Financial Footwork: Learn the Steps
by Roy Carter and Shaquita Murphy

Roy Carter kicks the rules...

“There is nothing certain in this life except death and taxes.” Well ladies and gentlemen, if you are seriously considering making the business school plunge, you are going to have to develop a new motto. “There is nothing certain in this life except death, taxes and incredibly huge, scary loans that I need to finance my MBA”.

You probably already know that you can easily borrow well north of $100,000 for the “privilege” of studying at many business schools. No, your eyes are not deceiving you. $100,000. Now unless you just signed a multi-million dollar NBA contract or your last name is Trump, $100,000 is a pretty daunting amount of money to consider borrowing these days. In fact, some of you might be hyperventilating right now but don’t worry. I am here to help guide you through the initial steps that you should be taking now to prepare yourself for the financial side of the MBA experience.

Rule #1: Get your credit report NOW!

I want you to go to any of the three major credit reporting agencies, Experian, Trans Union or Equifax and go get a three bureau (aka 3-IN-ONE) credit report now. Yes I said NOW, not after you finish reading this witty and insightful article but right NOW! Go ahead. I’ll wait.

OK thank you for following instructions and taking advantage of this bountiful wealth of knowledge. Now why was I so insistent? Well let me ask you a question. Would you loan $100,000 to a person with credit so bad that even his co-signers need co-signers? If you answer yes, then please let me know which company you work for after your B-school experience, so I know which company’s stock to short. Now if you answer no (you did answer no, I hope), then why do you expect lending agencies to fund your b-school studies when the last time you paid your bills on time people were still doing the Macarena and livin’ la vida loca.

Of course there will be the intransigent (aka hardheaded) among you who will disregard my pearls of wisdom. All I can say is walk this foolish path very carefully. We currently live in the days of widespread identity theft. Do you really want to be denied a much-needed student loan to your dream school because your brother, sister, ex-whatever “needed” an extra social security number to open up an account but conveniently forgot to pay the bill? Don’t laugh because it happens everyday, and it might have happened to you.

Rule #2: BUDGET, BUDGET, BUDGET

In case you don’t read introductory titles, a budget is absolutely 100% necessary. Develop as austere a budget as you can tolerate, then start living that lifestyle right now and pocket your extra money away for future expenses. See how this works for 2-3 months, then try and cut even more out of your budget. The trick here is to not borrow against your future earnings to pay for non-essential things while you are in B-school. This means separating your “wants” from your “needs” right now and conditioning yourself to living the student lifestyle before you are forced by loan limits to do it. As a wise woman once told me, “If you live like a king while you are a student, you will live like a pauper when you are not a student”.

By the way, try picking up a pot and pan and polishing up those cooking skills. Eating out is a huge, hidden expense that can be significantly paired down by preparing your own meals. Try cooking large, one-pot meals (like soups, stews and gumbo) then freezing the remainder in small containers for readily available meals.

RULE #3: Start thinking ahead

Make a list of the million-and-one money related things that you will need to deal with before B-school and start preparing for them as soon as possible. A brief, un-comprehensive list includes moving, housing and apartment deposits, health insurance/COBRA, pre-b-school trips, IRA accounts, laptops, passports, school visits, application fees, etc., etc. Make your own list and start saving those Ben Franklins now so you won’t have to pull out the plastic later.

Now go young grasshopper, armed with the wisdom and knowledge that Jedi Roy has imparted upon you. Save thy money and do not be seduced by the Dark Side otherwise known as the “big ballin’ bling, bling” lifestyle. Never forget that you are not 50 Cent but a soon-to-be-broke graduate student. May the force of good credit and judicious planning be with you.

Shaquita Murphy shows you the last steps....

Financial Aid is by far the most overlooked and costly step in the business school application process. While every applicant knows the already expensive- and rising- tuition costs of top MBA programs, they devote considerably more time to gaining acceptance than to funding their education.

Don’t wait until you are accepted to begin the financial aid process. When I hit ‘submit’ on my applications to b-school, I spent the next two months logging into the application to see if my status had changed. I later learned that my wasted time could have been much more productive if I had started this process. It also would have saved me some undue stress for several reasons. If you are a U.S. Citizen, you’ll need to complete the Free Application for Federal Student Aid (FAFSA). First, you’ll need a PIN from the Department of Education to complete this online (http://www.fafsa.ed.gov). You’ll need to allow several days to receive this via email. Secondly, some schools such as Kellogg suggest that you submit the FAFSA prior to the admissions notification date. While this is a pain, this should allow the school to provide your financial aid package to you before you need to secure your slot in the school’s class. Columbia Business School provides the financial aid package to admits within 3-4 weeks. International applicants should definitely start early as federal aid is not available to them and loans require a U.S. co-signer. Financial resources for international students are very limited, however some grants can be found at http://www.iie.org.

Know what is required. Several schools will require that you submit documentation in addition to the FAFSA. These documents may include a copy of the previous year’s W-2, a copy of your 1040 or 1040A, or even ask you to submit a separate financial aid form. Stanford, for example, required the College Board PROFILE in addition to the FAFSA. If you do not have a spare W-2, don’t worry. You can contact your company’s human resources department or employee services center for a copy. The FAFSA does not ask for retirement account information, however, your school may ask for the amount in your IRA, 401K, and profit sharing accounts and possibly trust funds and stock options. I highly recommend paying off debt- your assets are included in calculating your estimated financial contribution, but your debt is not.

Know who else’s information may be required. Some schools require parental information, some don’t. If your school will require your parents’ information, I suggest working with them to ensure that their tax forms are completed before you need them. Your spouses information will be required, so be sure to have their tax forms and W-2s at hand.

Finally, call or email your school. Don’t rely on deadline information from anyone other than the financial aid office. Get your information directly from the source. Your school can supply a list of external fellowships and scholarships.

For more information about scholarships, financial aid, and their processes, become a MBADiversity member to access our Resource Center and Forum.

Roy Carter, a contributing writer to The NetWork, is a retired materials science research engineer from the not-so-great but oh-so-fun state of Louisiana who has (by some indescribable miracle) been admitted to the ’07 Chicago GSB MBA class. Along the way, he has suffered mightily through the indignities of a Ph.D. chemical engineering program at Tulane University. His other claim to fame is coming down with two bouts of malaria while serving as an urban sanitation Peace Corps Volunteer in Segou, Mali. His hobbies include making gumbo, eating gumbo, drinking beer and trying (but usually failing miserably) to be humorous.

Shaquita Murphy is a NetWork Staff Writer.

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