Recent compensation reports of top B Schools indicate that the total compensation and bonuses have increased and seems to be around 165,000 USD, but how much of this ends up in ones hands? (Post Tax, any other cuts), I am obviously not from the US, so trying to get a better feel of how much one actually ends up receiving. At absolute levels, US salaries seem super high and to be honest, I maybe having some grass is greener mentality. (I do understand US pays the highest salary levels, but how much actually ends up on ones hands, given tax, etc.) Even the Sign-in bonuses are taxed right?
Can someone take a loan for the full cost of attention and land a consulting job Post MBA, pay off the 200,000+ loans within 4-5 years? I understand there are a lot of variables, but what is like a good ball park timeline for those paying back loans? another factor is of course visa time in US is also limited for internationals, tricky question overall.
you can check what the tax will be in different cities using this site.
https://smartasset.com/taxes/paycheck-calculator
everything gets taxed
generally you are going to pay 30-40% tax so at 200k you will end up with 120k
I took 170k of loans for M7, and I'm prioritizing stock market savings over paying back loans, but i probably could have paid back 50k of loans in the 6 months since starting consulting. I think full payback in 4 years would be possible if you put all your money into the loans
Thank you for the insight!
Is it generally the case to see top school students with no major savings take almost 90% of the cost of tuition + living costs for the mba? Or most have the majority in saved cash already?
I think my level of loans is more than average - probably most in the 60-90k range, due to a combo of higher pre-MBA savings/scholarship/parental funding
Beware that reported post-MBA salary only includes guaranteed comp. Deferred compensation such as IB bonuses or stock-based compensation that many tech firms offer is not reported. And yes, sign-on bonuses are taxed.
Yes, I maxed out my loans as an international student, i.e., roughly $220k, and know several other internationals who did the same. I graduated in 2021 and am down to $190k plus $60k in savings while living a very comfortable lifestyle. Half of the remaining loans will be gone in 2-3 months when I get paid my bonus, and the remaining half should be gone by the time I receive my next bonus, so it will have taken me ~2.5 years.
When I was trying to decide between consulting and banking before my program started, I made a financial model and concluded that it would likely take two IB bonus cycles to pay down my debt or, alternatively, 3-4 years in consulting depending on lifestyle/expenses. That number may has probably shifted upwards given current interest rate levels - half of my loans are variable and currently at 10.5%.
For my personal situation, I viewed the MBA as a high-risk, high-reward investment. The main risk is that you're striking out on recruiting and end up in a crappy $150-200k corporate job that you hate but have to stick with for up to 5 years for the purpose of repaying your student loans. (Realize that this sounds insane to 95% of the population and they're not wrong.)
Thank you so much!!!!
This this golden insight here, thanks for sharing, was thinking that I would be the only one thinking of maxing out the loans as an international.
Just one more question, did it ever worry you would have to go back after OPT following the 3 years and have to end of paying loans by working in non US country having USD denominated loans?
Glad I can help. You're certainly not the only international thinking about maxing out your loans, although there are definitely others who can pay the full tuition in cash, no questions asked. (While I had the mindset that only an M7 school would make sense for me (and I am glad I did), I wish I had been slightly more strategic with my applications and included 2-3 schools slightly below. There would have been a non-zero chance of receiving scholarships there that I could have then leveraged for my actual school. It's kind of like gambling: spend an extra $1,000 in application fees and potentially receive a 5-figure amount in return. Just some unsolicited advice/food for thought.)
To answer your question, yes and no. First, 3 years are plenty of time to get an H-1B. Assuming a 70% chance of receiving an H-1B in any given year, you have a ~97% chance of getting it within your 3 year OPT period. Second, if your OPT expires and you are in consulting, your firm will usually move you abroad for one year, after which you qualify for a transfer visa and can move back to the US. This period is often spent in other high-income countries, e.g., Canada, UK, or UAE, so the situation, while unfortunate, is manageable from a debt perspective.
However, there is a chance you're not in consulting after 3 years and your non-consulting employer won't be flexible. That's an X% * 3% chance for this scenario. I don't have any data or sensible guess for what value X should be, but depending on your risk tolerance, you can assume the total probability of this worst-case scenario to be somewhere between 0.5-2.0%. You can mitigate this risk by accelerating your debt repayment. But even if you don't, you'd be left with ~25% of your debt assuming you planned on repaying it within 4 years; let's say that amounts to $60,000. I am from a European country with lower salaries than the US, but enough for $60k to be manageable even in the current FX environment; even more so when assuming that I'd be somewhat of a unicorn with a top MBA from the US and 3 years of strong international work experience. I'd hope/expect that to be reflected in the career options that are open to me back home. YMMV if the income differential between the US and your home country (or alternate options you may have) is too high, but I thought of this scenario as having 0% (maybe even negative) ROI, but still positive in terms of experience and career fulfillment. That said, it's easy to deceive yourself into justifying any decision, so be mindful about your own biases. At the end of the day, there is a downside risk and whether or not an MBA is "worth it" depends on your risk tolerance. You have to sit down and (a) calculate what a downside scenario would realistically look like for you; and (b) decide if you can live with it (literally and figuratively). I decided I could. You may or may not.
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