Well, got rejected from Syracuse University a few weeks ago. Can't let that stop me so I applied at American University and University of North Carolina for their MBA programs, too.

I have 100% of my Post 9/11 GI Bill for 36 months. I knew staying in past my obligation would benefit me.

Talking to a professor friend of mine with a Ph.D, I expressed concern that I won't get into a good program and that it seemed like I have the toughest hurdle, paying, taken care of. It's like I have money to spend but I have to find someone to take it!

She said that schools aren't worried about getting paid because they'll get paid. They don't care whether it's by the government or private loan. She said "anybody can get a student loan."

That got me to thinking: are people really that insane to take a chance like that on something that may or may not pay them back?

The cost of the American University program is about $80k while the UNC program is at least $107k because there will be "nominal" increases each year.

You're telling me that someone is willing to take out $107k+ in student loans and that a bank is willing to loan someone $107k+ without any collateral?

What type of insanity is this?

$107k+ is a nice house in some parts of the country. If it weren't for the full ride, I wouldn't even bother applying.

In short, the answer to your question is yes.

I keep wondering when the student loan chicken will be coming home to roost. It has to happen sooner or later.

Yes.

I took out $200k+ in student loans to get my law degree and a masters. Add in a couple years of re-capitalized interest from some low earning years right out of law school (bad economy when I graduated), and I'm in it for close to $300k.

The banks will loan the money without collateral because student loans are not normally dischargeable in bankruptcy.

It's a risky investment in the face of an uncertain job market, but sometimes risky investments are the ones with the biggest payoffs. I won't say that my career wasn't without setbacks, and managing $3 or 4k in monthly loan payments was pretty stressful early on, but I think my investment was worth it.

I have a BS & MS in engineering from Texas A&M. I was on the GI Bill for the MS. I also worked on campus and eventually got a graduate assistantship. I got out on time on schedule as single parent with two small children debt free. Not bad for an old tanker and grunt.

That said some degrees are not worth the cost if you do an objective ROI (Return on Investment). The MBA and some law degrees may work. However there are many degrees offered that have near zero job opportunities.

quote:

Originally posted by Edmond:

You're telling me that someone is willing to take out $107k+ in student loans and that a bank is willing to loan someone $107k+ without any collateral?

What type of insanity is this?

The more important question is, what idiot is willing to spend $107K on an MBA that they are not likely to recoup in several decades.

I have no problem spending a metric shit-ton of money on an education if that education will put you in an income bracket to pay it back. But an MBA? No.

quote:

Originally posted by Aeteocles:
Yes.

I took out $200k+ in student loans to get my law degree and a masters. Add in a couple years of re-capitalized interest from some low earning years right out of law school (bad economy when I graduated), and I'm in it for close to $300k.

The banks will loan the money without collateral because student loans are not normally dischargeable in bankruptcy.

It's a risky investment in the face of an uncertain job market, but sometimes risky investments are the ones with the biggest payoffs. I won't say that my career wasn't without setbacks, and managing $3 or 4k in monthly loan payments was pretty stressful early on, but I think my investment was worth it.

Holy moly!

That'll cut into your beer and cigarette money, even if you don't smoke!

You could have a couple of ex-wives for that much!

How long will you be pushing that stone uphill?

quote:

Originally posted by Gustofer:


I have no problem spending a metric shit-ton of money on an education if that education will put you in an income bracket to pay it back. But an MBA? No.

How much is that, in real money?

Have you checked UNC Greensboro's MBA program? I am in MLIS program and noticed a billboard that said UNCG had a good MBA program.

quote:

Originally posted by JALLEN:
How long will you be pushing that stone uphill?

I'm nearly done. This will be my 9th year since graduating and depending on how aggressive I want to be, should be debt free anywhere from 0 to 24 months. So pretty much on track with someone who took out a 10 year loan and didn't make extra payments.

My first couple years out of law school I had my own solo practice and relied pretty heavily on credit to pay for overhead, living expenses, etc. So my first couple of years had all of the re-capitalized interest from my school loans (since I wasn't making full payments on my limited income) plus credit card debt and etc. Years 3 and 4 saw a break even as I finally managed to make enough to keep up with the hemorrhaging , and years 5 and 6 were windfall years for me which allowed me to plug up all the holes, and start bailing water. I've been bailing pretty hard for the past 3 years, but won't say that I'm throwing my entire effort at it as I've redirected a lot of my income to catch up on my retirement savings, investments, wedding, and a down payment on a second home.

quote:

Originally posted by JALLEN:

quote:

Originally posted by Gustofer:


I have no problem spending a metric shit-ton of money on an education if that education will put you in an income bracket to pay it back. But an MBA? No.

