Shall I take USD 160k loan to attend Wharton?

Hi, I am an international student who just get admitted into Wharton Full time MBA (2019 intake / Class of 2021) without any fellowship. To pay for the MBA, I need to take a loan of around 160k USD which is pretty hefty to me, especially considering the high interests rate in the states ("as low as 9%"). Before the offer arrives, i am fully convinced that an Wharton MBA will be worth it, but I am a bit shaky now after i realized all my other MBA friends are either self-financed or have received 100k+ fellowships.

I am currently 30 and earning around 80k USD after-tax in the Risk-Management function of a bb, and hoped to eventually move to a Chinese-tech focused PE / VC such as Sequoia / IDG / Hillhouse based in Mainland China / Hongkong / Singapore, but I am open to other career paths in other locations as well if opportunities present itself.

Any suggestions that if i should proceed with the loan? If I am able to secure a 160k job offer in the US after graduation, i will have 120k+ after tax and save around 50k+ per year. At that speed, i need around 3 or more years to repay the loan, and i will be 36+ when I fully clear the debt. The repayment timeline will be similar if i work in Hongkong / Singapore as the pay will be less but so will be the tax. By the time I have saved enough for the house down payment / marriage, i will be 40+, which sounds pretty scary.

Any suggestions ? if i shall take the offer and go for the MBA? or any career advise?

I have thought about making the IBD TMT --> PE path in the US, but I also understand that I will be a bit old for IBD by the time of graduation (i will be 33 by then) , while US PE firms prefer to recruit young IBD analyst at around 25 yo. The PE / VC circle is also fairly closed to Asians, not to mention international students. In Asia, a Wharton MBA "might" be able to help me leap into the PE industry directly without going through the IBD stage (that's a big "might", i know), but my odds of landing in the PE/VC industry still look higher in Asia than in the US.

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Comments (72)

Most Helpful
Jan 3, 2019 - 8:19pm

I'm in the same boat as an international student going to a H/S/W MBA and will be taking on considerable debt. I think if you already went through the process of applying, you see the value of a MBA not just in the ROI but the life-long benefits from a brand like Wharton. The average student graduates from H/S/W with about $80K in debt after paying off a considerable portion from signing bonuses, summer jobs, second-year fellowships. I believe Wharton also provides a number of on-campus, paid positions for MBAs that can help offset some of those costs.

As well, I think a significant number of post-mba professionals have manager to get married, get a mortgage, while still slowly paying off their student loans.

Don't shut yourself out from other industries yet either, when you get to Wharton you will find a litany of other opportunities. I read a statistic that only 30% of mba grads end up doing what they expected to do pre-mba.

As for loans - see if you can borrow from family or friends ahead of a bank. I know it's not glamorous asking your parents for money at 30, but this truly is an investment in your future, and with Wharton you will be seeing dividends.

Best of luck!

Jan 3, 2019 - 11:13pm

It's a no-brainer from your salary level and with any high level finance aspiration. Consulting now pays $200k+ post MBA and expect IB/finance roles to adjust upwards from $250K+ to $300k+ to compete. Honestly the loans are a drop in the bucket compared to the long term earnings adjust. It will mean a few years of focusing on your loans after school at a better standard of living than as before; once they're paid off, your life will change dramatically.

IB at 33 is fine from Wharton. You won't hit any obstacles. 90%+ of people will land a role. Even if you totally bomb in recruiting and end up in corp fin or something, the long term doors the degree opens are worth it. I was in a similar position and also self financed; while the debt hurts now, it is steadily decreasing.

Jan 4, 2019 - 1:13am

These are really encouraging numbers! If 200k is a realistic salary expectation, all my concerns will be cleared right away!

Do you happen to know about the hiring of international students in bb? My Booth friend told me that it is difficult for an international student to secure an MBB (consulting) offer in the US unless he/she has a US undergraduate degree. I was thinking if finance jobs require the same.

Feb 3, 2019 - 8:26pm

Some places may be less open to accepting internationals due to extra hoops to jump through for work visa reasons (see UBS thread). But if internationals are having a harder time recruiting, assuming they are coming from a top bschool (M7ish or top 10), I would guess the reason(s) is around language (not having sufficient English skills - written and spoken) or cultural (not being awkward). I think a person having an undergrad degree from US is likely someone that grew up or has spent a decent amount of time in the US if they also got their MBA from the US (and more likely to have native / business fluency in English).

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Jan 4, 2019 - 3:27am

I think you should go for it. From where I stand, your only downside prospect is that you want to work in China, a nation happens to be very unfriendly to MBA degree holders, even for Wharton-educated MBA. But if you are open to opportunities in US, HK or SG, the debt you are about to carry is really nothing compared with your bright future.

