The Class The Loans Fell On

Other students take a similar view, even if they’re inclined to worry a touch more. Consider Monica Tai. She will begin her MBA studies at Wharton next month. After graduating with a B.A. in economics from Cornell University in 2006, she worked as an “actuarial analyst” for Mercer Consulting for nearly four years. Clearly, Tai knows and understands the compounding effect of numbers. She was able to secure what she calls a “good financial aid package” from Wharton, but still has to borrow an unspecified amount of money to pay for the degree. She also has “less than $10,000” of undergraduate debt left.

Is she concerned? “I’m a little bit worried,” she says. “I think there will be enough incremental value to pay back what I’ve lost by not working for two years. But I don’t know if it’s enough to pay back what the loans cost. So I am a little bit scared about it. I’m not going to hide that fact. I guess it really does make me think that I have to recruit in particular types of jobs so that I can pay back the loans.”


Wharton is passing the $100 million threshold before any other business school because of the large size of its classes as well as the size of its average MBA debt, which is the highest in the world. Wharton MBAs rack up a third more debt than those at Harvard Business School. For the Class of 2010, Harvard MBAs walked off campus with average debt of $73,100 versus Wharton’s $109,836. The total debt tab for Harvard’s Class of 2013? It’s more than $40 million less than Wharton–an estimated $71.7 million in debt, loan origination fees and interest.

With a $2.3 billion endowment that is three times the size of Wharton’s, Harvard Business School has a distinct advantage in this game. It has been among the most generous B-schools in offering fellowship grants to keep student borrowing in check. Over several months, Wharton has repeatedly declined requests to speak about its students’ appetite for debt. On Friday, a Wharton spokesman declined yet again. “We still have no plans to participate in this story,” said Ira Rubien of Wharton.

Christian Schraga, for one, thinks the numbers for the class are nothing less than “frightening.” Schraga graduated from Wharton in 2002 and believes that this level of debt has major consequences on a person’s life. “I’m not sure that these people understand what they’re getting into,” he says. “They’ve limited their options for what they want to do because of the debt. It requires a level of indebted servitude to pay back the debt, versus going after what your heart desires.”

That means that anyone who’s thinking about taking on the uncertain job prospects and the very certain loan payments should have a clear idea of the job they hope to get, their chances of getting it, and what it’s likely to play.  With today’s steep tuition bills, studying hard and hoping for the best is a risky strategy at best.

Schraga should know. He enrolled in Wharton’s MBA program in 2000 with a glamorous image of life after B-school. “I would be living in a Trump luxury apartment with crystal whisky decanters on some sort of bar cart,” he quips. He didn’t worry much about borrowing $112,875 for the privilege. Schraga, however, did not have a very clear picture of  how to achieve that dream, other than a sense that he wanted to work in the entertainment industry.

Then the market crashed, and a sense of desperation set in around campus. Without a job, he and his classmates began to fear the unthinkable: bearing unshakable debt – U.S. bankruptcy law rarely forgives student loans – that you cannot repay. Like most classmates, he scrambled for the jobs that came up on campus, rather than focusing on ones he really wanted.


During a McKinsey interview for a consulting role in New Jersey, Schraga felt miserable: “I thought, ‘if I have to do this job, I’ll die.’” McKinsey offered him the job, which included a salary that would have comfortably covered his loans, but a September start date gave him time to look harder for that coveted entertainment gig.

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