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 such as 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
- Unsubsidized Direct Loans:
It is limited to $20,500 per year, with fixed interest rates set annually by the government. - Graduate Loans PLUS: No longer available after July 2026.
Private loans
- Offered by banks, credit unions, and online lenders.
- Interest rates depend on Credit score, income and loan term-Some borrowers are eligible for… Rates are lower than federal loans.
- There are no federal protections, such as income-based repayment or relief programs.
For many business school graduates, these loans become a significant 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 of your existing student loans with a new private loan, ideally at a lower interest rate. But timing is important, as is the type of loan you have.
1. You have high-interest private loans
If you finance your MBA with private loans, refinancing is often a good idea — especially if you have a good credit score and a steady income. Since private loans do not come with federal interest, you do not lose protection by refinancing.
2. Federal loan interest rates are too high
- Graduate loans can often have interest rates of 7% or higher.
- If you qualify for a private fixed-rate loan with a lower interest rate of 3% to 4%, refinancing could mean significant savings over the life of the loan.
However, federal loans offer protections that private lenders do not, such as Public Service Loan Forgiveness (PSLF) and income-driven repayment (IDR) plans. If you think you might need these things, refinancing may not be the right move.
However, many business school graduates do not go on to PSLF-eligible professions.
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 land high-paying jobs in consulting, finance, or technology are often good candidates.
For example, a borrower with a $100,000 loan at 7.5% interest would pay $1,187 per month over a 10-year repayment plan. Refinancing to a 5% fixed-rate loan can 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 refinancing a student loan makes sense, it’s important to do so He shops To get the best deal. Here are some lenders that offer competitive rates to business school graduates:
