Search for financial aid can take plenty of study

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With jobs tough to get and the cost of getting an MBA exceeding $300,000 when you figure in living costs and lost pay if you go to school full time, potential business students are thinking twice before leaping into such costly programs.

And for good reason. Many MBA students graduate with more than $100,000 in debt, and that's going to mean a struggle making ends meet after graduation for the person living on the average salary of a newly minted MBA at the $83,500 reported by Payscale.com.

Students can try to keep the debt level down by shopping for financial aid. But it isn't as easy to find scholarships and grants for an MBA program as it is at the undergraduate level, unless you are an outstanding student.

When pursuing bachelor's degrees, students who need financial help can get it based on family income alone — even if the student isn't at the top of his or her class. For MBA programs, however, much of the aid that is doled out is based merely on merit. And while colleges compete for the creme de la creme with aid, the student who just squeezed through the admissions process may get little more than a seat in the MBA class.

A few elite schools such as Harvard and Stanford provide aid based on a student's ability to pay, but even that aid doesn't ease the price as much as you might think. Stanford said it has provided for the 2012-13 academic year about $24,900 on average in fellowships to MBA students, but the full two-year cost — without aid — including books and living expenses was about $181,000, assuming that a student didn't pay about $4,000 extra for study abroad.

Most MBA programs aren't focused on helping students with financial struggles. MBA programs use aid to lure students with top GMAT scores so the college stands out in rankings.

Even the most accomplished students, who get sizable aid from top MBA programs, may leave school with loan payments much higher than expected. That's in part because Perkins Loans at 5 percent interest rates, or federal Stafford loans at 6.8 percent interest rates, cover only a portion of an MBA.

The maximum Stafford loan amount is $20,500 per academic year, or a total of $138,500 over a lifetime including loans at the undergraduate level.

So MBA students must often turn to federal Graduate PLUS loans at 7.9 percent interest rates — a steep price when mortgages are running 3.5 percent.

Still, people who think ahead and plan for MBA programs well in advance may be able to position themselves for more aid.

Your first and possibly best stop could be your employer. While fewer provide employees financial help for education than they used to, you should ask.

Then start hunting for colleges that provide the best aid, especially if you are an outstanding candidate.

At websites for each MBA program, look for special fellowships that might fit you. Some require applications.

Andrea Sparrey, a consultant who helps students get into MBA programs, says about half of her clients have received aid. But besides the traditional grants that come with acceptance letters, students also get other forms of financial help for MBAs.

Once immersed in an MBA program, you can look for competitions that offer cash awards. At Northwestern's Kellogg School of Management, case competitions or innovation projects offer teams of students a chance to win $5,000 to $20,000.

Also, the Thomas and Stacey Siebel Foundation's Siebel Scholars program awards 85 students a year with $35,000 that goes toward tuition in their final year of studies.

Sparrey suggests that MBA applicants submit applications to several schools so you can negotiate for more aid at a favorite program by letting the admissions staff know you have another offer that's better.

Going beyond your workplace and leading projects in the community can help. Lining up employers who will recommend you is also key, Sparrey said. And using your background to show that you are truly oriented toward the goals you say you want to fulfill in your MBA program is important when applying for programs and grants.

Once the acceptance comes and the price tag is tallied, make sure to pick the right student loans. Although some private loans may have lower teaser rates, or ongoing rates, federal loans can take some of the risk out of repayment. Under the federal program, if your income turns out lower than expected once you enter the job market, you have the benefit of a new plan that keeps federal loan payments down to an affordable level based on your pay. This is called "income based repayment" and does not tend to be available with private loans.

gmarksjarvis@tribune.com

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