1 in 5 MBA graduates are having trouble with their student loan debt

This is so true... would the golden days for MBAs ever return?

I could be in that group :(

It has less to do with "golden days" of MBA's and more to do with our general idiocy. People take out too much, don't adjust their standard of living, then get a job...and ratchet up the standard of living even higher out of some delusional sense of entitlement. It applies to law, biz, undergrad, whatever.

Everyone isn't going to be in IB, and even those who do land those gigs need to live beneath their means for a while. Ideally they should live below their means...forever, but that's not realistic in this era.

I'm not all that surprised. Tuition is expensive in the US!

(UG) I applied solely to Canadian schools for this reason - as a Canadian citizen, tuition ranges from 2-13 thousand (based on school & program). Compare that to 30-50k/year in the US!

I doubt the ROI would be higher had I went to Stern or a school of similar caliber.

University tuition...perhaps the only true indicator of inflation in the U.S. over the past several decades.

some people have no biz in school and getting loans.....

Ideally they should live below their means...forever, but that's not realistic in this era.

How is dying with a pile of your hard earned money in the bank ideal?

This maybe stupid, but why do loans and not some sort of equity instead? Couldn't it be set up so that for-profit companies fund large numbers of students, and then just get some percentage of their income? That way, those who fail to get a job after the MBA are not so burdened, and the companies could still maybe get the same amount of money back. I know things are more complicated, because a lot of the loans are gov't funded, but still, I'm surprised by the apparent lack of dynamism in the student loan market.

So is 1 in 5 so bad?

Considering that this survey takes into consideration many MBA programs that are not by any means stellar. Naturally, if someone goes for an MBA and doesn't graduate that person will be struggling. The 20% indicates ppl that entered into management programs to repay these loans. This can simply mean that many people don't really think about how they will repay their loans in the future before they go to business school. They probably assume that with an MBA there will be no issue financially at all. Of coarse this isn't so if you do your research and know that nothing goes so smoothly.

I also agree that many people could easily repay their loans if they were more disciplined, but having that hot job makes people a bit undisciplined with their cash, which results in them deferring their loan payments, which puts them in the 20% pile.

Either way, this article reinforces the value of a top MBA.

The default rate is only 7%, which doesn't sound too bad, but would be better below 5%

I wonder how many of that same 20% dont have "trouble" paying their BMW payments.

Here we go again. Media making blanket statements about society's problems, waiting for the next politician to "save " the day.

Can't really blame it on the people. They are ignorant. It's more of a societal problem. Which can be deduced down to watching television and diluting our minds.

Imagine if you never grew up watching television. You would never have this tendency to aspire to get rich quick or have envy for another man's money. You would never have these movie stars/sports/television stars ingrained in your mind that that indeed is what success is;therefore I want to make as much money as I can, because everyone on television does it. Never would anyone be living beyond their means, only to come to the sad realization that they can't keep up with the joneses. It's all nonsense, and as long as our mass population is getting brainwashed by this horrendous form of visual media, we will never advance as a society. Truly the decline of western civilization.

and are these for top b schools or devry mba's as well?

It probably includes all MBAs. I guarantee you the top 7 MBAs have a much lower default rate on loans.

They actually break down default rates by university . . .

For MBA, pedigree matters immensely, even moreso than law. If you don't go to a top program, it will be rough. Going to an elite program is well worth the cost, especially for those wanting to make a transition.

It doesn't make sense to pay down the principal on your student loans. Tax deductible and low interest rates mean you should milk that spread for as long as possible.

Cannot deduct interest if you make over 70-75k a year .

