Like many other college students, Mollie Mullen-Green used student loans to pay for her undergraduate education. And after years of loan payments, she could finally see light at the end of the debt tunnel. So when she made the decision to get her MBA, Mullen-Green says taking more loans — even at today’s low interest rates — never crossed her mind.
    "My employer is reimbursing about 20 percent of my tuition, and because I’m a registered nurse in the Navy Reserve, I also received the GI Bill, which gives me a significant amount monthly towards my education. The rest I decided to make up out-of-pocket," she says. But Mullen-Green — a student at University of Phoenix — is more the exception than the rule. The most common road to an MBA still is paved with student loans, which are considered financial aid even though they must be repaid.
    Fawn Terwilliger, senior vice president of lending at University and State Employees Credit Union in Mission Valley, says even though USE offers other types of loans for students, it’s best for prospective students to first seek out "true student loans," commonly known as Stafford loans. Those loans are either subsidized or unsubsidized; if you meet certain financial criteria the government pays the interest on subsidized loans while you’re in school. "The interest rate on the Stafford loan is much lower than on private loans, so it makes sense to get those first," Terwilliger says.
    Anyone who lives, works or worships within county lines can become a member of USE and apply for a loan. Terwilliger offers two financing options for students — a signature loan or a Visa credit card.
    "The interest rate on the Visa varies from an 8.9 percent annual teaser rate for six months and then adjusts to the prime rate plus 5.9 percent," she says. The signature line of credit has an annual interest rate of 16.5 percent. Compare those rates with the current interest rate on a Stafford Loan — 6.86 percent while in school and 7.46 percent while in repayment — and you can see why student loans are the better deal.
    Tina Moncada, dean of admissions and financial aid at United States International University, says it’s not only low interest rates but tax breaks, too, that make this the best time in years to invest in an MBA.

Tina Moncada, USIU's dean of admissions and financial aid, says the time is right to invest in an MBA.

"The Taxpayer Relief Act of 1997 was enacted in July 1998 and contains a Lifetime Learning Credit, which is a credit so it directly reduces your liability," she says. According to the Department of Education, students can reduce their tax liability up to $1,000 or 20 percent of the first $5,000 paid in tuition and fees on or after July 1.     Moncada says a deduction also can be taken from a borrower's adjusted gross income for interest paid on student loans, including loans for graduate study. "It caps at $1,000 this year and is increased by $500 until the year 2001," she says. (The deduction is permitted for payments made during the first 60 months of repayment.) "I’ve been in higher education for over 20 years and I’ve never seen anything like this."     Up to $18,500 can be taken annually through a Stafford Loan and Moncada suggests using the money to pay for all education-related expenses, rather than using your credit card for sundry items. "Don't charge books or things like that when interest rates are so much lower with the loan. You can take one class per semester and still be eligible for some loan money."

    But don’t overdo it either, cautions Matt Levine, director of financial aid at National University. "You can take $138,500 in Stafford loans for education as long as you are attending classes and, unfortunately, I’ve seen people take that much," he says. "It’s not unreasonable to try and pay off $20,000 in loans over 10 years. But seven times that? That's not realistic. Students should budget themselves; they don’t necessarily need to take the maximum offered."
    Probably the biggest change when it comes to financing an MBA is the Internet. Students can find government financial aid applications, known as FAFSA, online, and transmit them electronically. (See sidebar for Website addresses.) They can plug in to the page for assistance and links to a host of other Websites that provide funding information. The page also provides news about related Internet sites and organizations being investigated by the Federal Trade Commission. To search for scholarships worldwide, there is FastWeb, a free, one-stop site to search for a variety of scholarships, internships, loans and saving opportunities. And there's the Internal Revenue Service Website for questions about tax breaks.
    National's Levine urges students to seek out these aid alternatives. As do all the schools, National University offers its own need-based grants as well as scholarships based on leadership ability and collegiate honors.

