How Business School Financial Aid Works

First, let's look at the traditional methods of paying for higher education tuition and expenses, if you don't have the money in hand to cover all your costs.

Borrowing the money to pay for tuition is a common route, and there are many options available in student loans. Federal loans usually provide the best interest rates, and federal loan programs such as Stafford and Grad PLUS loans are the workhorses of the student loan industry. Students must complete a process known as the Free Application for Federal Student Aid, or FAFSA, to determine their eligibility for these loans [source: Federal Student Aid].

Some schools may also offer campus-based loans, which are often funded through the Federal Perkins Loan program or through institutional funds, such as endowments, that they make available to their students [source: MBA.com].

Private lenders also offer student loans, often at a higher or variable interest rate compared with federal loans. However, unlike most federal loans, which are based on need, private loans are granted based on a student's credit worthiness. They may cost more over time compared with federal loans [source: MBA.com].

Grants are funds directed toward students that do not have to be repaid. Grants are given out primarily on a need basis, and can come from the federal or state government, colleges and universities, and public and private organizations.

Many grants target particular types of students or students studying in particular fields. There are grants targeting underrepresented ethnic minorities, women, non-traditional students, low-income or disadvantaged students, members of the United States military, and people studying in high-needs professions [source: College Scholarships.org].

Scholarships are also free money, but they tend to be merit-based. Scholarships are offered to students based on academic or athletic performance, to winners of essay competitions, or people who have demonstrated achievement in a particular field or a personal accomplishment [source: College Scholarships.org].

The Federal Work-Study program provides funds to schools to help finance the cost of part-time jobs for students within the university or college. These jobs are primarily based on financial need [source: U.S. Department of Education].

The first stop for anybody looking for financial aid in the United States is the federal government's FAFSA Web site. Completing the FAFSA is a requirement for receiving any federal aid, along with most state and college aid as well. The entire application can be completed online. You can apply for a personal identification number at the FAFSA Web site that allows you to electronically sign in when you're putting together your application.

If you're applying for financial aid to go to graduate school, as in the case of an MBA program, you're automatically considered independent and don't have to submit financial information about your parents, regardless of your age or marital status [source: Federal Student Aid].

You must be a citizen of the United States or an eligible non-citizen, meaning you must have permanent residency, be a refugee or have obtained conditional residency. If you're married, you'll be asked to provide financial information about your spouse. If you're a male age 25 or younger, you must be registered for selective service. If you're not, you can do so through the FAFSA.

Your federal student aid eligibility may be affected by previous drug convictions. But even if you're not eligible, completing the FAFSA application may qualify you for other types of student aid.

Roughly four weeks after you complete the FAFSA, your should receive a Student Aid Report. Review this and make any necessary changes, then return it. The schools you list on your report will also receive copies. You will receive an award letter from the school you hope to attend that outlines any financial aid they can offer, based on your eligibility. Finally, you'll be required to sign a promissory note locking in that financial aid [source: Florida Department of Education].

After those steps, you could still have a gap in your financial aid package that you need to fill -- particularly one related to business school. Grants, scholarships, private loans and work-study programs can help make up the difference. Nonprofit organizations and for-profit companies alike offer free search tools to identify forms of aid for which you may qualify, such as FinAid! and CollegeScholarships.org.

If you're going for that MBA, there are some special forms of financial assistance that can help fill in the holes that a typical award letter would leave out.

First, in addition to other federal student loans, you can apply for the federal Graduate PLUS loan program. These loans are meant to supplement Stafford loans, but they have higher interest rates. Your eligibility for these will also be determined through completion of the FAFSA [source: MBA.com].

Several private lenders offer loans tailored to graduate school students and even to business school graduate students. However, due to the credit crunch that preceded the most recent economic recession, many private lenders have withdrawn popular loan programs, including those targeting MBA students [source: Business Week].

Banks such as Citi offer CitiAssist loans to graduate students, while large private lenders such as Sallie Mae offer their Smart Option student loan [source: Citi, Sallie Mae]. These loans have variable interest rates based on credit-worthiness.

Scholarship and grant opportunities geared toward business school students can help make up the difference as well. Groups such as the Consortium for Graduate Study in Management offer merit-based assistance to promote diversity and inclusion in business [source: The Consortium].Other groups such as the National Association of Black Accountants,the American Association of University Women and the National Society of Hispanic MBAs target underrepresented groups for assistance [Source: Harvard Business School].

Civic groups such as Rotary Club, Jaycees and Kiwanis may offer business school scholarships, as do many professional organizations such as the American Marketing Association, American Accounting Association and the National Business Association [source: Education.org]. Your employer could also help with the cost of tuition, including up to $5,250 of tax-free tuition reimbursement per year [source: FinAid!].

Prospective business school students can even find financial help with preparing for or taking the GMAT exam to get into business school. The Graduate Management Admission Council that administers the exam offers a fee waiver program to schools, as well as free test-preparation software [source: Graduate Management Admission Council]. Educational publisher Kaplan provides a free sample GMAT test for joining its free business school network [source: Army Times].

For lots more information on financial aid and business school, see the links on the next page.