How much is that, in real money?

For an MBA? $50K. Tops.

A big question will be, what do you want to do after getting the MBA, and doing that, will the MBA more than pay for itself.

In some fields (thinking finance especially) it will. There are others where it won't. There are some fields where you'll essentially hit a low ceiling on your career if you don't have it.

I would look really really hard at where your MBA is coming from.

MBAs and JDs are similar. People largely only care about the prestige of the school where you got your education, not the quality of the education.

People who get their MBA or JD from Stanford, Harvard, Yale go off to have spectacularly jump-started careers. People who graduated from less prestigious schools have fewer doors open for them.

If you are starting a career and are using an MBA to create opportunities, I'd reevaluate whether you'd have the same opportunities with your 2nd and 3rd choice schools versus your 1st choice school. If you are using your MBA just to check off the requirement box for a promotion within a career you are already established in, then go with whatever is cheap.

The whole guaranteed payment to the school thing drives me a little crazy. People spend differently with borrowed money.

That is why school has become so expensive, it's all on borrowed money. My Dad like to quote that in the late 50's graduate school was $50 per semester at the state school, and $300 per semester at the private school. College does not have cost what it does and if the loan programs dried up, college costs would drop like a rock.

This sums it up for me.

If you're going top shelf MBA, you're going to pay but you'll get a top shelf career.

If you're not getting a top shelf MBA, go cheapest of the 2nd tier MBAs that are available to you.

For me, an MBA was a ticket I had to buy to get in the door plus security. At a later point, I got a second Masters in Information Systems partly because I was bored and partly to finance my wife not working any more. The MBA was fully subsidized; the 2nd Masters was not. I want to say tuition was only $10k a year for three years while I took a total loan of $60k.

After getting layed off from a job after only 6 months, I believe the two masters was instrumental in getting me hired within 4 months - it was a tough job market then. Before the second masters was completed, I was offered a salary double than was I was making when I started the 2nd Masters.

It all comes down to rate of return. Will you get a better rate of return by investing the money on your education and increasing your future earnings or putting it in the stock market or, if you wish, you can spend the money on the proverbial hookers and blow.

Other non-financial considerations are: the time is going to pass by anyway and would you, in the end looking back, rather have spent the time getting the education? Also, would you regret not getting the MBA for your psyche? Those are also valid considerations.

Go in with your eyes open. It is quite possible to throw money away pursuing an MBA. It is also quite possible that the time and money investment may be the best one you ever make.

First, pretend you already have an MBA and do some cost-benefit financial analysis before making the call.

What it costs you, incrementally, after tax:

1) After tax income loss from studying vs. working.
You won't be earning but you also won't be paying income tax. (The 'opportunity cost' of the after-tax money you won't earn is as real a cost as the checks you'll write for tuition.)

2) Change in living expenses (could be a savings or a cost)
Compare the costs of living now vs. planned costs as an MBA student. You may find you save money or you may find student living might cost you more. Either way, the difference (not the absolute value) in living costs is what factors into the analysis.

3) After tax cost of tuition, books etc.
If there is anything that you'll wind up paying for after Uncle Sam kicks in, count that up. But also net out any tax credits that will apply.

What are the financial benefits?

Well, from a top-down view you can get four financially-relevant things from an MBA

1) Help in placement into a job/career with better lifetime earning potential than the one you had before (possibly quantifiable)
Placement offices can get you numbers to help with this

2) Actual course content/learning, (subjective)
Each program will (or should) have some rating/ranking information vs. peers and if you can find that out for your targeted profession, that can help you guess the value of the course content.

3) A brand to put on your resume, (subjective)
When employers have to choose between applicants with 'brand X' MBAs or 'top tier' MBAs, there is an advantage to being in the latter category. The brand value can change over time as programs' content and on the caliber of applicants it attracts vary over time. So that can and does change. So a lesser-renowned school making the effort to improve its curriculum and facilities can be a good value if it is successful.