Jan 6, 2019 - 10:35pm

Master degree yes, but not MBA. If you are looking for a role at the China branch of international PE/VC, MBA is the right way to go. On the other hand, if you want to work in local firm, then you probably won't need MBA. Chinese firms ask for advanced degree, not the right degree. Some local firms even prefer PhD over MBA or other masters for purely business roles.

Jan 7, 2019 - 8:35am

While I agree with others that going to W is the right move, I would caution some of the overly optimistic points. Let's break these down:

  1. Salary: Consulting does not pay $200+ in salary, but rather that includes bonuses. Cut that in half after tax, and then depending on the COL of your home office, you aren't actually left with a lot.

  2. Visa: As an international student, do not rely on you getting a job in the US post-MBA for your financial calculations. You might very well lose the H1B lottery and end up having to go abroad or back to your home country. It sounds like you have already thought about that, but US pay is very different from international pay, even in developed markets.

I agree with the asking friends and family for a loan. Anything you can do to reduce or eliminate that 9% interest (lol) is worthwhile. It's not like you are asking for money to finance some random venture or shady business, this is Wharton after all.

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Jan 7, 2019 - 11:17am

Thanks for the advice. I will definitely think though the points you have highlighted.

My current career plan still centres around Asia. While I dreamed to become a value-added investor in a Chinese-tech focused PE/VC firm (as the tech industry is very happening in China), I have very little knowledge about the job opportunities there or their compensation. My back up plans are either consulting or HK IBD .

HK IBD, I heard, pays a base salary at around 100k USD (with 10% effective tax rate) but the working hours are much worse than NYC. I have a few friends who got transferred to the HK office from NYC after they failed the H1B lottery , and they all quitted their jobs within 2 years.

Another friend told me that MBB pays the same after-tax amount to MBAs in all their global offices (around 140k USD after tax). Last year Wharton sent 7 MBA to McKinsey China, the most among all business schools. Considering there are only ~40 mandarin speakers in a batch in Wharton, it appears that I may have a decent chance to get a consulting job in China. I am open to consulting jobs in HK and SG as well. These are my plans for now. hopefully I can make more informed decisions in my year 2.

Jan 9, 2019 - 12:44pm

The consulting salary expectations may be slightly off. From what I've seen, the managementconsulted website has the most accurate figures (based on what my MBA colleagues got offered at MBBs). Still, even with bonuses, it would be difficult to get a $140k after tax annual amount. US is about $140k-150k (+bonuses), London about GBP80k-90k, Western Europe EUR80k-95k and Dubai $120k-130k. After taxes, those amounts are quite different per country, from less than $5,000 per month in some European countries to more than $10,000 in Dubai. Some of those difference could narrow once you factor in living costs. Still, you'd have a decent lifestyle anywhere on an MBB salary.

Nonetheless, I wouldn't base your MBA decision on how quickly you can pay back the loan. I found the network, career opportunities and life friends I made during my MBA as much more valuable than the cost of the programme and the lost earnings.

Jan 9, 2019 - 9:29am

I would say this all depends on the individual circumstances:

  1. Are you going to be taking on any debt? If you can go at a significant discount, I see little downside apart from lost earnings for the two years.

  2. Do you actually want to work IB in the US afterwards? T15-20 may not be much help internationally vs. M7 back in your home country.

  3. What level are you currently at? If you are Associate on track for VP, then I would say not worth it. H/W/S, maybe.

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Jan 8, 2019 - 9:56am

Well, I won't consider that as an option. There will be consequences to you personally, and an extremely negative impact on future applicants who share your background. You will become famous in the most powerful alumni / career network in the world in an undesirable way. Rejecting the admission offer is probably a wiser choice than trying to run away from student loans.

Jan 8, 2019 - 10:38am

My guess is that it will take your around 8 years to break even with the assumptions you provided.

* Current Salary $80K, Expected $160K, 3% Growth
* $160K in Loans for tuition ($80K per Year), 7 year duration, 9% rate?
* Two Years Opportunity Cost
* Cost of living increase since you'll likely now live in a major city

You're probably right about buying a house ~38-40, but still Wharton has plenty of upside.

Jan 8, 2019 - 3:00pm

First, congrats on getting into Wharton. It's a good school and most people get rejected. So good on you.

But have you applied to any other schools and received any type of aid or reduced tuition to compare this to? Even if Wharton doesn't offer you a loan or scholarship, it's likely that another school might, especially if you tested well and are talking about a T2/T3 or lower.

