How do people afford MBA?
I hear 2-yr-full-time MBA would cost you somewhere around 150K (including living expenses etc).
Do a lot of you get a student loan? Or pay with $$$ you earned during 2+ yrs in IB/PE?
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The answer is C) all of the above. I'm starting business school in the fall and am paying for it with a mixture of savings and student loans. Many, many people, however, pay for it all with loans
If you are going to pay for it...work for a while and only go to a top program. If someone else is paying for all/part of it then your options open up a bit. This is assuming that you want a positive ROI.
Affording the MBA (Originally Posted: 10/28/2013)
All,
Currently I am a undergraduate and trying to decide how to obtain my MBA. My first choice is to complete a five year program at my current school that has a one year MBA. Or, I could work for a few years and then apply to a better program. The best programs are two year full time which would require one to quit their job. How did some of you afford the time period with no full time employment? Thank you in advance.
Loans. Lots of Loans.
I'm also starting in the Fall.
Most people take out ~$20k in a Federal Stafford loan per year which has decent rates. The rest ~$50-60k needed per year is usually financed by 1) Personal Savings 2) Merit Based Fellowships (a lot out there if you look hard enough) 3) Private loans (not as attractive but if you don't have enough of #1 and can't get #2 then you need to go here)
You might find an employer who pays for it. For example the big4 firms do.
Wow, fast replies. Thank you both!
Don't do a 5 year program with a 1 year MBA. The goal of an MBA (if done right) is to get a job out of undergrad, work for a few years, go to a great MBA program and then get a way better job after that. If you add an MBA onto your UG degree the job you get out of it (especially given the MBA program can't be that great if it lets UG students in and is 1 year only) will not be as good as one you'll get after an MBA at a top program with work experience under your belt already.
Is a good scholarship group for minorities.
Getting an MBA without a few years of work experience is generally a terrible idea. The reason guys graduate from MBA programs and earn $160K, $200K/year is that they have prior work experience. Without that, you won't earn that kind of money.
I would line up a FT job and go back and get an MBA after 4 years.
Thank you Alphaholic, I will look into that as well.
How to pay you ask? Most of us have taken/will take loans. Although I'm not too thrilled with this idea.
From what I gathered, expect to pay about $230,000 for a 2 year program, including living, books, tuition, etc. On top of that, you will be foregoing a salary of let's say $75,000 for 2 years, quite hefty.
My expenses are about $25-30K/year, and I live pretty well.
I own a car. (a rusty Honda) I own a motorcycle. I own a hang glider. I do ~15 SCUBA dives per year. I party in NYC occasionally. I party in Ellenville (hang gliding) a lot.
I have to try really hard to spend $30K/year. I don't think you can justify pegging the cost of an MBA at more than about $180, maybe $190K. The tuition is $110K, and the living expenses- even with vacations- even with partying- for most reasonable people shouldn't go over $40K/year on an after-tax basis.
***One trick for paying for an MBA is saving via a 401k, shifting income into the calendar year you are not working full-time, and withdrawing to pay for school penalty-free. You may also be eligible for a business deduction for tuition expenses (See IRS Pub. 970)
My Illinois buddy, thanks for an accurate response.
Mine was a very overestimated budget just to be safe (I always do that). I did take some assumptions into mind, such as being married and children. This was mainly based off of Harvard's budget, but we all know how that is.
And roulette, there are many factors to consider within the top 20 business schools. Look at recruiting stats, location, industry focus, etc. A lot of people start applying because of prestige, but end up narrowing it down and choosing a skill that fits in line with their goals.
Military GI Bill will pay about 25K a year too...
Going to MBA school is pretty much the last time you will get to leave work and go back to school for something potentially productive. It doesn't piss your employer off if you leave for an MBA (usually) and you will be more respected and contribute more with work experience. If you are too young, it shows.
You only have one more ticket basically, don't blow it right off the bat. Save it for later.
I paid for MBA entirely out of loans...
Most MBAs graduate with a minimum of 100-130K in student loans, compared to JD's who graduate with a minimum between 150-200K! Totally sucks. Especially in this environment. If you are thinking about hiding away in B-school to ride out a bad economy and job market, with no guarantee that 2 years out things will be significantly better... not sure that's a great decision. If you tack on whatever debt you still have from undergrad... most folks graduate with about $40K in undergrad, right? So post-MBA the average person has about $160K in total undergrad/grad student loan debt. Really sucks.
Sigh. I envy my friends from Switzerland and Sweden who are in working in the US right now on PhD programs. They have no debt from education. Must feel nice.
The decisions I've had to make on account of the "golden handcuffs". Sad.
Thank you for all of the input. IlliniProgrammer made some really interesting points. Not to sound naive but as long as one attends a top 20 business school does it matter the school? Of course if your GS or broke then you will narrow your school choices. Also, how much emphasis was put on which company you worked at right out of school during the MBA selection process? Thanks again in advance!
I think it does. There is a huge difference between Cornell and a top seven school in terms of graduate income. There's a significant difference in pay and a bigger difference in opportunities between a Columbia or MIT Sloan and Harvard or Stanford.
An MBA is not some sort of get rich quick (or merely get rich) scheme. The median HBS grad 30 years after graduation is still earning only about $250-300K. In other words, if you go to a university filled with the 1000 brightest and most ambitious people in the world, and you only do the mean, you get a 2000 square foot house in Westchester County with a white picket fence and a gently used BMW. You get Big Four Tax partners passing you in their Porsches. You get a Master Welder with an associate's degree from BMCC and 20 years of experience as your next door neighbor.
Get an MBA because you enjoy business and because you enjoy playing with money. If you like earning LOTS of money, the world is going to be a pretty boring place for the next 10-20 years as everybody deleverages and cuts back on their consumption. If you like earning some money, finance, insurance, and accounting are all perfectly good places to work and will likely give you the same income potential.
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