3 Ways Your Home Can Pay for Your MBA

For many people, an MBA is a gateway to a better life – a higher salary, a bigger office, a management position – but paying for the degree can be a hardship. Campus Explorer says the average cost of an MBA is $80,000 ($40,000 per year for two years) – and that is just tuition. You also have your living expenses consider.

While student loans are always a possibility, according to Bloomberg, graduate student loan rates can be as high as 9.5 percent and you can only deduct up to $2,500 in the interest you pay on student loan interest payments a year. Instead of taking on a traditional student loan, you could use your home to pay for your MBA.

Home Equity Line of Credit

A Home Equity Line of Credit, or HELOC, allows you to borrow against the equity you have already established in your home and to take the money as you need it. This way, you can pay for your school expenses as you go, rather than taking the money all at once – and save paying interest on your school expenses until you actually have to make the payment. According to Bankrate, the average home equity line of credit has an interest rate of 4.78 percent and, unlike a student loan, in most cases you can deduct all of your home mortgage interest. While you will be limited as to how much you can borrow by how much equity you have in your home, not all MBAs cost $80,000. Getting an MBA online is only around $37,000 from an accredited school.

Cash Out Refinancing

Another option is a cash out refinancing. In this case, you would refinance your home for more than what you need and use that excess cash to pay for your school expenses. For instance, if you owe $50,000 on your home but it is worth $120,000, you could refinance and take up to $70,000 to pay for school – and the interest rate is favorable. Bankrate says the average 30-year fixed rate mortgage is at just 4.01 percent as of October 2014 and, like a HELOC, you can deduct your entire home mortgage interest in most cases.

Buying a New Home

You can use your home to pay for your MBA in another way as well – buying a new home. While you may not be able to take out additional monies to pay for school when purchasing a new home, the location of your new home may make a considerable difference in your tuition costs. The average in-state tuition for graduate programs is just $30,000 according to US News, and that includes living expenses. In fact, according to AllBusinessSchools.com, in-state residents can pay as little as $9,669 for an MBA online.

Using your home to pay for your MBA isn’t something everyone can do. You will have to consider the amount of equity you have in your home, your current interest rate, and the value of your home, as well as where you want to go to school and how much it will cost. For instance, if you get your MBA online, you may not need to borrow as much to pay for your MBA, so it may be simple to just take a home equity loan or line of credit and pay as you go.

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