    Many students are fortunate enough to have employers who provide tuition reimbursement for business school. But Marty Bell, financial aid director at University of California at Irvine, says the level of corporate reimbursement has dropped from past years. "But for those who get 50 percent or more of their tuition reimbursed, tuition payment can be deferred until they receive their money. We were finding people had to borrow money while they waited for their companies to reimburse them, so this prevents that," says Bell.

At USIU, about 60 percent of the students receive some kind of tuition reimbursement. The school provides up to 25 percent in matching funds. Moncada says the university also offers 15 to 20 teaching assistantships to students who are the "cream of the crop," covering as much as 50 percent of their MBA costs. USIU's program requires between 48 and 60 units to complete, with tuition running between $17,280 and $21,600 a year, a small price to pay, says Moncada, for what you get. "Our student body is international, so people leave here with contacts all over the world, not just locally."     Kelly, an MBA candidate at University of San Diego, agrees that the cost of the degree is worth its ultimate benefits, but found the financial aid system can be tough to navigate. "Dealing with the money issues has been difficult. Sometimes you have to ask 10 different people the same question just to get a straight answer," she says. "You get loans through the institution but then they pass it off to another agency and it’s hard to figure out who is administering what."     USD's financial aid director, Judith Lewis Logue, says her office lost two counselors and a few staff members in August, which created problems, but the situation has since been rectified. David Light, USD's director of graduate business programs, says the school also has made its MBA more affordable by changing the 60-unit program — at $585 per unit — to a 48-unit one, a savings of about $6,500. The new program begins in September. Students also can apply for university fellowships, graduate assistantships and need-based grants.     But USD's pared-down prices still can’t top the MBA offered at San Diego State University. It is the best deal in town because California residents pay no tuition, just university and campus fees.

Matthew Johnston of the University of Phoenix says the school's MBA program is tailored for working adults.

That translates to a cost of $966 a semester for students taking 6.1 credits or more; for those taking 6 credits and under, the cost is $633 per semester. Even though fees are low, many students take student loans. SDSU offers direct loans, as does UC Irvine, which means students get money directly from the school, rather than from the government.

Kiera Friedrich of California State University San Marcos says MBA costs at the school are fairly low.

Direct loans have the same interest rates as Stafford loans, but the difference is service to the student, says Chris Collins, SDSU's assistant director of financial aid. "We can deliver loans earlier and if adjustments need to be made — say a fellowship or scholarship comes through — we can make those more quickly than with FAFSA. We can swap subsidized with unsubsidized loans if we have to."     The University of Phoenix has gone a step further in offering students loan options, working out a new loan deal in January with Sallie Mae: the Premiere Loan. "Our MBA program caters to working adults so it’s very flexible," explains Matthew Johnston, the school's director of financial services. "And now our loan program is flexible, too. The application takes five minutes and you get approval within 24 hours. You can still borrow up to $18,500, depending on your credit history."     Students get funds on a per-course basis as well as additional money for living expenses, which comes in "two chunks," says Johnston. "Interest rate depends on the individual, but with a good credit history it’s the prime rate plus 0.65 and there are no fees, as you find with Stafford loans," he says. But if your credit history is less than stellar, the interest rate can go as high as prime rate plus five.     Other schools maintain payment plans to help students covering their MBA costs out-of-pocket. At University of Redlands, where tuition is $400 per unit on a program between 41 and 53 units, students now have the option of paying on a per-class basis. "We just changed it this year," says Judy Myers, associate dean of admissions. "You used to pay on a per-semester basis. But some students can only afford to pay on a per-class basis and can’t come up with $4,000 a semester."     At California State University San Marcos, students can pay in monthly installments. Fewer than 15 percent of CSU's MBA students use financial aid, says MBA program manager Kiera Friedrich, because costs are fairly low — between $11,000 and $15,000, depending on how many courses need to be taken.     No matter what financing plan you choose, Friedrich believes an MBA is worth it.

"The last survey we did showed the average starting salary out of this program to be $61,000. Once you see the value of the degree," she says, "you’re going to find the money."