6 Simple Strategies to Painlessly Finance Your MBA Degree

Many business-oriented professionals put off pursuing their MBAs because they worry about the cash required to finance their education. While a top-notch school does mean a financial outlay, it’s possible to put yourself through school without turning your personal finances upside down.

1. Tally Your Taxes

The U.S. government rewards students who pursue higher education. Tax credits allow you to deduct part of your tuition so you carry less of a financial burden. Consider consulting with a tax professional, such as a CPA (certified public accountant) or tax attorney. You have several options, so think through them all to find the one that best suits your financial circumstances.

2. Inquire About Incentives

Talk to your current employer about educational incentive programs. Many companies recognize that paying for tuition enhances their employees’ value to the business. You put your newly acquired skills to work for your employer, and in return you receive a reduced bill for your classes.

IRS
Image via Flickr by GotCredit

Some employers pay 100 percent of tuition for employees, while others pay a smaller percentage. Review your employee handbook or hiring documents before you approach your employer or the human resources department. You’ll want to know the company’s stance before you attempt to negotiate.

3. Mine Your Memberships

Greek, fraternal, trade, and social organizations often help their members with grad school tuition. They might offer scholarships to deserving people or grants for future research or work. Your school might even provide assistance for students in MBA programs. Use all your connections to find sources of revenue that might lower your personal financial load.

4. Assess and Accelerate

Try to pursue your MBA when you have plenty of free time. Accelerated programs often allow you to earn your degree within 18 months, but make sure you have enough time to complete the coursework. An accelerated program reduces the time spent in school and, therefore, decreases your net tuition expenses.

5. Cut Out the Classroom

You don’t need an auditorium equipped with 300 hard plastic seats to earn an advanced degree. Through an online MBA program, you can cut the costs of education while still absorbing the material. As long as you have a home computer, you can take advantage of these opportunities.

An online program eliminates the need to attend a physical meeting every day. Instead, you work around your classes to meet all of your obligations. If you work a full-time job, complete your coursework in the evenings or on weekends so you don’t lose that necessary paycheck.

6. Cover Your Costs — But No More

If you borrow money to finance your MBA education, crunch the numbers before you apply. Don’t accept a loan in excess of what you need because you’ll pay interest on every cent. Instead, figure out exactly how much money you need to cover tuition and other expenses. If a bank or credit union offers more, decline it.

Your education remains your most important asset in the business world. It’s worth more than your house, your car, or any other physical possession. If you focus on smart financing decisions, you’ll earn your MBA without putting your finances in the red for years to come.

Programs to Pay off Student Loans

Programs to Pay off Student LoansCollege tuition increased from 1985 until 2013 by a whopping 538%. People started taking on more and more student loan debt to pay for college, and now it is a huge financial issue for Americans. Some stats that illustrate the problem include:

There is Help

There are thankfully some programs to help people pay off their loans.

Public Service Programs

Organizations such as the Peace Corp and AmeriCorp offer loan repayment assistance programs (LRAP). You work for these organizations for a certain amount of time, and then they help you with your loans. You also receive a salary (or stipend) as part of your employment. You can lose repayment benefits if you leave your employment early.

In addition to LRAPs, there are Public Service Loan forgiveness programs. If you are a Direct Loan Program borrower, you may qualify for income-based repayment and loan forgiveness after 10 years (and time spent in the Peace Corp or AmeriCorp could count toward these 10 years). You must continuously work as a public servant for 10 years. These are great options and can help people fields that include:

  • Emergency Management
  • Public Interest Law
  • Child Care

Private Volunteer Programs

Private organizations such as SponsorChange and ZeroBound operate on a basic premise that you exchange your labor for help paying off student loans. SponsorChange works this way: you volunteer at a designated nonprofit and donors pay your student loans. At ZeroBound, you come up with an idea (a program at a local hospital for instance), and people crowdfund your student loans when you put your idea in to practice. Donors know their money addresses an organization’s manpower needs and not administrative costs.

Military

The service branches also offers loan repayment programs. You must be in one the Military Occupational Specialties, not just an officer, to receive this benefit in the Army. Most of the programs highlighted here only help with federal loans. But the Army, for instance, also helps pay off private student loan debt.