If you think MBA is bad, what about JD?

i'm glad i won't be at the mba decision point for a few years - very curious to see how things develop, might go for an msf/mfin/etc instead for time/cost reasons

JD is a blood bath in the last 3 years. The whole BigLaw $160 K guarantee wasn't much of a guarantee after all. Of the lawyer friends and to be lawyer friends, they are among the most risk adverse people I know. Especially those that actually graduate law school. I believe it comes from actually knowing all the nuances of all the laws and judge decisions. It makes people paranoid.

jjc, you seem kind of like an idealist. You have strong convictions, which is admirable. But, you seem to be viewing MBA as your only chance to great social life and prestige. I agree with a part of what you say. But your "Going to an elite program is well worth the cost, especially for those wanting to make a transition" is just toting the party line. I believe this still for the most part holds true. But I also like to have different points of view and other facts to get a whole picture.

Anthony, wow. Thanks for letting people know about the 75K salary not allowing tax deduction. Did not know that.

The main problem is alot of people think: "The more and the better education I get the better I will be paid".

Which is utter bullshit. This materializes in the NYU Religious studies chick with 100k of debt suddenly realizing she studied a bullshit degree and can't pay back debt, but she went to a good school so she deserves a high paying job amirite(or whatever these ppl think).

I mean even at HBS you have people going into marketing at GE,non profit or whatever afterwards, and thats HBS. Now at the southern kentucky community college school of business, it probably looks alot worse. Hence ppl rack up debt. No surprises here

If you're into marketing itd be better to do the gig at a firm thats mainly driven by marketing (think high end luxury, and washing powder). That's nitpicking tough.

GE Marketing is a solid gig if your into it, but you dont need HBS credentials to do it and it doesn't pay alot compared to finance, hence you'll have debt.

Not hating on marketing just illustrating the debt point.

We all know I am a huge proponent of specialized masters. As more and more top universities start offering MSF programs I think you will see ex bankers go for the one year route and save time and money. Not everyone of course, but if you want to stay in finance and already have a great network, why not continue your focus on the subject, save a year and come out in PE or whatever.

You might also see more one year MBA's roll out.

I echo your sentiments tireds but in a general sense. by subsidizing education through non-interest loans/direct subsidies to colleges/universities the government has created a situation where there are too many graduates, too many subpar universities and colleges and to few jobs that actually require university/college education. in many instances it has led to many vacancies in regular jobs, such as call centers or sales requiring at minimum a university degree. It's high time we scrapped these government policies and let people make better decisions with their future. I doubt we'd be seeing so many english and philosophy majors if each student had to pay for the true cost of an education up front.

Interesting discussion.

The biggest problem is two fold: the expectations of the graduates, and the universities themselves as a whole (not b-school in particular, but the overall university mentality).

The universities in the west have one foot stuck in the 17th century, and the other half in the 20th (not even the 21st).

Before the 20th century, universities were for the rich and privileged (and the lucky few who got sponsored by rich families). For a kid who is rich, there is absolutely no need for practical skills, because there's no need to make a living. It was knowledge for knowledge sake - whether they were studying the liberal arts or the sciences. The only exception being law and medicine, with medicine in particular being one of the only ways for a "plebian" or commoner to move up the ladder.

Beginning in the 20th century (height of industrialization and urban migration), you had the rise of a huge middle class. They started going to universities, but the expectations were different. Same with the immigrants who came to America especially - the focus of the family was on "practical skills" because that's how you made a living. So from there on in, the expectation was that you go to university not for "learning for learning's sake" but to move up the social ladder and get a better job.

Not coincidentally, this is around the time when more "practical" disciplines like business and engineering began to mushroom.

So how does this relate to today?

I've always believed in the value of a liberal arts education - whether you get an actual degree in it is another matter, but I really do think it's important to understand the world around you - it's history, culture, traditions, arts, etc. because even in practical terms it helps make for a more informed and "smarter" civil society - you become a more engaged citizen and voter - it's good for democracy.

However, the problem is a mismatch of expectations when it comes to a university education. While universities are straddling a tradition of "knowledge for knowledge sake" and "research/knowledge that is practical and commercially viable" -- virtually EVERYONE who goes to university assumes that they will get a better job because of it.

And that simply isn't true.

