Refinancing an MBA loan can lower interest rates but comes with trade-offs, especially if you have federal loans. However, federal student loans offer protections like income-driven repayment plans and student loan forgiveness, which private refinancing eliminates.
Refinancing is often best for high-income borrowers with private loans or those who don’t need federal benefits.
With that in mind, here’s what to know.
Types Of Student Loans For Business School
Earning an MBA often comes with a significant financial commitment, and many students take out loans to cover tuition, living expenses, and other costs. The most common loans for business school fall into two categories:
Federal Loans
- Direct Unsubsidized Loans: Limited to $20,500 per year, with fixed interest rates set annually by the government.
- Graduate PLUS Loans: Available for the full cost of attendance, but with higher interest rates and a 4.228% origination fee.
Private Loans
- Offered by banks, credit unions, and online lenders.
- Interest rates depend on credit score, income, and loan term—some borrowers qualify for lower rates than federal loans.
- No federal protections, such as income-driven repayment or forgiveness programs.
For many business school graduates, these loans become a major financial burden after graduation. Refinancing can be a way to cut costs—but it’s not always the right move.
When Does It Make Sense To Refinance An MBA Loan?
Refinancing means replacing one or more existing student loans with a new private loan, ideally with a lower interest rate. But timing matters, and so does the type of loan you have.
1. You Have High-Interest Private Loans
If you funded your MBA with private loans, refinancing is often a good idea—especially if you have a good credit score and stable income. Since private loans don’t come with federal benefits, you’re not losing protections by refinancing.
2. Your Federal Loan Interest Rates Are Too High
- Graduate PLUS Loans could have interest rates that are often 7% or higher.
- If you qualify for a fixed-rate private loan with an interest rate 3%–4% lower, refinancing could mean significant savings over the life of the loan.
That said, federal loans offer protections that private lenders don’t, such as Public Service Loan Forgiveness (PSLF) and income-driven repayment (IDR) plans. If you think you might need these, refinancing may not be the right move.
However, many business school graduates don’t go into careers that are PSLF-eligible.
3. You Have a Strong Income and Job Stability
Refinancing works best for borrowers who can afford consistent, high monthly payments without relying on IDR or forbearance options. Business school graduates who secure high-paying jobs in consulting, finance, or tech are often good candidates.
For example, a borrower with a $100,000 loan at 7.5% interest would pay $1,187 per month on a 10-year repayment plan. Refinancing to a 5% fixed-rate loan could lower payments to $1,061 per month, saving nearly $15,000 in interest over time.
Pros And Cons of Refinancing MBA Student Loans
As always, there are pros and cons to refinancing MBA student loans.
Refinancing Options For MBA Borrowers
If student loan refinancing makes sense, it’s important to shop around for the best deal. Here are some lenders that offer competitive rates for business school graduates:
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