MBA loans are a type of private student loan designed for borrowers looking to earn a Master of Business Administration degree. They're a good option for people who have exhausted their federal student loan options, as many MBA loans will cover up to 100 percent of education costs.
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When shopping for an MBA student loan, compare APRs across multiple lenders to make sure you’re getting a competitive rate. Also look for lenders that keep fees to a minimum and offer repayment terms that fit your needs. Loan details presented here are current as of the publish date. Check the lenders’ websites for more current information. The MBA loan companies listed here are selected based on factors such as APR, loan amounts, fees, credit requirements and more.
MBA student loans are loans that can help you pay for the cost of your master's degree. They typically have low interest rates and flexible repayment terms and can be used for tuition, fees, housing, books, supplies and more.
How do they work?
MBA student loans can come from either the federal government or from private lenders. While there are limits on federal loans and some private loans, often you can borrow up to the full cost of your education. Most lenders also give you the option of making payments while you’re still in school, but you may also be able to make interest-only payments or partial payments until you graduate.
Many MBA loans also let you defer payments until six months or longer after you graduate, which can give you time to get on your feet and into a new job before you have to worry about your student loan debt. Most MBA loans are repaid over a term of five to 25 years.
Types of MBA student loans
When looking for a loan for your MBA degree, you have two options: federal or private.
Federal student loans are, as the name implies, managed by the federal government. Interest rates and standard term lengths are the same for all borrowers, regardless of financial profile. Graduate students can choose between Direct Unsubsidized Loans and grad PLUS loans.
Direct Unsubsidized Loans allow you to borrow up to $20,500 annually and $138,500 total with an interest rate of 4.3 percent, and they don't require a credit check. Grad PLUS loans allow you to borrow up to the cost of attendance with an interest rate of 5.3 percent, but they do check your credit.
Private student loans, on the other hand, are managed by a number of private lenders that set their own interest rates, terms and eligibility requirements. Generally you'll find lower rates and more flexible repayment timelines with private lenders, though you'll miss out on federal protections like forbearance, income-driven repayment plans and loan forgiveness programs. Your interest rate will also be determined by your credit score and debt-to-income ratio, among other things.
How much do MBA students borrow?
A study by the National Center for Education Statistics found that the average student loan balance for MBA graduates is around $66,300. Of course, that number could be higher or lower depending on the price of your school and how many scholarships or grants you take out. Many MBA student loan lenders will let you borrow up to the full cost of education, although some impose lifetime limits.
Important considerations before applying for an MBA student loan
While federal loans come with low fixed interest rates and protections like deferment and forbearance, private student loans for an MBA program may also make sense. Whether you opt to max out your federal loan options or go with a private lender, here are the most important factors you should consider:
Loan fees: Some lenders charge upfront origination fees and other fees, which you should try to avoid if you can. Ideally, you’ll wind up with an MBA loan with no fees and the lowest interest rate you can qualify for.
Interest rate: First, decide if you'd like a fixed or variable interest rate — essentially, whether you'd like to pay the same amount over the life of your loan or take advantage of fluctuating rates. You'll also want to compare APRs from multiple lenders. Look for lenders that let you check your rate without impacting your credit score.
Repayment term: Your repayment period determines what your monthly payment might be; choose a repayment period that allows you to pay off your loan as quickly as you can afford. Also look for loans without prepayment penalties so you can pay off your MBA loan early if your finances allow.
Deferment options: If you want the option to defer payments until after you graduate, researching lenders ahead of time is critical. Some offer minimal deferment options, while others let you defer your payments for a year or longer after you graduate if you meet their requirements.
How has the coronavirus affected MBA loans?
Student loan interest rates are incredibly low right now due to the coronavirus' economic impact. If you're looking to take out a new MBA loan or refinance an existing private loan, now is a good time. Federal borrowers have seen additional perks; most federal loans are temporarily interest-free, with no payments required, through Sept. 30, 2021.
With that said, lenders have also made adjustments to their lending practices given this unprecedented drop in rates. It may be harder to qualify for a loan if you have poor credit, meaning you may have to enlist a co-signer if you're looking for an affordable MBA loan.
Overview: Federal grad PLUS loans come with fixed interest rates, and you can borrow up to the amount of your college tuition costs minus other aid you receive. You can also defer payment on these loans until six months after you leave school, graduate or drop to half-time enrollment.
Perks: Federal student loans come with the option to pursue deferment, forbearance and income-driven repayment plans, making them one of the most flexible options on the market. Many private lenders even recommend starting your search with federal loans due to these additional protections.
What to watch out for: Unlike other federal student loans, grad PLUS loans do run a credit check during the application process. Also note that these loans come with an upfront loan fee that is deducted from each loan disbursement.
Lender
Federal grad PLUS student loans
APR
5.3% fixed
Loan amounts
Up to 100% total cost of attendance
Loan terms
10 to 25 years
Fees
Loan fee: 4.228% of total loan amount
Best for borrowers with excellent credit: CommonBond
Overview: If you're attending an eligible program and have good credit, you may be able to get a CommonBond MBA loan without a co-signer. CommonBond's MBA loans have two repayment terms — 10 or 15 years — and they come with competitive interest rates. CommonBond loans also have no prepayment penalties, so you can pay your loan off anytime you want.
Perks: CommonBond MBA loans have forbearance options, meaning you can pause your payments during times of financial hardship. CommonBond's forbearance program can span up to 24 months.
What to watch out for: CommonBond charges an origination fee of 2 percent. In contrast, many online lenders have waived all fees, including origination fees.
Overview: College Ave lets you borrow from $1,000 to $150,000 to complete your MBA program, and you can choose to repay your loan over five, eight, 10 or 15 years. You can also choose among diverse repayment options that include full principal and interest payments, interest-only payments while you're in school, a flat payment while you're in school or deferred payments until you graduate.
Perks: College Ave has some of the lowest APRs on the market for consumers with good or excellent credit, and you can qualify for a 0.25 percent rate discount if you sign up for autopay.
What to watch out for: College Ave lets you borrow only up to $150,000 for an MBA program, which could be limiting — some other lenders let you borrow up to the full costs of your education.
Overview: SoFi's graduate school loans let you borrow up to the cost of attendance for your MBA program, and you can choose from highly competitive fixed or variable interest rates. You can also choose to defer your payments until six months after you leave school or make interest-only payments while you’re in school. Other options including making partial payments while you finish your MBA or moving forward with full principal and interest payments during your program.
Perks: SoFi easily has some of the most competitive rates in the business, and you can borrow up to the total cost of attendance at school. SoFi also makes it easy to apply for your MBA student loans online, and there are no origination fees.
What to watch out for: While SoFi has high loan maximums, it also has high loan minimums at $5,000. If you need to finance only a small portion of your education expenses, it's likely not the right lender for you.
Best overall student loan refinance company: Sallie Mae
Overview: The Sallie Mae MBA loan lets you borrow up to the cost of education, and you won’t have to pay an origination fee. Sallie Mae MBA loans come with a six-month grace period, and these loans are also workable for students attending an MBA program less than half time.
Perks: Sallie Mae allows you to release your co-signer after you make just 12 on-time payments on your loan and you meet certain credit requirements. These loans also come with no origination fee and no prepayment penalties.
What to watch out for: Sallie Mae has only one repayment timeline for its MBA loans — 15 years — so it's not the best option if you'd prefer a greater range of options.
Overview: Citizens One lets you borrow up to $225,000 for your MBA. Repayment terms can last for up to 15 years, you can choose to make interest-only payments while you’re still in school or defer payments until after you graduate.
Perks: Citizens One offers approval for loans that last multiple years, so you don’t have to reapply to borrow more for your MBA program after the initial loan phase. This is particularly helpful when it comes to your credit, as Citizens One won't do a hard pull of your credit score for each year you need funds. Citizens One also rewards borrowers who already have a relationship with the bank with discounts of up to 0.5 percent.
What to watch out for: The $225,000 limit for Citizens One loans is aggregate, meaning this limit applies to all of your federal and private student loans.
Overview: Discover MBA loans can let you borrow up to the cost of attendance for your MBA program, and you can apply online in 15 minutes or less. While in school, you can choose to make interest-only payments or fixed payments of $25. You can also defer your payments until nine months after you graduate, which is more generous than many other lenders.
Perks: Discover MBA loans don’t have any origination fees or application fees. You can also qualify for a one-time cash reward if you maintain a GPA of 3.0 or an equivalent, and you can receive a 0.35 percent interest rate discount by making interest-only payments while in school.
What to watch out for: Discover MBA loans come with aggregate limits. You'll have to apply with the lender to see if it can offer you as much as you need.
Lender
Discover
APR
See rates above
Loan amounts
$1,000 – up to 100% of school-certified college costs. Aggregate loan limits apply.
Overview: Earnest promises a speedy loan process for its MBA loans, which let you borrow up to the total cost of attendance for school. The fixed and variable interest rates are competitive, and you can qualify for a 0.25 percent rate discount if you sign up for autopay.
Perks: Earnest lets you check your rate without a hard inquiry on your credit report, and you can move forward with an application and apply online in a matter of minutes. Earnest also has a unique feature that lets you skip one payment every 12 months, which is a great buffer if you encounter unexpected life events.
What to watch out for: Unlike most lenders, Earnest does not allow for co-signer release. If you'd like to release your co-signer, your only option is to refinance.
Lender
Earnest
APR
Fixed: Starting at 3.49% (with autopay); Variable: Starting at 1.05% (with autopay)
Loan amounts
$1,000 – 100% total cost of attendance
Loan terms
Not specified
Fees
Florida stamp tax: $0.35 for each $100
FAQ about MBA student loans
Your repayment period for an MBA loan will depend on the lender you choose. However, most lenders set repayment terms between five and 20 years. Of course, you can always pay off the debt sooner to save on interest charges — just confirm that your lender doesn't charge prepayment fees.
Whether an MBA degree is worth the price tag depends on your personal circumstances. One Gallup poll found that 42 percent of graduates considered their MBA degree worth the cost; however, this may largely depend on how much debt you incur and what your job prospects are after graduation. For instance, according to the U.S. Bureau of Labor Statistics, the average salary for marketing managers is $149,200, while the average salary for market analysts is $71,570.
It's usually best to start your student loan search with federal student loan options. Federal loans tend to come with protections you can’t get with private student loans, such as income-driven repayment plans and loan forgiveness programs, which is why many private lenders encourage you to exhaust federal options first — you can always use private loans to supplement what a federal loan won't cover.
If you've decided to take out a private student loan, take the time to compare lenders in terms of the rates they offer, their repayment options and other perks you can qualify for. It can be helpful to find a lender that offers a discount for autopay, for example, as well as one that will let you borrow up to the cost of attendance for school.
