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Freshman Winston Yan enters the Admissions Building at Harvard University September 12, 2006 in Cambridge, Massachusetts.
- The Free Application for Federal Student Aid (FAFSA) is a questionnaire that applicants fill out for schools to consider them for financial aid.
- It's available for grad students - including those applying for MBAs - although there are only two types of loans available to MBA students.
- If you're not sure if you have financial need, you should still apply. The form can be completed online.
- You should apply as soon as you can - you'll hear back with your expected award from the US Department of
Education between three days and three weeks after submitting. - Click here for more BI Prime stories.
You're ready to level up in your career, and you've decided that pursuing an MBA is the best way to do it. Not only can MBA programs provide you with a comprehensive education, but they can also help you increase your professional network, shed light on new career paths, and - depending on what you do with your degree afterward - your earning potential, too.
But we can't ignore the fact that the price of most MBA programs is very steep. In fact, the average price of full-time tuition is $50,000. Per year. That's a large investment.
There's some good news, though. Each year, the US government dedicates around $120 billion for federal student aid, and graduate students can apply for some of it. All you need to do is fill out a FAFSA form.
Here's what you need to know about this process.
What is FAFSA?
FAFSA (which stands for Free Application for Federal Student Aid) is a questionnaire you need to complete if you want schools to consider you for financial aid.
It's approximately 100 questions long, with question topics ranging from your educational history to your income to any investments you might have. It's a lot of information, but every single answer is factored into your Expected Family Contribution (EFC), which schools use to determine if you need aid and, if so, how much.
Can MBA students get federal funding?
It's never a guarantee for anyone, but graduate students can definitely apply for federal student aid. If you applied for FAFSA for your undergraduate education, the process for grad students is almost exactly the same.
There are just three differences you should know about.
First, you won't be eligible for all the types of aid that undergraduates are. MBA students can get two types of loans: the Federal Stafford Loan and the Federal Grad PLUS. As these are loans, you must pay back the full amount you borrowed plus any interest that accrues over time.
Second, whereas the loans for undergraduate students are subsidized (meaning the government pays the interest on them until graduation), graduate student loans are completely unsubsidized. That means that interest starts building up from the very day the money is distributed to you or the school you're enrolled in.
Courtesy of Nick Holeman
Nick Holeman.
The third main difference is that, while undergraduate students are usually filing as a dependant of their parents or guardians, the vast majority of grad students must file independently.
"Students seeking financial aid for their MBA are automatically declared an independent," explained Betterment Certified Financial Planner Nick Holeman. "This typically makes the application process much easier as applicants don't have to report their family's income and only [have to report] their own personal tax return."
This will directly impact your EFC - instead of factoring in your parents' or guardians' income, the school only considers yours (and your spouse's, if applicable).
How much money can you get from FAFSA?
The maximum amount of funding a graduate student can receive from the Stafford Loan is $20,500 each school year. With the Grad PLUS loan, you can borrow the total amount the program will cost you, though if you receive financial aid from any other sources, they'll subtract that from your maximum allowance.
There's no concrete answer to how much you, specifically, will be awarded (and there's no guarantee that you'll be awarded any at all). The final number is largely dependent on the program you want to join and your EFC.
When you fill out your FAFSA form, you'll indicate between one and 10 schools you want the form sent to. Each institution will use that to figure out how much aid they should award you. To do this, they take the total price of attendance and subtract your EFC. Sometimes, they include cost of living in the attendance cost, too.
How do you qualify for financial aid?
Before you fill out your form, confirm that you are, in fact, eligible to apply. That means you must be a US citizen or an eligible non-citizen, have a high school diploma or GED, and have a social security number. You also need to prove that you're already accepted into or enrolled in a degree program and that you have some level of financial need. (There are a few other requirements you should check out, too.)
If you're not sure if you have a true financial need, you should still apply - there's no max income cutoff, and you can't be 100% certain what your EFC will be. It could very well be below what the total costs of the program will be.
How do you apply for FAFSA?
Here's the good news: This is a fairly straightforward process. It just requires filling out a form, and the easiest way to go about it is to fill it out online. There's also a paper version of the FAFSA form, but know that this can slow down the process.
Abby Wolfe/Screenshot
The FAFSA.
Before you start, gather all the relevant information so you don't have to dig for it when the question pops up. This includes (but is not limited to):
- All records of money earned (for example, tax forms, W-2s, W-9s)
- Bank and brokerage statements
- Details of any investments you may have
- List of schools you want to send FAFSA to
While the process is pretty clear-cut, it can be tedious, as it requires a lot of little details. One good thing about filing independently is that you can completely skip Section 4, which is the parent and guardian information section. That's about 40 questions you get to pass right on by!
Abby Wolfe/Screenshot
The FAFSA.
When are the deadlines for FAFSA?
The FAFSA application opens on October 1 every year (so for the 2020-2021 school year, it opened October 1, 2019). Every state has different deadlines. Connecticut's is February 15, for example, and New York's is June 30. Deadlines are based on your state of legal residence - not the state in which the schools you listed are located. Find the FAFSA deadlines here.
Though you can apply until the last day, Holeman advised submitting your application as soon as possible.
"Some schools and states grant financial aid on a first-come-first serve basis," he explained. "So waiting until the last second may cause you to miss out."
What happens after you apply?
Once you hit submit, your form is sent to the financial aid offices of the schools you listed. Some universities may require you to fill out additional forms, so make sure you check into that.
Between three days and three weeks after submitted, the US Department of Education will send you a student aid report (SAR) summarizing your answers and letting you know what your EFC is. Based on all of this information, they'll decide how much financial aid you'll get and will send you an award letting.
If you accept the financial aid package, your loan money is distributed to that school's financial aid office. They'll use it to pay off the expenses you owe them first. You'll receive any remaining funds that you can use toward additional educational expenses.
What happens if you don't receive any aid?
If you don't receive any financial aid and are concerned about how you'll pay for your MBA, Holeman suggested the following options:
- Consider private loans: MBA students can get credit-based private student loans. Compare the top options and decide which works best for you.
- Look into tax advantages: Specifically, check out the Lifetime Learning Credit and consider a 529 savings plan.
- Apply for scholarships, fellowships, and assistantship positions: This is money you don't have to pay back, and I can vouch for the fact that this is a great option. An assistantship paid for my second year of grad school and gave me a monthly stipend.
Additional education can be invaluable when it comes to your career - just make sure that you've done the research to make sure an MBA is the very best option for you before you borrow money. Because you have to pay these loans (and more) back, you want to make sure the investment is worth it and you have a plan to pay them back on time after you graduate.