Education loan forgiveness programs aim at reducing or cancelling the financial burden for MBA students. Sounds too good to be true, right? For Indian MBA applicants, the cost of attending the best MBA programs (MBA fees, cost of living) can be crippling. But there are business schools that offer such incentives (beyond the regular MBA scholarships) to some of their MBA students.
There are however several pre-conditions that you need to keep in mind in terms of whether you are eligible in the first place, when will these decisions be taken, how much of your education loan can be forgiven and what career goals make you prime candidates for such programs. Read on to find out more.
What is the purpose of Education Loan Forgiveness Programs?
Most of the candidates look out for high-profile jobs after their MBA. Especially fields like investment banking, management consulting and strategy consulting see a lot of candidates getting in as they offer attractive salaries difficult to resist.
Even those interested in taking up jobs in a non-profit sector find the low salary a deterrent. A majority also have to pay back their education loan (if they haven’t been blessed with a nice MBA scholarship), so a career in a low-paying job is ruled out. The education loan forgiveness program is meant to encourage candidates to opt for a career in these lesser-known fields.
Public, non-profit organizations or NGOs work towards achieving a social, health-related or environmental cause. They might work at the grassroot level or focus on policy making/implementation to maximize the impact. Individuals who wish to have a chance to give back to the society can think of a career in this field. It can be a highly rewarding career (not so much in financial terms though).
Raising finances, designing marketing strategies, resource planning are needed here too. Especially for the non-profit organizations that are in an expansion phase, management skills can be handy. However, a dearth of skilled personnel is always an issue as professionals shy away from these low-paying sectors. The purpose of the MBA loan forgiveness program is to address this issue.
Which business schools offer MBA Loan Forgiveness Programs?
- The Yale School of Management is the first institution to take initiative in this area. The Yale SOM Loan Forgiveness Program allows eligible alumni to apply at any time during the first ten years after graduation.
- The Wharton School has a competitive selection process in which career activity, career goals, and need for assistance are taken into account. Under ‘The John M. Bendheim Loan Forgiveness Fund for Public Service’, created in 2005, those working in public or non-profit sectors after MBA can expect around $20,000 assistance per year. Candidates can apply each year for the first five years following graduation.
- The Stanford Graduate School of business also offers a similar loan forgiveness program. Students can apply during the first five years while they are repaying their loans.
The GSB International Loan Forgiveness program is only for non-US citizens and recent MBA graduates working for organizations in developing countries.
- Berkeley Haas School of Business has a Loan Repayment Assistance Program (LRAP) for those in public/non-profit sectors which works similarly and provides financial aid in loan repayment.
- The Fuqua Loan Assistance Program (LAP) originally known as the Fuqua Loan Forgiveness Fund was made possible by the efforts and support of the MBA class of 2001. Assistance amount up to $8000 annually can be expected.
- At Kellogg ‘The Collins Family Loan Assistance Program’ offers similar aid to eligible alumni
Do Education Loan Forgiveness Programs have any drawbacks?
Decisions regarding MBA scholarships are usually taken at the beginning of the term, so students can be sure of the financial offering in terms of scholarship as the amount are guaranteed. However under the loan forgiveness program, candidates have to apply for aid after completion of their MBA.
Due to unaccounted reasons, if a student does not qualify for assistance, repayment of loans with a low-paying job can become an issue. Again the amount you would be entitled to may be lower than your expectations.
However, it is a welcoming approach adopted by the bschools to support the cause of those who get involved in a career related to social impact. The financial aid offered by means of these MBA loan repayment programs can prove to be a significant contribution towards repayment of student loans.
So if you have plans to take a career in public service, non-government or NGO, be sure to check the various loan repayment or loan forgiveness options available in the schools you apply for and the eligibility for the same.