IB AND LOANS

I'm planning on going to the US to study at a top 50 uni to maximize my chances of becoming an IB. However, i'll have to take out approx 110-140k in loans. The loans will be private, not federal. Do you guys know whether its possible for an IB to pay off these loans and how long it can take? I plan on getting an MBA 3 years after working at a BB (hopefully) so I'd like to pay them before then. Also, can someone guide me as to how private loans work in the US. When does the interest rate start to apply? how long is the repayment period? Is interest simple or compound? 

Any personal experiences regarding loans for IB would be appretated. 

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Comments (25)

Sep 6, 2021 - 2:57am

If you place in a really good school and this is your only avenue to make it in life (education is the only choice for many out there), then yes, it could be worth it.
I don't know where to get a loan, so I'd wait for further input from others, assuming that "private loan" means through third parties like a bank? This should work as long as your parents co-sign or you have good enough credit.

With a good enough school you should be able to pay this back within a few years if you focus on just that.

Sep 6, 2021 - 6:27am

I did some calculations and saw that it might be possible to pay this within 3 years. If anyone can verify if my calculations are correct I'll really appreciate it because i just used online websites to find out what the net salary will be, and used an average rate of 75% for an IB's bonus. 

Anaylst1: Base= 110

                After Tax= 75

                Bonus (75% of base/assuming 30% tax rate on bonuses)= 58

                expenses+rent= 52 (average) 

                savings: 45

                leftover= 38 

Anaylst2: Base= 125

                After Tax= 85

                Bonus (75% of base/assuming 30% tax rate on bonuses)= 65

                expenses+rent+misc= 52 (average) 

                savings: 50

                leftover= 48 

Associate1: Base= 150

                After Tax= 100

                Bonus (75% of base/assuming 30% tax rate on bonuses)= 80

                expenses+rent= 52 (average) 

                savings: 60

                leftover= 68 

Would these figures be correct? 

Sep 6, 2021 - 12:03pm

I think is possible as long as you don't start getting golden handcuffs/lifestyle inflation. It becomes very easy to spend more money once you start making more money. I graduated with 85k in student loans and am on track to pay those all off in the next year (an2) but I'm still on the 85k pay scale and got a stub not full year bonus. I've paid off 50k so far, have 10k in savings and 12k in my retirement. So if your numbers are right yeah you can do it just need to make sure your 52k number stays 52k. Also be wary of the bonus numbers this year. Base may have gone up but that doesn't necessarily mean the bonus percentages of the past will stay the same. I don't know for sure but I wouldn't be surprised if all in comp is the same as previous years in which your numbers are high. But time will tell.

As for how student loans work, normally they are in forbearance until you graduate and accrue interest while your in college, so you don't need to make any payments until you graduate. Like said before unless you have credit for some reason your parents will most likely have to co-sign for them. Then the interest is capitalized, so your outstanding principal and interest all becomes your principal. Should be compound interest although you just need to read the loan doc (which most students don't). If your asking if it's worth it, if you figure you can do all of this then yeah but it's like using borrowed money for anything else. Your levering up, like using margin, the only difference if your investing in yourself not stocks. Your in a much better spot than someone who goes to a private school, pays the same amount and comes out with a liberal arts degree and no direction in life, but if you can do it for less there's obviously less risk.

  • Incoming Analyst in IB - Gen
Sep 6, 2021 - 4:34pm

Assuming you're not a US citizen based on your post. This means that all of your loans are unsubsidized and start accruing interest from the day you take them out. (If you are a US citizen, you should be able to take out the federal, subsidized loans. The amount you can take out is pretty low, roughly 20k over your 4 years, but the government pays the interest while your in school and you have a 6 month grace period after you graduate)

Is your family wealthy? Is there any chance you can get aid from the schools? (Schools can be picky about giving fin aid to international students. If you're from a poor country and have a sob story, you might be able to get aid.)

Finally, look into any outside scholarships you can get because the interest rate on the in unsubsidized loans is higher and they are always accruing interest.

For reference I'm an analyst one with 100k base. If I don't contribute to my 401k or have any deductions taken out of my paycheck, I get about 5,200 each mouth. If I contribute 25% of my salary to my 401k , I get about 4K each month. 

