Congratulations! Now please hand over $100,000 and your first-born.
I have heard from my second and third business school. I got in! Now that business school is really going to happen, I am also figuring out what it means to be a full-time student again. The MBA programs I applied to cost around $150,000-$160,000 for two years: ~$50,000/year for tuition, books, and supplies, and an allowance of ~$25,000-$30,000/year for living expenses. No one ever said graduate school was cheap.
How do I plan to pay for this educational elephant? Fortunately, I’ve been able to save up and I am able to count on some family help. $50,000 comes from my personal savings from post-college work, $40,000 comes from inheritance from my grandmother, and my parents will probably help me out with another $10,000. So that’s $100,000 of tuition. The other $50,000 in living expenses will likely come from a combination of loans and freelance earnings during business school.
School #1 did not offer me any scholarship, so if I go there it will be for the full sticker price. In that case, I will probably have to take out $40,000-$50,000 in loans. They might be loans from the Bank of Mom & Dad with a Dear Daughter Discount, but it’s debt nonetheless. $40,000-$50,000 of repayment will require pre-tax earnings of $60,000-$70,000 to service, which is no small sum. This is a great institution and I feel very lucky to be accepted, but it will be a struggle to pass up the money offered by.. School #2.
School #2 is offering me a not-insignificant-amount of aid. Thanks to a scholarship, the tuition drops down to $27,000/year, and the total cost of attending business school falls to $105,000. If I choose this school, I have a very good chance of graduating debt free if I live frugally and make some side income during school. I don’t even have to fill out a FAFSA! What a coup that would be… if I can graduate from a great MBA program and still have ALL of my income be mine afterwards. Well, mine and Uncle Sam’s. This school’s reputation may be a little bit more regional than the other schools I have applied to, but I believe that all busines schools, with the exception of Harvard and Stanford, are regional in some ways. Bottom line, this school is a solid choice, with a strong alumni network, very down-to-earth people, and a robust recruiting pipeline for the industries I am considering.
School #3 is an Ivy (though the mere fact that it is an Ivy shouldn’t make my parents any more glad about the acceptance, it will. And I am happy because they are happy), and will tell me whether I get any scholarships in a week or two. School #4 will inform me of their acceptance decision in about a month.
CB has also applied to graduate school. He will hear back within the next month. If he gets in, he will have to take out some loans (which will then turn into our loans. Ah the joys of marriage). If he doesn’t get in, he will keep working and support me financially for a year so I can take out fewer loans (ah the joys of marriage) and reapply next year. I think he has a pretty good shot at acceptance, so I am planning as if we will BOTH be in graduate school, BOTH not making much money, BOTH taking out student loans. In that context, I am forced to think about my student loan situation much more carefully than I might otherwise.
How my attitude toward student debt evolved
Even a few years ago, I had resigned myself to taking on $80,000+ in student loans. It’s what almost everyone does and most graduates of top schools can find a job that will service that debt. According to the MBA website Poets & Quants, the average MBA debt load is north of well north of $70,000 (incidentally, all of my schools are on that list… not sure if that’s a good or bad thing).
But the more I thought about it and the more I calculated, the more I realized that I don’t want to graduate with a mountain of debt. Student loan debt doesn’t have to be a fact of life for me. Even if I do take on loans, I want to err on the side of conservatism. I’d like to be able to pay off my graduate loans in 3 years after school. My limit is $50,000 in loans for an MBA. Assuming a family loan interest of 5%, it’d take me $1,500 a month to be able to pay off the loan in 3 years. A big chunk of money, to be sure, but not impossible. If I can keep the loans down to, say, $25,000, I’d be able to pay it off in a little more than a year.
I truly love all of the schools I applied to, having made a decision very early on that I would not submit my application to a school unless I know I will be happy and excited to attend. So I have three great choices right now (hopefully, I will have four great choices once I hear back from School #4). Money is definitely a factor, but how big of a factor? I don’t know.