Teachers and Health Care Professionals

Similar to public service programs, there are loan assistance programs for teachers and healthcare professionals. You may be eligible to cancel:

  • $17,500 for math and science teachers
  • $17,500 for special education teachers
  • $5,000 for full-time teachers in other specialties

Keep in mind, this program applies to Stafford loans and you are eligible for cancellation only after 5 years of service in certain low-income schools.

There are also programs that help people in the healthcare field. For instance the Nursing Education Loan Repayment program offers assistance to full-time RNs. If you work at certain nonprofit facilities, you can get:

  • Up to 60% of loans forgiven for 2 years of service
  • An extra 25% forgiven for an additional 3rd year of service

Additionally, the National Service Corp offers substantial assistance to people in healthcare professions that include:

  • Doctors
  • Dentists
  • Nurse Practitioners
  • Psychologists

If you know someone who is graduating with six figures of loan debt from a professional degree, this program offers qualified individuals who work in designated communities:

  • $25,000 per year in loan repayment for 2 years of service
  • $35,000 in loan repayment for an additional year

Review Your Options Carefully

As we noted earlier, some programs only help with specific federal loans, while the qualifications for others are complicated. Most programs pay little or nothing if you do not complete your term of service. For student loan borrowers that qualify, these programs offer solid debt relief for those willing to work in certain areas or in education.

The Importance of Credit

As a young adult making your first forays into the financial world, credit may not seem like a big deal – expenses are usually fairly easy to cover because you don’t have kids to look after or a mortgage to worry about. And, unless you are in need of credit, your credit rating may not seem like something that is all that important. It does, however, pay to take steps now to start building a good credit history so that when you actually do need to access credit, you can do so more easily and less expensively.

Having a good credit rating can save you thousands of dollars in interest and insurance premiums over your lifetime and can even give you a bit of an advantage when it comes to that management position that you have had your eye on.

It might seem paradoxical but having no credit history at all can out you in a similar category to people with poor credit for the simple reason that you will be an unknown entity to your potential creditors – you will have no means of proving that you are able to handle credit responsibly and so will be seen as a higher credit risk overall.

Having No History Can Be Damaging As Well

It might seem paradoxical but having no credit history at all can out you in a similar category to people with poor credit for the simple reason that you will be an unknown entity to your potential creditors – you will have no means of proving that you are able to handle credit responsibly and so will be seen as a higher credit risk overall.

What Credit Reports Are

Your credit report can actually be compared to a school report card, with the “exams” being your credit accounts and the score showing how well you have managed these accounts. The payment history gives a breakdown of whether or not you have paid your accounts on time every month and whether or not any payments are still outstanding. Paying late or not paying the full installment will negatively impact your credit rating.

The credit report shows a lot more than that though. It also shows what balance you owe your creditors and what your credit limits are. The total potential credit exposure, as well as the percentage of your credit utilization will also impact your score. Maxing out your credit limits affects your score negatively.

When a potential creditor looks at your report, they will assess whether or not you are a responsible borrower – if they have none of the above information to work on, they will have nothing to base their decision on.

Building Your Credit Rating

If you want to start building a credit rating, you need to make use of some sort of credit facility. That is not to say that you should rush out and get a bunch of credit cards but rather that you should start by opening one or two credit accounts so that you can show that you are a responsible lender. Store cards are usually easier to get than credit cards so start there. You will probably be given a small limit at first but this will be increased later as you prove that you can handle the account.

With this credit facility, it is important to make all payments on time and to make sure that you pay the minimum monthly instalment at the very least. Aim to use no more than 30% of the credit limit as this will help to boost your credit score. Many department stores will treat a 6 month account as cash so you shouldn’t have to worry about paying interest at this stage in time.

As time goes by, look at diversifying your credit report by applying for a small instalment loan, a credit card or vehicle finance. For creditors to get an overall picture of you as a debtor, having different types of financing on your credit report is important – it shows them how you would handle each type.

It is quite important to start building your credit report early on – older accounts count for more when it comes to establishing credit worthiness as they paint a fuller picture than newer ones.

The key to building a good credit rating is to be consistent – live within your means and never borrow more than you can afford to repay. Make paying your monthly bills on time your number one priority and you will build an excellent credit rating.

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