Financing the MBA

A good two-year MBA program costs in the vicinity of $140,000. For all but a few students this represents a major sacrifice.

An MBA degree, of course, constitutes a sound investment – there is no replacement for the rigorous training and vast networking opportunities offered at a top school.

Nevertheless, financing an MBA requires careful planning and a thorough knowledge of the available options. Here are some things to keep in mind when thinking about the financial side of business school:

1. Scholarships, grants, and fellowships are hard to get – but they’re worth the effort.

Many top business programs – such as those at Harvard, Stanford, and Kellogg – offer need-based grant and fellowship assistance.

These will not cover the full cost of tuition but can significantly offset it. All top MBA programs use need-blind admissions; if you are offered admission, they will help you figure out how to pay.

2. Hard work pays off. Merit-based scholarships, though rarer than need-based ones, are available at some schools.

Columbia and Kellogg, for instance, both award grants to exceptionally talented students – which means, with an extraordinary track record in academics and demonstrated leadership, you stand a stronger chance of coming into some of the available funding, which can be as much as $10,000 a year.

Stanford also recognizes achievement during the MBA program: the Siebel Scholars Award is given to top students in their second year.

3. Seek outside sources of funding. Many top corporations sponsor fellowship programs for MBA students.

Keep in mind, however, that grant money in excess of tuition and standard fees becomes subject to taxes.

4. Take advantage of every angle. Significant outside funds exist for students who fit a certain profile.

Often these are scholarships for minority and women students: the Forte Foundation seeks to sponsor future female leaders in business; the Toigo Foundation does the same for minority students.

Some schools even offer career-specific grants, such as the Leaders for Manufacturing fellowship at M.I.T.’s Sloan School of Management.

Many of the Wall St firms also offer scholarships. Sometimes, you have to do some extra digging to get access to fellowship information.

5. Borrowing is a necessary evil. Almost all students who graduate from MBA programs do so with some debt. The trick is to manage and minimize that debt.

Loans come in two kinds: federal and personal. Federal aid is available only to citizens and permanent residents of the U.S. Many non-federal options do exist for international students.

Some of the best are the loans available through Nelnet, which have relatively low interest rates and often do not require a co-signer.

6. Schools usually have partnerships with banks to offer non-federal loans to their students – for instance, Harvard partners with Citibank – but regardless of the loans available to you, comparison shopping is essential.

7. Financing the MBA is a complex endeavor that must begin years before matriculation.

Essential both to minimizing your debt and ensuring your eligibility for loans is savings: before issuing a loan or other financial aid, a school or bank will look at your financial records from the past three years; the financial aid office will want to see that you have been responsible about putting away money for your education.

8. The Internet has radically altered the playing field when it comes to financing one’s education.

Be wary of scams, as they are plentiful, but many legitimate resources exist. Some of the best are Fastweb.com and Finaid.org.

9. If coming from the corporate world, it is wise to explore the possibility of employer sponsorship. Your career after graduation may affect your debt as well.

Some top schools, including Stanford, offer loan forgiveness for MBA graduates who enter the non-profit sector or work in developing countries.

10. The financial aid process must be managed carefully. Two major elements of this are documentation and deadlines. To successfully apply for a loan, you must have all the relevant documents in order.

These include FAFSA application, CSS profile, and tax returns from the past three years (including those of a spouse or parents, if relevant).

It is also critical to check that your credit rating is accurate and up-to-date: poor credit or extraordinary outstanding debt can jeopardize your loan application.

Finally, be mindful of deadlines: fellowships at a given school almost always have earlier deadlines than the application itself; different schools also have different deadlines for filing the FAFSA.

The bottom line: do not leave any stone unturned and pay close attention to financial aid and fellowship deadlines.