If your decision is "Wharton or bust" (this seems silly), that leads to one set of mental calculus. But there are plenty of other MBA programs out there that might help you reach your goals for a little less dime. If it were me, I would probably start there since $160k seems pretty hefty.

Jan 8, 2019 - 11:00pm

I applied for a few top 7 and only got an offer from Wharton. Back then when i was preparing my application, I didn't want to go to a school ranked lower than my undergraduate school, and was using the Singapore INSEAD 1Y program as a kind o benchmark. While it might not be the right prospective to think about business school (e.g. US companies may not care about "global" rankings, or any rankings per se), it led to where i am now.

Jan 9, 2019 - 8:30am

That's a bit of a pickle. What people are saying above is likely true - you should be able to pay back 160k in a few years assuming you get a good banking or consulting job (or another job that pays +$200k USD) and live meagerly. But that is dependent on you getting one of those jobs post graduation, which is not a guarantee. The AVERAGE compensation for MBAs (even from Wharton) is something around ~$160k, which means some people are higher and some are lower. Of course, this depends on job function, but to further state the obvious - the lower you go, the longer it takes you to pay back your loan.

I guess it just depends on how comfortable you feel living with debt for 3-5 years at this point in your life.

If it were me personally, I wouldn't be able to justify spending $160k (post tax) on a particular school when there are a couple dozen other schools that have employment outcomes that I consider to be within range, and that I felt would give me more of a cost break.

But as you say, that ship has sort of sailed already for you right now and so I would make the decision that you think you will regret least in 50 years.

Jan 9, 2019 - 9:28am

Congrats on getting into one of the H/S/W schools! Definitely should be proud.

All the others are posted great advice and only you can make the decision, but one question I would have for you is:

Have you thought about posting a job review of your location so you can get a free IBD report from WSO which shows Comp, Advancement, Growth, etc?

That would likely be able to calm your fears, would cost you nothing, and you would be able to see a realistic post-mba Associate 1 salary.

Also, 32/33 is not too old for IB associates. From what I've read on plenty of threads, getting into mid 30's and up is kind of when someone should be thinking another career path.


Jan 9, 2019 - 9:38pm

Thanks for the advice ! I am happy to contribute to the community and will look for the job review section in the forum. On the other hand, is the IBD salary report based on US numbers (because i don't know if i can win the H1B lottery and stay in US) ? I saw the associate salary of 217k, but i think i can find out more after posting a review.

Jan 10, 2019 - 9:23am

From what I have seen in glimpses, it looks to be in USD. However, I would think they would have other firms other than just the US on since Banking is such an international type of work.

Best chance to give a review and give it a shot.

Best of luck!

Jan 9, 2019 - 2:13pm

Hi yf0223,

I'm literally in the exact same position as you as, albeit with a different M7 school. Like you, I wasn't offered any fellowships and for me the dynamics have definitely changed. I have always been excited about the IDEA of pursuing an MBA. Now that I actually have to DO it and take out a hefty loan, I have mixed feelings and doubts.

Here are some of my thoughts:

  1. I think it doesn't make much sense to view the MBA from a ROI perspective. There are way too many intangibles and uncertainties for any valid calculation. Assuming it had a negative NPV but you'd find a meaningful career, would you still do it? I decided I would.

  2. Anectodically, every single person I talked to told me the debt is not an issue and should be gone within 5ish years. (They were NOT all finance guys.) Make of it what you will as there might be choice-supporting biases at work.

  3. Thus, I'm trying to see this from a risk perspective, both regarding liquidity during the program and post-MBA trajectory (e.g. what if I don't get a visa or the job I want). I'm comparatively relaxed regarding the latter, even though as an international student, it really is a 3-5 year post-MBA commitment to staying in the US or UK as I would simply not get a competitive salary in my home country. Keep that in mind. I'm personally much more concerned about short-term liquidity as I don't have a hell lot of savings and I'm paranoid about being broke during the program (or broke enough to not be able to participate in travels or parties).

  4. Despite the doubts of point (3), while you may not have any fellowships right now, you might be able to offset some of the cost later in the program. Many programs (not sure about Wharton) offer merit-based fellowships for second years, you may get a teaching fellowship (or something similar) and after all, there will also be your internship salary. Try to get more information on your opportunities during the admit weekend!

I know that doesn't help you much, other than knowing that you're not alone in this! I personally decided I'll still go for it anyway. I also just turned 30 and thus view it as a once in a lifetime opportunity; climbing the ladder at my current job (Big 4 Corporate Finance) seems rather dull to me and I doubt the exit opportunities will be even close to the MBA's. Your situation may be different, but this is mine.