4) Help in establishing your career in the place(s) you want to live. (subjective)
The last and quite possibly most important of the subjective benefits is what having that MBA would do for you, specifically in the profession you want to pursue and specifically in locations where you want to live. Having an MBA with a great reputation in the Northeast, for example, but no reputation at all in Alaska won't be much help if you want to live in Alaska. So look in depth at the placement info and alumni demographics and see if the school is placing people in the industry you want to go into near where you want to live.

I put my own money and two years into my MBA - was a great choice for my situation. YMMV.

quote:

Originally posted by Rey HRH:

It all comes down to rate of return. Will you get a better rate of return by investing the money on your education and increasing your future earnings or putting it in the stock market or, if you wish, you can spend the money on the proverbial hookers and blow.

Sorta.

Most people can't walk into the bank and borrow $200k without some sort of collateral.

So the question isn't whether you can get a better return with the money invested elsewhere (because you don't have that money to invest elsewhere), but the question is whether borrowing the money now and paying it back later with interest will give you a big enough head start to pay for it later.

The rate of return gets even more convoluted when you start talking about compound interest and whether someone who makes $50k or $60k and gets regular pay raises until $90k and sets aside 10% of all their income comes out ahead of someone who has to divert some of their earnings to pay for school loans at the beginning, but then makes more money for the rest of their career.

quote:

Originally posted by Aeteocles:

quote:

Originally posted by Rey HRH:

It all comes down to rate of return. Will you get a better rate of return by investing the money on your education and increasing your future earnings or putting it in the stock market or, if you wish, you can spend the money on the proverbial hookers and blow.

Sorta.

Most people can't walk into the bank and borrow $200k without some sort of collateral.

So the question isn't whether you can get a better return with the money invested elsewhere (because you don't have that money to invest elsewhere), but the question is whether borrowing the money now and paying it back later with interest will give you a big enough head start to pay for it later.

The rate of return gets even more convoluted when you start talking about compound interest and whether someone who makes $50k or $60k and gets regular pay raises until $90k and sets aside 10% of all their income comes out ahead of someone who has to divert some of their earnings to pay for school loans at the beginning, but then makes more money for the rest of their career.

Not just sorta; it is. I was answering the question posed within the situation. I gave the overall highlights (which explains the hookers and blow part) but not the boring details.

1) The OP already stipulated that financing for education is readily available.

Assuming the financing is available, then it is a matter of rate of return. It doesn't matter where the financing is coming from (whether he borrows it or takes it from under the mattress), the process is still the same. Remember, the OP also has his GI Bill to invest in his education.

"rate of return by investing" captures the idea that you have to count the cash flow in versus the cash flow out. Student loan interests and payments doesn't start until the education ends. The rate of return answers the question of whether the net benefit (increased pay based on the education net of interest payments and return of capital) is worth the money invested in the education.

This discussion makes me remember to bring up a point that I don't see why the OP not investigate whether he can go to school to get his degree and also work at the same time. I did and so have a lot of people.

My brother was looking for financial advice on pursuing an MBA Program in Finance.

I told him two things:

1) Always pay yourself first

2) Never pay interest on anything that depreciates

I sent him a bill for $10,000 and a "your welcome" for saving him $30,000.

quote:

Originally posted by Graniteguy:
My brother was looking for financial advice on pursuing an MBA Program in Finance..........

I sent him a bill for $10,000 and a "your welcome" for saving him $30,000.

If you play your cards right, he might be willing to trade grammar advice for financial advice.

What type of insanity is this?

$107k+ is a nice house in some parts of the country. If it weren't for the full ride, I wouldn't even bother applying.[/QUOTE]

Now you see there, you are demonstrating the type of critical thinking needed to successfully complete such a program. This year is the 30th anniversary of my degree. The cost of these degrees has become as you say "insane". Mine was $15,000 including what I spent on room and board. I cash flowed the whole thing by saving up and paying cash. Also moved clear across the country to attend the school of my choice.

Ironically that school got themselves into a serious financial bind by being way too aggressive in their growth goals. (Also took them away from the quality they were know for at the time). Since bought out by another University and struggling to survive. Kind of sad to watch the whole thing unfold. They can't understand why more alumni don't support them financially.

Good luck in your studies.