I would like to share a few aspects of my student loan borrowing and also my repaying history, and I hope that future students can get a better idea about financial consequences of acquiring their MBA degree through part-time studying.
The majority of MBA programs require the GMAT. Obviously, everyone’s circumstances are different when it comes to the way they pay for or fund their MBA education, and I know at least three students in my cohort whose parents covered the entire costs for the program, and some others were getting some sort of tuition support from their employees, and generally this compensation was equal to six credits per semester.
Many of our group, however, paid for the complete MBA program by ourselves. The only compensation I received was a merit-based scholarship grant from George Washington School of Business (GWSB) for six credits (this equals to some $7200) that I received in the first year of my MBA program. See also our review of the best GMAT prep tools.
So now I will give you an approximate description of my financial situation with regards to paying for my MBA program. The GWSB MBA program requires 52.5 credits for graduation, and the average cost per credit (in the three years you need to complete the program) was around $1,280 (in fact the c.p.cr. was $1,208 in year 2009/10 and increased every year thereafter).
Consequently the total tuition cost was about $67,200 (52.5 x 1,280). So the total tuition that I had to pay on my own was about $60K as $7,200 was funded by the scholarship. Now this does not include some other costs, for example textbooks, business cases, and course packs ($2500); study materials, including a laptop that I bought especially for business school ($1500); travel and parking costs ($1000); further costs for a study excursion to France: flight, hotel, meals, etc. ($2000).
In total, the cost of my MBA program was around $80K, and I had to furnish about $70K by myself. My objective when I started the MBA program was to reduce the amount I needed to take out in student loan as much as possible, and therefore I paid for all the incidentals directly out of my pocket, all through the program. Thanks to this attitude I needed only to finance the tuition cost of $60k.
Fortunately, I was able not to take any extra private student loans in addition to my government-backed Stafford loan. Because I was a graduate student I was qualified to borrow $20,500 every year, but thanks to the GWSB scholarship, I needed to borrow only $11K in my first year. In the following years, I respectively borrowed $20 and $20.5 K, so that I ended up with a total borrowed amount of $51.500. The difference of some $9K over the three years for tuition in business school I also paid out of my own pocket.
Now suppose I had done nothing to reduce my debt, I would have needed to repay $587 every month, starting in January 2013, for as long as 10 years at a fixed interest rate of 6.8%. But because I really did not want to be repaying more than $500 per month I was already making early repayments on my student loan all through my years of studying for my MA degree, and especially in the period after graduation as my student loan was capitalized in November.
These payments were not legally required, but I repaid what I could and whenever I had a chance. It was my goal to bring down my monthly payments to under $500 by the time the required payments started. My time and effort were pretty successful, and at the moment my student loan was capitalized and finalized for the following 10 years, I found myself having only to pay off $43K in monthly installments of $498.
Now, this is an amount I can live with considering my other financial obligations, and I actually consider to make additional payments whenever I can in order to minimize the amount of interest on my student loan and to reduce the needed payment period to some eight years, rather than ten.
So this was my explanation of my MBA study costs and my MBA student loan repayment. Because every situation will be different, you have the chance to make adjustments in line with your own circumstances. You can make your own calculations, but I hope my description will give you a good idea of MBA study costs and how you can deal with the ways to pay for your academic education.
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