The MBA Series is brought to you by Juno, a collective bargaining group for student loans. In this series, we’ll interview MBA students about their paths and decision-making process. The following interview was conducted with Varun from MIT Sloan.
Getting into MIT
Varun was accepted into his one-year MBA program at MIT Sloan in late 2019, just months before COVID-19 shut down campuses around the world. While he was given the option of deferring acceptance, he was already mentally prepared to begin the program and decided to move forward. The Sloan program is designed for professionals who have worked for 10-15 years, so Varun had already scheduled a sabbatical from work and wasn’t quite ready to change his plans.
One of the major challenges he faced was the time difference between Boston and his home in London. Fortunately, MIT offered two options when it came to attending classes. Students could choose to attend class from 6 am to 10 am (Boston time) or log on for the afternoon slot from 1 pm to 5 pm.
MIT also took a proactive approach to managing their COVID-19 response and quickly assembled a committee that was tasked with establishing safety policies and looking at how they could eventually safely reopen. For Varun, this was a reassuring step, “That’s when I really fell in love with MIT because they actually used a very methodical process of collecting data, analyzing it, and then coming up with a framework.” The committee served as a good first indication of what he could expect from the school.
While Varun has missed being able to bump into fellow students while crossing campus, he does credit the school with doing an excellent job of enhancing the student experience. MIT has hosted virtual happy hours and dinners. Other students, along with professors, staff and deans have made themselves readily available through Zoom, which has added value to the entire experience.
Life Before the MBA Program
Before Varun entered his MBA program, he was working with KPMG in London. He held a senior management role and focused on acquisitions. While he was happy with his compensation at the time, his salary wasn’t enough to cover the cost of tuition and also support his family. He did not want to move his family to Cambridge during the pandemic, so he took on the added pressure of maintaining two households (one in the UK, and one in the US).
While Varun did have some savings and was more than willing to take out loans to cover costs, he was still surprised by some of the expenses, “It’s been financially challenging. You suddenly stop earning, but the expenses haven’t stopped, right? You’re still paying the electricity bill, broadband and other things. I personally felt the US was a bit expensive. At least Cambridge was expensive. After living in London, I thought Cambridge (Kendall Square) was quite expensive…” In hindsight, he wishes he would have gone into the program with a bigger savings amount.
Varun’s wife stopped working once their daughter was born. They have been able to survive by setting out a budget in advance and making sure there was always money in the accounts. Fortunately, their daughter is still quite young and isn’t racking up too many expenses.
Financing His MBA
For Varun, earning his MBA from MIT was the ultimate dream, so the cost wasn’t ever going to be a deciding factor, “I would have not gone to any other university, even if they had given me a 50% discount.” This also meant that he was prepared to take out loans, a choice his parents didn’t necessarily understand.
They thought he was taking on too much of a risk, especially with a family, and that the money could be better spent on something tangible like a house or a piece of real estate. Fortunately, he was able to convince them that it was a good decision by pointing out that it was an investment in his future and that increasing his earning potential would allow him to pay off the loan in five to seven years.
Varun didn’t have a lot of options when it came to financing his education. Since he was in the middle of changing his nationality from India to the UK, he had more limited loan options which forced him to work through US lenders. Without any scholarship money to help, he had to take out a 20-year loan with Discover. With a 4.5% interest rate, his loan will be $350,000 upon graduation spread over 20 years. While Varun was able to get into and finance his dream school, his loan amount does cause some anxiety. He wonders whether he should have saved up more or asked a US relative to cosign on a loan so that he could secure a lower interest rate.
The fact that he isn’t in a traditional two-year MBA program also raises some personal doubts about his job prospects. Students who complete their MBA in two years tend to have a lot more options when it comes to internships, networking, and on-campus jobs. He managed to find on campus jobs but the stipends were very minimal.
This reality has influenced his approach to considering future employers, “I want to do something I care about, but at the same time, at a company that pays me well enough and also sponsors a visa. For me, it’s about finding that balance, which is not that simple. I’ve ended up looking at big companies and not a smaller niche firm, because I know that big companies can sponsor visas and can also pay me a decent salary where I can still manage my lifestyle.” The last thing he wants is to have to turn to his parents for help and admit that his risk didn’t pay off. Since he took a sabbatical, the worst-case-scenario would be that he had to return to his old job, at the same salary, but with a big loan over his head.
Varun’s Advice to MBA Students
- Save as much money as you can leading up to the program. Being a little more mindful and frugal early on can ease some stress during your program.
- Keep in mind that international students may hit more roadblocks when it comes to securing loans.
- As you shop programs, schools will list the average cost of living, but this is usually a conservative number that doesn’t take into account daycare, gas, internet, etc. Plan with caution when it comes to estimating your costs.
- Be sure to have a rainy-day fund. Loan amounts may not be dispersed right when you need them, so try to have a backup plan.
Varun is set to graduate in May 2021 with an MBA from MIT. While he is still exploring professional opportunities, hopefully, his degree will turn out to be a smart investment and he can meet his goal of paying off his loan in five to seven years.