Although there has been a serious hit in the job market over the past few years, this has not stopped young professionals from creating more ways than before to follow on their chosen career path. Amongst the most popular ways is for them to take an internship to gain entry to a company, work as a freelancer, taking jobs that further grow their skills right the way through to starting their own business.
Personally I live in my own technical bubble in San Francisco and I find this whole phenomenon exciting to monitor, after all why wait for a company to employ you when you can carve out your own niche in the market? The majority of focused young professionals including those hoping to eventually land a top corporate career chose to gain an MBA to give them further skills and make them a solid choice for prospective employers.
The Masters of Business Administration or MBA as it is more commonly known is a program that teaches individuals the skills that are required to start and run a company whilst also building the network that they will need. Obviously this information does not come cheap in fact the costs related to an MBA are steep. Many people will earn their MBA whilst they are still in full time employment and this enables them to repay the costs through employer tuition reimbursement programs, but there are still many that pocket the cost while going it alone. For those that fall into the latter category, there are ways to ensure that you are not saddled with debt forever.
The following are a few ways which can help you pay off MBA loans and focus solely on the career that you have worked so hard to achieve:
Utilize the Grace Period
The six months that follow your graduation and the appearance of the first federal student loan bill is the ideal time to find a job in order to be able to make the repayments. As it can take a time for a new graduate to secure work it is vital that you make the most of this period.
Those choosing to start a company when they have graduated with their MBA should also use this grace period, now is not the time to slowly start on your new venture, it can take months or even years for a new business to start earning a profit so it is vital that you use the grace period as a head start in terms of your finances and then hit the ground running once you graduate and chances are that you will have a great little company and even a paycheck when the first loan is due.
Government Programs Exist to Help You Too
For those that require more than six months to find a job or get their business off the ground, they should take the opportunity to research the government programs that are available to help you with your loans. The IBR (Income-Based Repayment Program) is already in place to provide assistance to those that are finding it difficult to make their monthly payments, this institutes can also provide assistance to those who are just getting their business off of the ground. The Small Business Administration has created a page detailing everything you need to know to get started which offers vital information and useful tips. Although the IBR will not mean that you pay off MBA loans any faster, it will assist by lowering the monthly payments giving you the time to work on improving your finances and get your company going.
For those that are starting a nonprofit 501(c) 3, their federal loans also fall within the Public Service Loan Forgiveness Program. The debt is paid faster and whatever is owed after 10 years will be written off on the provision that all payments are made on time. The payments are also lowered to IBR amounts meaning that they are far easier to manage and keep up to date.
Strategically Pay Your Loans
For those finding that they cannot pay off MBA loans monthly amounts they should adapt a strategy for their payments which makes them debt free even faster, a good way to do this is to make biweekly payments.
All you need to do is split your monthly pay off MBA loans in half and pay that every two weeks. This will equate to one extra payment a year and can impact greatly and shorten the time you spend on repayments and increase the amount of interest that you will save.
Think of Ways to Lower Your Interest Rates
One of the most effective ways to pay any debt quicker is to reduce the amount of interest that is payable each month so that more or your payment each month will begin reducing the actual balance to pay off MBA loans. With this in mind there are several new companies appearing every week with the sole aim of helping young professionals and entrepreneurs in their quest to pay off MBA loans quicker:
SoFi offers an actual entrepreneur program that has been specially designed for entrepreneurs. When opting to take this program, individuals can obtain up to six months of deferred pay off MBA loans whilst they build their business and they can then take advantages of lower rates that will be offered if they consolidate all of their borrowing. This program also offers networking events to bring entrepreneurs together and also investors.
Prior to making a decision regarding either opportunity you need to ensure that you will benefit in the end. Federal student loans offer protections like deferment and forbearance however these become null and void if you decided to consolidate with a private loan company. Therefore it is vital that you determine the level of risk and if you do feel that you can easily pay off MBA loans then saving money on interest could be a real benefit and also see you paying the loans off faster. On the other hand if you think there could be a chance that you will require a payment break then you should be more cautious when it comes to consolidation.
Risk Your Business Not Your Personal Finances
Starting a company inevitably has elements of risk, meaning that to be a successful entrepreneur you need to be sure that you are comfortable with the chances that you have to take and sometimes this can even mean taking a gamble. Those with an aversion to risk will find it almost impossible to get their business started as there are just too many unknowns when a business is first started.
Those comfortable with risk must understand that the risks need to be for the business alone and personal finances should be kept as far away as possible. There are many entrepreneurs that will fund a start up business from their savings, but this is something that should only be done if predetermined with strict time limits to adhere to. Whilst there are stories of big companies that were deep in debt before suddenly hitting it big, however these stories are few. Whatever you do make sure that your personal finances are protected as far as possible or you could find that you are left with nothing if your venture were to fail.