MBA Without IOU

A lot of women want one. Here’s how you can afford it.

By Mary Claire Allvine

Janine Golden had 10 years’ experience as an engineer and consultant specializing in Six Sigma quality control for Top 100 companies. But to get ahead in her field, she knew she needed a top-tier MBA – preferably from an executive MBA program that would allow her to continue working. Her choice, the University of Chicago’s Graduate School of Business, fit the bill.

But Golden’s choice came with a price. Her employer, Sun Chemical in Northlake, Ill., offers a program that covers only two-thirds of the cost of an MBA for qualified candidates. “My only hesitation was taking on more student loan debt to cover the remaining third,” she says.

Golden isn’t alone. Other women execs worry about the price tag for a degree that generally requires two years and up to $150,000 to complete. And that cost does not include opportunities missed while spending evenings and some work days at school.

For costs that employers don’t bear, EMBA students like Golden can look to several other sources of financing:

Federal Loans. The best rates on Stafford Loans (currently fixed at 6.8 percent until 2011) are available under strict guidelines. Stafford Loans deemed “subsidized” can defer interest payments until the degree is completed.

Private Loans. Most schools have preferred lending arrangements with local financial institutions. Recent scandals not withstanding, these streamlined loans can make borrowing easier since banks assume the EMBA will make the borrower able and willing to repay.

Personal Assets. Drawing on home equity or 401(k) savings through loans can be simple because a hard asset is held as collateral. You don’t need to qualify to borrow against your retirement savings. But tapping these sources can be costly, depending on current market rates and opportunities missed in other investments.

Family Loans. Parents approaching retirement might not want to pay outright for an adult child’s degree. But family loans can be a good option, particularly if the parents would otherwise invest in low-interest, bond-like vehicles and provided both parties make the loans official by writing down the terms.

Unfortunately, few EMBA programs offer scholarships, since it’s assumed that students entering these programs will get salary boosts that will more than cover the costs. “I would do it all over again even if my company hadn’t paid for a portion of my education,” Golden says. “I was willing to resign if they didn’t support the time commitment. I felt the contribution to my future success was invaluable.” In fact, among recent MBA graduates, mean salaries rose by 20 percent to $129,740 in 2006, according to the Executive MBA Council.

Even if a company does not have a formal program that supports EMBA candidates, firms which are eager to advance women may be willing to put up some of the cash.

Mary Claire Allvine is a certified financial planner and co-author of The 7 Most Important Money Decisions You’ll Ever Make.

Reprinted from the January.February 2008.