How to Pay for an MBA

Business school is a costly investment. Here are some tips on how to make it more manageable

By Francesca Di Meglio

Lindsey Aponte, a first-year student at the University of North Carolina at Chapel Hill's Kenan-Flagler Business School, made all the right moves when it came to preparing her finances before entering the MBA program.

She already kept a household budget, which she scanned to see what she could trim and how the cost of living in the Kenan-Flagler neighborhood compared to her residence just outside of Philadelphia. Then, she sought the appropriate loans to pay for what she could not handle herself. The hope, says Aponte, is that after graduation she'll get a job, which will pay more than the one she had before school.

Aponte is certain that enrolling in graduate business school was a "sound financial decision," even though she will be paying off loans after graduation in 2009. Like anyone making such a big investment, Aponte was apprehensive, but she consider that a positive. "It's a good thing to be concerned about finances," she says. "Don't shy away from being nervous." It shows that personal finance—and your financial security—is important to you.

So embrace your anxiety. If you're an aspiring MBA losing sleep over how you are going to afford graduate business school, then you should check out the financial aid tips below:

Ask for Help

Even before you apply, you can get information about the financial aid services available at each school that interests you. Some of them have financial aid offices specific to the graduate business school; others require business students to work with the main university financial aid office along with everyone else. All of them have professionals available to answer your questions and explain the complex world of financial aid. Take advantage of this resource.

Susan Brooks, the financial aid assistant director at Kenan-Flagler, suggests keeping financial aid folders for each of the schools to which you applied—and reading all the material they send you. Do additional research on your own on available scholarships, grants, and federal vs. private loans. Understanding your options, what each school is offering, and educating yourself about student loans in general is key to getting the best deal possible. "Approach it as you would any business decision," says Aponte. "Get as much information as you can as fast as you can."

Get Your Financial House in Order

Take your cues from Aponte and start cutting costs from your current budget as soon as you decide you want to go back to school. Bring a brown bag lunch, nix your Starbucks habit, or quit hanging around the mall on sale day—whatever you can do to keep a few extra dollars in your savings. This will help prepare you for being without a salary for two years. In addition, you'll ideally want some sort of savings for emergencies and a sense of security while you're in business school. Get your credit score from a service such as myfico.com and start paying off other debts, especially bad debt like credit cards. Your lenders will use your credit score to judge your application, so you'll want to be in good standing.

Determine how much you'll need

Consider the cost of the schools to which you have been accepted. If you applied to a state school where you are a resident the tuition will likely be lower and you might think that's reason enough to attend the program. But before making any decisions, you should figure out how much you'll actually need to live and pay for each of the programs. Tuition alone is not enough. You must also consider the cost of living in that state and unexpected expenses for things such as traveling for the job search, purchasing business attire, and attending networking events. Compare the totals you come up with for each program to your current budget to see if you can swing it.