The rich kids majored in liberal arts from the 17th century to today because THEY CAN - they don't need the degree to get a job. They don't even need a job.

The problem is, you have too many middle class and working class kids who feel they can get the same liberal arts degree as these rich kids, and still get great jobs simply by graduating.

If you grow up in a working class or middle class (or even upper middle class) family and you need to support yourself, you can major in any "non practical" degree program you want, but you need to complement that with practical skills whether you learn that on the job or through trade school.

Which leads to this.

There needs to be way more trade schools that teach practical skills - you can laugh all you want about the DeVrys of the world, but there needs to be more people learning a TRADE. In universities, you are there to THINK. But in the real world, you are paid to DO.

The skilled trades (electricians, mechanics, machinists, carpentry, etc.) need people. There's a shortage of skilled healthcare workers (physicians assistants, nurses, technicians, etc.). And so forth. These jobs won't get you rich, but they can pay you well enough to make a respectable living if you live within your means. In fact, these jobs can pay better at the entry level than perhaps some of the "office jobs" at Big-4 firms and other corporates! Moreover, a lot of these jobs are probably more interesting and engaging and where you're actually contributing something useful than half the brain-dead office jobs out there where you're pushing paper all day as a "product manager" or whatever. And finally, there would be less lawyers in this world (a default option for many lib arts folks) which would be good for everyone.

There needs to be a bit of both. The folks focused on engineering and sciences need more liberal arts education even if they don't "major" in it - this might mean requiring a larger chunk of the credit requirements having to come from liberal arts courses. And on the other side, the non-rich liberal arts folks need to combine their education with some practical skills or a trade if they don't want to study engineering, business, law or medicine - whether that means double majoring in something practical, or going to a trade school after college (or not going to college at all and straight to trade school).

That way, there will be less English majors working for minimum wage at Starbucks, and more working on salary as caregivers at a hospital, or as contractors on a construction site.

And on the other side, there will be less functionally illiterate engineers and dim witted business and science folks who actually are able to form opinions of their own rather than mindlessly following the herd.

MBAApply, Bravo. I echo the sentiments wholeheartedly. I am constantly impressive by the way you articulate the words and insight you give. I've was discussing this very point with a friend a few weeks ago. Though I believe your wording was actually clearer than what I came up with. Interesting fact about the 17th century model. I always somewhat felt this way but didn't fully connect the dots.

I could of I did engineering/computer degree with a double in International Relations undergrad. I really enjoyed and felt I learned in someways more in my International Relations degree on in regards to the liberal arts. Though it was my Computer Sci/Engineering degree that ultimately help secure the bump in entry level salary.

One thing, I've noticed is the extravagant growth of Art Degrees, especially Art Schools. They are the biggest scam unless your family is rich or in very high upper middle class. It has become "fashionable" for young ladies to major in art. Of the ones I knew that went to art school, most couldn't even draw or operate computers very well. It was one of the schools they can get into. Art schools have very high acceptance rates in regards to most colleges. The Art School was something chic/hip. 4 years later, and 30,000 K in debt and working at Starbucks for close to minimal wage is not chic. Even the rich ones I know just tends to bounce around and now back in grad school for Art. I try to talk this to my younger cousins to no avail. It's like they are brainwashed and feel this is awesome path and starving artist mythos is cool.

Most of lower 40% quartile of high school students that couldn't get into a top 100-150 college are better off for themselves, family, and society being in some type of trade school. But this is very non-PC. Little Johnny deserves the same chance at a good life as anyone and should always go to college. Now we live in a "over" educated society with folks who actually aren't all that "educated" nor should have many gone to college in the first place. The whole high education statistics used by politicians is a Red Herring.

I haven't read all the posts, just the first few,. But things for MBA grads are improving. I recently read this story where those who graduated this year - more got a job immediately, and their pay package was higher than last year grads. So despite the economic recession things do seem to be getting better for those pursuing an MBA.