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MBA LOANS |
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The Pell Grants from our undergraduate days may be off limits to us as grad students, but there is tons of loan money available to MBA students because lenders consider them great credit risks. We’ll look at four loan programs from both the federal government and private sources: Stafford Loans, Perkins Loans, School-Based Loans and Private Loans.
This
is the main loan program from the federal government.
MBA students can currently borrow up to $18,500 a year ($8,500 of
which may be “subsidized” and $10,000 of which must be
“unsubsidized”). The
cumulative total debt for all outstanding Stafford loans generally
cannot exceed $138,500 for MBA students.
(A maximum of $65,000 of this can be in subsidized loans.) What Do You Mean By Subsidized and Unsubsidized? The
federal government will “subsidize” your Stafford loan by
making interest payments on it while you’re in school if you qualify
based on need.
(Submit the FAFSA to determine whether you qualify.)
That means you pay no interest on your loans until six months
after you graduate or drop out of school (to start your own dot com!). With
an “unsubsidized” loan you will begin making interest
payments right away.
While you don’t have to pay back any principal
during school, unsubsidized loans require that you either make interest
payments during school or have the interest added to your principle,
thus raising your loan balance.
You will then begin repaying that loan six months after
graduating. (You can choose whether to make interest payments during
school or to “capitalize” your interest and pay it only after
finishing your MBA.) What Are the Fees and Rates for Stafford Loans? When students receive their loan funds, a fee of up to 4 percent will already have been deducted by the lending organization. This fee is used to guarantee the loan and keep the interest rate low. Stafford Loan interest rates are adjusted each year on July 1, so the rate you're charged will depend on market conditions. Stafford Loan rates are limited by law, however, from ever rising above 8.25 percent. "Direct" vs. "FFEL" Stafford Loans You will probably see these two terms often when applying for educational loans from the federal government. They refer to the source of the funds, not the type of loan. Thus, you could have a “Direct” Stafford Loan or a “FFEL” Stafford Loan. (The source of funding isn't all that important at this stage of the game. Only the type of loan matters.)
Perkins
Loans are only for students with exceptional financial need.
(Contact your school’s financial aid office to determine
whether you qualify.)
They come at the very low interest rate of 5 percent, and unlike
Stafford Loans, Perkins Loans carry no fees. Interest
does not accumulate while the student is in school, and borrowers have
nine months after graduating before they have to begin repaying their
Perkins Loans.
The payback period can be up to 10 years. How Do I Know Whether I Qualify for a Perkins Loan? You will be notified about your eligibility after submitting your FAFSA. How Much Can I Borrow? That depends on when you apply, the amount of funds available at the time and your level of need. The annual maximum for a graduate student, however, is $6,000. The accumulated maximum amount of Perkins Loans a grad student can have outstanding is $40,000, including Perkins Loans that are still outstanding from undergraduate studies. There is no guarantee, however, that Perkins loans will be available (even to qualified students) because of inconsistent Congressional funding from year to year. Is This Federal or School-Based Aid? Who cares! I mean, uh, it's both. Perkins Loans are administered by the schools, but both the schools and the federal government contribute the funds. Direct vs. FFEL Perkins Loans As with Stafford Loans, Perkins Loans come from two different sources. Thus, you could get a “Direct” Perkins Loan or a “FFEL” Perkins Loan.
School-based
loans are usually the source of last resort.
It isn’t that the terms are so bad, it’s just that federal
and private loans are so readily available that schools don’t like to
maintain (and service) school-based loan funds.
Loan money is available, though, at most business schools, and
you may want to take advantage of it. Because full-time B-school students can work only in the summer, they often run short of money in the spring. If that happens to you, don’t be shy about approaching your school’s financial aid office for a short-term loan. Most top schools have loan funds available for such emergencies or for other short-term needs. Interest
rates and fees will vary from school to school, but you’re sure to get
a good deal compared to conventional lenders (and you might even get a
grant from the emergency fund if you grovel well).
There are many sources for private loans. I've listed just a few below. Apply for federal Stafford loans first, but be sure to ask your school’s financial aid office about applying for funds from the following sources if your grants and federal loans don’t cover all of your costs. A. MBA Loans Qualifications:
Must be a
U.S. citizen or permanent resident. B.
Business Access Loans Qualifications:
Must be a
U.S. citizen or permanent resident. C.
CitiAssist Qualifications:
Must be a
U.S. citizen or permanent resident. D. MBA EXCEL Qualifications:
Must be a
U.S. citizen or permanent resident. NEXT > Work Study for MBAs |
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