Stafford

Perkins

School-Based

Private

The Pell Grants from our undergraduate days may be off limits to us as grad students, but the Stafford loans are still available.  In fact, there is tons of loan money available to MBA students because lenders consider them great credit risks.  We’ll look at loan programs from both the federal government and private sources.

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.)

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.)

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.)

More Loans
2. Perkins Loans
3. School-Based Loans
4. Private Loans