For an increasing number of students, higher education is not possible without some form of financial aid. As someone who is interested in enrolling in an online MBA program, it’s paramount that you understand exactly what types of student aid are available and the responsibility that comes along with borrowing money.
When it comes to federal aid, graduate students have three options: campus-based aid, Stafford Loans and Direct PLUS Loans. Some schools provide campus-based aid, which for graduate students can include Federal Work-Study and Federal Perkins Loan programs. The amount of money students receive is based on their individual financial need and the availability of school funds.
Federal Work-Study provides eligible students with part-time jobs that enable them to earn money to help pay for their educational expenses. Given the nature of online degree programs, it is unlikely that any student enrolled in one would be eligible to participate in a Federal Work-Study program on campus, although some schools may offer off-campus opportunities and have agreements with private for-profit employers. Federal Perkins Loan programs allow students to take out low-interest loans through their schools’ financial aid offices. These need-based loans are backed by government funds and distributed by schools. While graduate students can borrow as much as $8,000 a year, the exact amount granted to each student depends on financial need, the school’s funding level and when the applicant’s FAFSA (Free Application for Federal Student Aid) was filed.
Direct Stafford Loans carry low interest and are sometimes subsidized. Direct subsidized loans are distributed based on financial need and do not charge interest while students are in school or during grace or deferment periods. Direct unsubsidized loans are not based on financial need and interest begins to accumulate as soon as the money is distributed. For both of these types of loans, the school determines exact amounts that students are eligible to borrow based on the cost of education.
Graduate students can also receive Direct PLUS Loans, which are based on credit history rather than financial need. Students must submit a FAFSA to apply for these loans, but they cannot be awarded until schools have identified maximum eligibility for Stafford Loans.
Those who qualify for federal loans reap the benefits of low interest rates and more flexible repayment plans, so it is often the best option if you must borrow money. Students who are relying on federal aid to fund their education should submit a FAFSA as early as possible to ensure they receive the maximum amount to which they’re eligible. To be eligible to distribute federal aid to students, a university, college or program must be accredited by an agency recognized by the U.S. Department of Education. More information can be found on the department’s Database of Accredited Postsecondary Institutions and Programs. The department also provides a list of agencies that are recognized for accrediting distance and correspondence education programs, such as online MBA ones. Any institutions that are accredited by agencies appearing on this list are eligible to participate in the federal student financial assistance programs.
Those looking for financial aid that does not require repayment may want to find organizations that provide scholarships, both need and merit based. Scholarships are often available through organizations such as nonprofit societies, business associations, community centers or charitable organizations. Groups may require applicants to meet certain financial or academic qualifications as well as to submit materials such as undergraduate transcripts, essays, resumes and letters of recommendation.
Those considering earning an MBA online can use personalized search engines such as the Fastweb scholarship search to see what opportunities may be available to them. Most institutions of higher education also have a certain number of scholarships to award to students each year who meet qualifications. Contact your school’s financial aid office to find out about what scholarships might be available for online MBA students.
Employer Tuition Reimbursement Programs
If you are employed, take a look at your benefits package to check whether a tuition reimbursement program is included. These programs pay tuition costs for eligible employees who are participating in career-related education and training. Many companies offer these programs because they believe it is more beneficial to support employees’ obtaining additional qualifications than it is to spend time and money recruiting new hires. Employers also know that the more educated their workers are the more they can contribute to their companies. These programs can significantly reduce your out of pocket expenses so before you consider any other type of student aid, contact your human resources department.
Private Student Loans
You have probably often heard that private student loans should be taken out only as a last resort. But for those who don’t qualify for as much federal aid as they need, fail to impress the scholarship committee or don’t work for a company with education benefits, a private student loan may be the only option. Private student loans are backed by banks and other lending institutions. Interest rates for private loans are usually determined by credit history, so students with a bad one may be denied entirely and those who are approved are likely to pay a significantly higher interest rate than they would on a federal loan. Repayment terms and schedules typically are determined by lenders, which have the power to change them according to what best benefits them with little regard for the borrower.
Shop around and compare when considering a private loan. According to FinAid, students need to take a close look at each private lender’s terms and conditions, loan limits, interest rates, repayment options and fees. There are plenty of private lenders that offer reasonable options, but you’ll need to take the time to find a quality one.
When it comes to paying for an online MBA program, it’s important to explore all your financing options and carefully consider how borrowing money now will affect you later in life.