These HBS 1st-Years Made MBA Loan Collective Bargaining A Reality

Two of every five Berkeley Haas students used LeverEdge to get better student loan rates last fall. Courtesy LeverEdge


At the elite schools where LeverEdge found its customers, that base represented no small percentage of the total MBA population. In fact, two of every five students at Berkeley Haas used the company to find better rates for their loans, while 29% of Stanford students did so (see above).

How much did the average student save by going to LeverEdge? From a survey of its members, the company found that the average best private loan offer was 6.5% fixed for a 10 -year term. That would total $36,258 in interest over 10 years. But after negotiation, the rate for “the vast majority” was 5.25% for the same 10-year fixed rate. That totals $28,750 in total interest, which translates to a net savings of $7,508.

The savings were even better compared to the federal student loan program, Abkarians says. In that comparison the average student saved more than $8,000. (See below.)

“The most competitive rate we found generally for most people was around 6%, and it came along with a 2% origination fee, essentially a little higher than 6%,” Agarwal says. “I think what was happening in the market was, the federal rates were around 6.6% for the first $20,000 and the private market essentially said, ‘Oh, as long as we beat the federal rate by a little bit, we can attract customers.’ When we stepped in, the game changed, because no longer were they just competing against the federal rate, they were now competing against each other. I really felt they had to offer more attractive interest rates.”

So how does LeverEdge make money? They are paid a referral fee per loan by the bank who wins the competitive bidding process.

“Two important things to note,” Abkarians says. “We do not, and never will, directly charge students to participate. And if a student indicates interest in joining the negotiation group, there is no obligation for them to take the loan we negotiate.”


What’s next for LeverEdge? Expansion and growth, Agarwal and Abkarians say.

“We lowered interest rates for almost everyone in the group and are now expanding the initiative across all MBA, JD, and MD programs,” Abkarians says. How successful they are will depend in part on how much bandwidth they have as they finish their first year at HBS.

“We’re trying to run this ourselves for this round and see how far we can get. We want to avoid having to raise much money and hire people, and then if we can make money off of the next round then use that money to hire people in the scheme of things,” Abkarians says.

They’ve gotten and will continue to get, help from several campus resources, among them both the Harvard Innovation Labs Venture Incubation Program and the Harvard Business School Rock Incubator Program. They credit adviser Peter Gladstone, assistant director of consumer goods and services for the Harvard Innovation Labs, for serving as a helpful “sounding board.”

“It’s often good to chat with him about things like, ‘Oh is data riding a good thing? And actually how do you go about using some of that?’ It is helpful to be surrounded by people who are also making a similar risk while they’re here,” Agarwal says.

“Harvard Innovation Labs has been tremendously helpful in providing a place to work,” Abkarians adds. “The community of entrepreneurs across all the Harvard programs would be there every day and support each other being exposed to vast resources. The Harvard Rock Center for Entrepreneurship on the business school campus has also been incredibly helpful and provided a fellowship to work on our startup throughout the summer, which we have a class for and are going to do this summer.

“A third resource that not everybody talks explicitly about are the professors themselves and the students themselves. Whenever we have a question about what we should be doing or a problem in the direction we’re heading, our experience is that professors — whether they are your professors or somebody else at the school that has experience in it — are exceedingly helpful. They go out of their way to get you in touch with somebody who is an expert in that category.”