Thinking About Business School? Weigh These Factors
Many MBA applicants know exactly what they want – and when. They’ve been prepping for b-school since they crossed the stage and picked up their diploma to the elegance of “Pomp and Circumstance.” They landed the right jobs, picked the right mentors, and volunteered for the right causes. But not everyone thinks that far ahead. Sometimes, it takes a failure to awaken us to a need to get better. Or, it can be a slight that pushes us to become more than we already are.
The holidays signal that the second round window is closing fast. The incoming classes are starting to take shape. And financial aid is being doled out as you decide. You have three months to ready for the third round, the forum for quirky rebels and never-say-die fighters. So if you’re serious about joining the Class of 2018, you need to act now. So what do you need to prepare for?
For starters, think about the price tag really carefully, says Dan Macklin, co-founder of SoFi, a leading student lender. In a recent Business Insider column, Macklin, a Stanford MBA himself, warned applicants to consider the costs before jumping into school. He notes that average MBA debt is $42,000, with applicants often carrying $35,000 in undergraduate loans to boot. As a result, Macklin points out, students need to look into the future to factor in debt service. “Federal student loan interest rates for graduate students are currently between 5.84% and 6.84%, and have been less than favorable over the years,” Macklin shares. “On a $100,000, 10-year term loan, 6.84% equals more than $38,000 in interest.”
And it’s not just tuition that can hobble graduates, Macklin adds. For example, boarding and book expenses could add another $20,000 per year to the total. And that doesn’t include incidentals like “fees, laptops and overseas trips.” In other words, you could end up paying as much for living and learning expenses as tuition.
To get a clear idea of total cost, Macklin encourages applicants to use a “breakeven calculator.” “Enter assumptions like program, in- vs. out-of-state tuition and expected post-graduation salary, and the calculator estimates how long it will take for you to “break even” on your investment.” In addition, Macklin suggest refinancing existing loans. “One way to curb the cost is to refinance student loans at a lower interest rate as soon as possible after graduating. Cutting the interest rate from 6.84% to 4% on a $100,000, 10-year loan would save almost $17,000 in total interest. Refinancing can also allow you to choose a shorter term, saving even more on interest and hitting that breakeven point sooner than expected.”
That said, the financial implications of attending business school reverberate far beyond just tuition and cost of living. In USA Today, Nick White of WorldWideLearn advises readers to consider placement rates and salary-to-debt ratios. For example, the 83rd-ranked University of Tulsa boasts a 5.803 ratio with a 100% placement rate for the Class of 2014. At the same time, however, the school’s average $64,067 starting salary makes it difficult to Tulsa grads to catch students who snag higher salaries out of the gate. That said, you’ll find some of the highest Class of 2014 placement rates at the University of Chicago (97.2%), Washington University (96.9%), the University of Pittsburgh (96.2%), Texas A&M (96.1%), the University of Washington (95.8%), and Wharton (95.6%). At the same time, Louisiana State (5.673) and the University of Washington (3.556) are among the top performers in salary-to-debt.
White also directs students to factor location into their decision. For example, he recommends that students looking to move into tech consider schools near tech hubs (i.e. Haas and Stanford for Silicon Valley; Harvard and Sloan for Boston; Foster for Seattle; McCombs for Austin, etc.). “These schools are more likely to have established connections with local tech sector players,” he adds.
Now, let’s say you decide to make a run at business school this winter. What are some points to consider with your application? In Fortune, Nick Hofmeister, a serial entrepreneur who earned his MBA from MIT in 2004 (and has since launched an applicant support site called Fat Envelopes), offered some advice on how to avoid ending up in the reject pile.
He cites presentation as one area where students can differentiate themselves on their application. “The No. 1 reason for getting your resume immediately tossed out is formatting, not content,” Hofmeister observes. “If it’s too dense, too crowded, has an odd font, or not enough white space, it won’t get read. Admissions committee members want something they can quickly parse and understand.”
While keeping your resume simple and clean is the rule, there is an exception. For Hofmeister, that comes in the “work experience” section. “This section has to be packed,” Hofmeister exclaims. “The main three things admissions committees want to see are leadership savvy, breadth of experience, and quantified results. It also helps to include a mention of what’s unique about your achievements and why you think they make you a great fit for a particular school.”
Most important, Hofmeister urges applicants to get feedback on their essays. In particular, he advocates using someone who knows you well and can quickly determine whether you are speaking in an “authentic voice.” And that was a lesson that Hofmeister himself learned the hard way. “I tried to sound like what I thought they wanted,” he concludes. “That’s a mistake, because admissions committees can sniff out phoniness immediately.”