Let’s face it, an MBA is not cheap. And, no matter how much a graduate-level business education pays off, MBA loans can be a bit frightening. • Even older applicants that currently earn a comfortable salary and have some money stashed in the bank face difficulties. • But, these difficulties shouldn’t stop serious applicants from applying to business school because there are as many different MBA loans as there are accepted candidates. • But it all depends on where you’re from, where you study, how early you begin the application process, what your credit looks like at the moment, and the scholarships and bursaries available.
Even with a myriad of institutional financing avenues, many students look to their parents (or grandparents) with big eyes and an open wallet. • Indeed, there are many areas of the world where the family loan is a cultural norm. • Different types of family loans and commitments • There are many ways parents, grandparents, siblings, cousins, friends, and anyone else that wants to can rally behind future graduates with MBA loans. The type of support, however, varies. • Typically, financial assistance from families falls into three (broad) categories: • Tax-free gifts that are not subject to repayment • Study loan (with or without interest and terms) • Co-signer or guarantor responsibilities on MBA loans
Each one almost carries specific obligations for both parties. • And, they are all likely to include some third party, whether it is a bank, tax department (such as the IRS), or notary public. • As such, family financing can become almost as complicated as going to a bank. • You may not be declined for family loans based on your current credit status, but you still need to jump through financial and legal hoops.
Education, the gift of a lifetime • Just about everywhere in the world, the receipt of a monetary gift is seen as income, but there are tax-free gifts. • While five bucks here and there isn’t much to speak about (and not enough to buy lunch in many parts of the world), thousands and tens of thousands are something the government wants to know about. • What the government wants to know, and the financial ramifications of that, however, varies from country to country.
MBA candidates lucky enough to have family or friends that want to make monetary gifts towards educational expenses should investigate the governmental policies in their country. • After all, it will feel a lot less like a gift if either party must pay unexpected taxes on the transaction. • Source: http://bit.ly/21Kdv40
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