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MBA programs can be costly — the average MBA debt is over $66,000. To pay for your program, you’ll likely need to use at least some MBA loans. If you need to borrow money to finance business school, it’s important to understand your different student loan options.
3 MBA student loan options
If you’re going to business school, you have three MBA student loan options:
- Direct Unsubsidized Loans: As a graduate or professional degree student, you can borrow up to $20,500 per year in unsubsidized loans.
- Grad PLUS Loans: With Grad PLUS Loans, you can borrow up to the total cost of attendance for your program minus any other financial aid you received.
- Private student loans: You can work with a private lender to take out loans for the total cost of your program.
1. Direct Unsubsidized Loans
Direct Unsubsidized Loans are offered by the federal government, and they’re available to you regardless of your financial need. Unlike some other student loans, you don’t need to go through a credit check when you apply for an unsubsidized loan, and having bad credit won’t prohibit you from getting a loan.
Loans disbursed on or after July 1, 2019, and before July 1, 2020, have an interest rate of 6.08%. Plus, unsubsidized loans also have a disbursement fee. Loans disbursed on or after October 1, 2019, and before October 1, 2020, have a disbursement fee of 1.059%.
As a federal loan, unsubsidized loans are eligible for perks like income-driven repayment plans, access to loan deferment and forbearance, and the ability to qualify for Public Service Loan Forgiveness. To qualify for an unsubsidized loan, you need to complete the Free Application for Federal Student Aid (FAFSA).
2. Grad PLUS Loans
Like Direct Unsubsidized Loans, Grad PLUS Loans are a form of federal student loan; to be eligible for one, you must complete and submit the FAFSA. However, PLUS Loans require a credit check, and you may not qualify for a loan if you have an adverse credit history.
PLUS Loans allow you to borrow up to the total cost of attendance at your selected program, but they have the highest interest rate of any federal loan. Loans disbursed on or after July 1, 2019, and before July 1, 2020, have an interest rate of 7.08%. Plus, they also have a high disbursement fee. Loans disbursed on or after October 1, 2019, and before October 1, 2020, have a 4.236% disbursement fee.
3. Private student loans
When it comes to MBA loans, private student loans can make a lot of sense. If you have good credit, you could qualify for a lower interest rate than you’d get with federal student loans, helping you save money. Private student loans don’t have benefits like income-driven repayment plans or eligibility for Public Service Loan Forgiveness, but the cost-savings can be well worth the tradeoff.
But let’s say you opted for a private student loan instead and qualified for an interest rate of 5.30%. Over a 10-year repayment term, you’d pay a total of just $64,522. Opting for a private loan instead of a federal loan would allow you to save over $5,000.
Private student loans have other benefits, including:
- Variable or fixed interest rate loans: With a private student loan, you can also choose between a variable rate loan and a fixed-rate loan. While fixed-rate loans have the same interest rate for the length of the loan, variable rate loans are different. They start off with lower interest rates than fixed-rate loans, but the rate can fluctuate over time.
- No added fees: Private student loans usually don’t have extra fees. Unlike federal loans, which have disbursement fees, you won’t pay a disbursement fee or origination fee with a private loan.
The private student loan companies in the table below are all Credible’s partner lenders. We have not included other lenders.
| Lender | Fixed rates from (APR) | Variable rates from (APR) |
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 | 4.25%+1 | 1.25%+1 |
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 | 3.99%+2,3 | 1.24%+2,3 |
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 | 4.84% - 12.39%6 | 1.59% - 11.37%6 |
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 | 4.25% - 12.35%9 | 1.25% - 11.15%9 |
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Checking rates won’t affect your credit |
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Lowest APRs reflect autopay, loyalty, and interest-only repayment discounts where available | 1Citizens Bank Disclosures | 2,3College Ave Disclosures | 6Discover Disclosures | 7EDvestinU Disclosures | 8INvestEd Disclosures | 9Sallie Mae Disclosures |
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Citizens Bank Student Loan Rate Disclosure Variable rate, based on the one-month London Interbank Offered Rate ("LIBOR") published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of July 1, 2020, the one-month LIBOR rate is 0.18%. Variable interest rates range from 1.25%-11.40% (1.25%-11.01% APR) and will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. Fixed interest rates range from 4.25%-11.95% (4.25% - 11.53% APR) based on applicable terms, level of degree earned and presence of a co-signer. Lowest rates shown requires application with a co- signer, are for eligible applicants, require a 5-year repayment term, borrower making scheduled payments while in school and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of the loan. |
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Other private student loan lenders to consider
Here are more private student loan companies we evaluated. Keep in mind that these lenders are not offered through Credible, so you won’t be able to easily compare your rates with them on the Credible platform like you can our partner lenders.
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Deciding which MBA student loan is right for you
When it comes to MBA loans, it’s important to research your different options so you can make an informed choice. If you’re trying to decide between federal and private MBA student loan options, think about the difference in interest rates between them, what benefits they offer, and what repayment options are available.
By doing some homework before submitting your application for a loan, you can save money and get the credential you need to advance your career.
See: The Best Private Student Loans
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Checking rates will not affect your credit
Methodology: Credible evaluated loan and lender data points in 10 categories to identify the “best companies” for private student loans. We looked at interest rates, repayment terms, repayment options, fees, discounts, and eligibility. We also considered each company’s level of customer service provided, cosigner release options, whether the minimum credit score is available publicly, and whether consumers could request rates with a soft credit check. Credible receives compensation from its lender partners when a user of the Credible platform closes a loan with the lender.
