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April 30, 2024
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I cleaned out my 401k and took some loans. Wish I hadn't done the former (not worth it with the tax hit and lost gains) but all is well now; my internship, my sign-on bonuses, annual bonuses, and raises from job switches have enabled me to wipe out most of the debt and restore my financial position, so mainly just lost the opportunity cost. By year 4 I should be well back ahead.
Keep the debt reasonable (~90K) and get a median paying gig (or higher) post MBA and enjoy. But even the people who borrowed the max to attend don't seem all that hard up given their income levels and quality of life-I'm seeing lavish weddings, babies, and home purchases. If you end up in IB, Tech, or Consulting and avoid the luxury apartments in high COL areas, your bonuses will put major dents into your debt, so you'll be fine. Having a spouse with 6 figure income makes you much more than fine, actually.
Thanks! I'm iffy on cleaning out the 401k, this is a good vote in the "against" column.
We both make low 6 figures now so I'm thinking financial aid is likely out. I'm gonna try to keep the debt sub $100k. I currently live in a mid-COL area but all the schools i've applied to are in high COL areas (I've basically applied to the whole MBA business schools ">M7 except Chicago schools) so I know there'll be a change in expenses. Planning to end up in VC or tech so not too worried about it long run, but don't want to leave any money on the table short run.
Estimate a 20% add on to the annual budget the school suggests as a rule of thumb (they only count the 9 months of the school year in their estimates). Also you will eat out a lot as part of your networking. I balanced it by going to any school event or presentation with free food
Not sure what VC internships pay but per most school stats expect to make somewhere betwen 18-30K (pre-tax) over the summer. I was able to save most of my summer pay because I had 3 roommates and no social life, but still had to pay rent for my place back at school-so factor that in.
I traveled extensively but on a budget - 10k did the trick. One official school trip and then a few little backpacking "excursions" over any breaks. But i flew coach and stayed in hostels
Plenty of my classmates also refi'd their loans at terrific rates once they got jobs
So just consider these things as you prep your budget going in, spread out over 21 months.
This is helpful - thanks! SB'd
I have a bunch of other considerations / decisions to make. Like for example do we want to get legally married before I go? Could help me get better rates and a tax break BUT could disqualify me from any aid. There's not that much info on grad school financing out there (most of it is undergrad focused or focused on medicine or law when people tend to go right away).
Glad to hear it on travel. I'm not like a die-hard luxury traveller but want to go cool places and keep up with my peers (i.e. I don't want everyone staying at a hotel while I stay by myself in the youth hostel, YK?)
No real "aid" in the traditional sense-some really competitive or rare candidates that schools salivate over get tuition discounts (URMs, internationals) and there are a few named merit scholarships, but really, expect to be taking out a Grad Plus Loan.
Look into the Forte Fellowship for women if you get in anywhere. Not sure on the criteria but if you end up getting admitted into an MBA business schools ">M7 program I imagine you'd be competitive.
Where did you backpack at?
Most of Latin America. Did Israel, too
Loans are plentiful. You can pay rent and buy food off your wife's salary.
If you intern in IB or consulting, you'll make something like ~$30,000-$45,000 for your summer internship. If it's in your school's city you don't need to pay two rents.
Your signing bonus for most finance or consulting roles hits when you sign (warning: there are exceptions, so don't bank on this). These range from $25k to upwards of something like $70k all in depending on the firm. A lot of bankers pay for year 2 with their signing bonus.
Don't get too caught up in the loans. Take your spring break trips and summer travel. It's worth the connections. All in comp for good consulting/IB roles out of school range from $165-250k/year. You'll earn it back.
One tip: try to avoid loans that have a big origination fee if you have leeway. I'd take a slightly higher interest rate over a 5% org fee anyday. Either way, you'll probably pay the loans back in 4-7 years with modest effort. So the overall financing costs aren't terrible.
I missed that you're shooting for VC. VC/PE internships pay pretty much zero during school (and you will be interning all through school ideally, not just in the summer - that's the VC dynamic - it can hit 50 hours a week while you're in classes). If you intern in tech, expect a fairly well compensated summer if you're at a major firm (Google/Amazon).
In terms of financial aid - most schools give "merit" based aid. Which just means they give money to draw people from other programs, they don't care about aid. HBS is an exception. I've been on the other side of this with Booth and the general thought process is that its just too variable to say "ok, you made $40k before school and you made $80k" when the $40k person could easily end up making $250k at a BB after school.
Thanks! I was hoping you'd chime in on this topic since I've seen you comment on b-school before and it's clear you know what you're talking about.
I plan to fill out a FAFSA in a few days, but makes sense about financial aid. Plus it's tough to control for every variable. For example, I spent 3 years in IB and currently 2.5 in VC but I had significant loans from undergrad to pay down. I did, and now I'm debt free, BUT I probably have less savings than someone with the same income history who didn't also pay down ~$100k in loans. Also plan to apply for any scholarship I can find for women, first generation college students, etc.
Not to correct you - but I'm a woman and will be marrying a man :). His income is fairly guarenteed - his job right now is one where he can work remotely, so he plans to do that until he finds a better gig in the city we move. He works in data science so if we land in SF or Boston there's lots of opportunities for him. Plus in either of those places I think I should be able to find a decent summer gig to eliminate the double rent conundrum.
It's funny you mention IB and consulting because those are the two things I'm almost certain I won't be doing after b-school. I've done banking and it's not for me, plus would feel like a step back at this point and consulting doesn't appeal to me at all. I travel a lot for my job right now and I really don't enjoy it. Plus - I'm 27 now and when I graduate I'll be 30. TBH I'll probably be looking at trying to have kids 1-2 years after. Crazy to think about right now since I'm so not there but biology is what it is.
Right now I'm at a top tier Corp VC - my goal is either to land back in corp VC at a more senior level, a shiny corp strategy/corp dev role at big tech, OR if the right startup opportunity presents could jump on that ship. I might try for the top VCs (non corporate), but there's a lot of pros and cons there. The compensation is obviously more for those spots, but it's a lot more competitive and doesn't offer the same security as corp. My experience is pay for corp VC is similar to manager-level in corp dev PLUS a bigger bonus. I know we pay our intern about $35k for the summer, for example. For summer internship, I think it's very possible I work for a startup - especially since I already have VC experience and what I'm missing is operating experience. I know that'll reduce the money I'm able to make, but might be worth it long run.
Thanks for the tip or origination fees. Do you have any sense if having a dual income may be able to reduce my interest rate? We're planning a wedding for sometime during my first year (winter or spring break or maybe summer) but if it'll help me get a better interest rate we'll head to the courthouse
I borrowed max and was able to pay off within 3 years by living not so poor. Think lot of people banking did it even faster.
On dual income / other, lot of people do private loans (especially if your plan to pay off is fairly near term). Some people in my class were getting near 0%-1% or something ridiculous for floating through Sallie Mae with stellar credit + support from parent / others. So might be worth considering.
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