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  • Analyst 1 in IB - Gen
Sep 7, 2021 - 12:05pm

Based out of nyc. Numbers are pre-move (remote training) so they don't include city tax, but they do include state taxes in the state I was based in + NY state taxes. I also rounded a bit. I will get some of the money back come April because I only work 1/2 the year but you make a lot less than you'd think.

Base 100k

Taxes ~30% 

Post tax ~70k

Rent + utilities, fees, WiFi etc is ~2000/ month ~24,000/year

So you're left with 46k excluding bonus. It's a good chunk of change but don't bank on paying off 150-200k worth of loans in 1-2 years.

  • Incoming Analyst in IB-M&A
Sep 6, 2021 - 6:24pm

I would recommend against it because you are an international student. I am one too and the only reason I came to the US was because I got a full ride because I didn't want to take out USD based loans. This was because getting a job in a non-STEM field is tough and is getting tougher every year. If, say, you didn't get a job in the states you will have to go back to ur own country where you will potentially be earning in another currency which will be valued much less than USD. Let me take India for example. If I were to go back to india and work there, a very good case scenario would be me earning 10 lacs per annum which is like 15k USD per annum. Assuming you took out 150k in loans it'll take 10 years in just pre-tax income to pay it off (assuming you have zero expenses).

I just think taking out that much in loans is a very big risk for if thinGs didn't work out.

Sep 7, 2021 - 10:29am

without taking loans i can pay around 50-55k/year. i wanted to take out 10-15 in loans to reduce the amount of aid i'll need to increase my chances of being admitted into a top school. (aiming for NYU). I'm not ivy league worthy so i probably wont get a full ride anywhere. Wanted to go into a top school to increase my chances of going into IB

  • Incoming Analyst in IB-M&A
Sep 7, 2021 - 10:52am

I go to a non-target / borderline regional semi-target and I took a full scholarship here. I know multiple international students across different schools, including the top ones, and I think you are going to find it difficult to break in from anywhere. If anything, going to a non-target made it easier for me to stand out against my peers but if I would have gone to a target like Stern then I would have had to compete against those who will have had US-based brand name experience and for me being a bigger fish in a smaller pond was much easier than being a smaller fish in a larger pond. Just my two cents as a person who's gone through the process. 

Sep 7, 2021 - 1:01am

There is also the ugly truth that it is very hard to get a firm to sponsor your visa/citizenship, especially on wall street. If you are the same candidate out of 100+ prospective bankers from your school, the odds they will choose you over someone who doesn't need sponsorship is likely high, unless of course you prove to them it is worth it.

  • Prospect in IB - Gen
Sep 7, 2021 - 1:39pm

If you're going to need visa sponsorship from whatever company you work for (if you're not a citizen or permanent resident) only do this for a top university. Outside of the top banks, which are also the hardest to get a job at, not many firms will take you in as they don't want to go through having to get you legally eligible to work here. Although they don't pay quite as much, eliminating this huge chunk of MM and Boutique banks that might accept you is going to make this really tough to do unless you go to a target school.

Sep 7, 2021 - 6:03pm

"Top 50" sounds like a non-target. Your chances of getting into IB out of school even as a US citizen are mediocre. As an international who requires citizenship, realistically even F500 will be tough. 

Array

Sep 7, 2021 - 7:32pm

The real question is why are you so confident you'll get a job in IB with your "top 50" school? If you do get it, then yeah, you'll repay your loans easily. But if you don't, and you have to return to wherever you're from, then you're fucked - this scenario is way more likely in your case.

Sep 8, 2021 - 2:53am

if I don't have confidence in myself who will. All I can do is work my ass off to get the thing I really really want, and hope for the best. Hundreds of intl students get recruited by BB IBs every year why cant I be one of them. 

Sep 8, 2021 - 2:49pm

and tens of thousands intl students get rejected and don't get any IB offers every year.

but you only live one life, and taking loans for education is not the worst idea. I personally got in ~$200k of student debt to study at M7 and didn't get any IB offers, but my life still turned out to be great.

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Sep 8, 2021 - 10:30pm

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