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Jan 10, 2019 - 1:21am

Thanks for sharing! I think that summer internship / signing bonus / associate opportunities may reduce the 160k to 100k, but provided you don't have other costly expenditures.

I am personally very concerned about the H1B lottery so I probably have to commit to a lot of Asian career Trek which may cost 10-20k USD? I don't know exactly at this moment. Do you have any backup plan in case H1B does not happen? or you are prepared for all-in?

Jan 10, 2019 - 4:58am

My girlfriend's from the US, so I have the marriage card in my hands for visa issues. I wouldn't marry her for the visa only, but if things continue the way they do, then it looks like it may very well work out anyway!

That being said, you never now and in this sense, relying on my current girlfriend would be foolish. Consequently, I have the same concerns as you do. My alternative to the US would be the UK and while there is uncertainty as well (hello Brexit!), I don't want to build up an endless "what if"-tree of alternatives. For me, it is sufficient to know that I'm not completely fucked if I don't win the lottery. Call me naive, but it is what it is.

I guess for you, it depends on potential salaries in China or other alternatives (Singapore, Australia,...?).

Regarding cost of the Asia treks, that's definitely something you should ask about at the admit weekend!

Jan 16, 2019 - 9:58pm

hmm.. this is the kind of question / struggle that every guy in our age group goes through. I've gone through it. (got into a top 15 mba last cycle w/ no $$, turned it down) I honestly think that this decision can't be approached from the money equation. It is a personal life decision - more of a consumption rather than an investment. There are a million different ways to make that additional buck, and with no MBA / no debt, I'm sure you can find many different ways to improve your earnings with less downsides. If you care about learning new things, challenging yourself, want a serious / quality job, while taking a 2 year break to meet and socialize with other bright young guys that are career driven and ambitious, then doing the top MBA is worth it. It really depends on your personality and what things you value out of life. Another option could be deferring the MBA and having some serious cash saved up, so you avoid that 9% interest trap. After I turned down my MBA, I got a different job paying me 170k including bonus, worked some freelance jobs on top of that, and invested in some stocks that got me some big home runs. (thank you Amazon, Netflix, and AMD!!!) . However, my job still kinda sucks bc it's not what I want to do for rest of my life. I still eager for a 'quality' job / career, with quality network, which I think can be best attained at good mba programs. Now that I have six figures in my bank, I can afford to attend the top MBA program, if I so choose, with no debt financing. (will probably apply again next year and make the decision; prefer to attend a top 20 on a fat scholarship, over a top 10 with no scholarship) Best of luck to you

Jan 19, 2019 - 10:21am

Thanks for sharing.

I think the opportunities in Finance in Asia are quite limited compared to the Sates. I have tried in the past few years to break into AM / IBD through education/networking but to no avail, which leads to my decision to pursue an MBA. As I don't really have an alternative, I think I shall just make myself believe that Wharton is the best choice now and not to think about alternative paths and missed opportunities now. I will make the most out of my Philadelphia.

Feb 3, 2019 - 8:36pm

Finance recruiting is less structured in Asia, but if you're looking at say HK/SG, to lateral into IB from a non front office facing role like OP's risk management job is still highly unlikely. Usually, you need to at least be from an accounting background (more likely the transactions / valuations team). There are plenty of more qualified people knocking on those doors. So if he wants to make the career switch - be in IB and eventually make the switch to PE or VC - Wharton is his best bet.

Jan 19, 2019 - 11:55am

It's hard to tell why you're failing without knowing more about your approach. Are you going through recruiters? Targeting only BB / international banks? Any networking? Only looking at VP positions?

Jan 23, 2019 - 1:29pm

To keep it simple: nobody loses money going to Wharton.

Harold Simansky Senior MBA Admissions Counselor Stratus Admissions Counseling [email protected] If you wish to speak to me directly through a free consult click
Jan 29, 2019 - 11:14am

Bro i went to a non target for my MBA.

I got offers from LBS and Wharton as a UK applicant.

I regret every day not taking the debt. It would have changed my stars.

Learn from my mistake.

UK Investment Banking - London
Feb 6, 2019 - 3:15am

Don't make the mistake of being a US snob. LBS is a top school and was rated 1st for a number of years. Still easily top 5 on all the major rankings.

In answer to your question: Schools open doors. Which gets you your job. Go to a non target and even with networking you'll still get canned (especially in London).

Just trust me, I made the mistake of not taking debt and going with a Top 20 and not a Top 5. I regret it everyday as I hustle to get back into IB.

Happy to chat to you if you'd like (either via pm or call)

UK Investment Banking - London
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Feb 3, 2019 - 9:01pm
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