<p>I realize that I-Bankers make significantly more than some other professions (assuming you land a job) so logically, the amount of student debt that IB grads can reasonably handle would be a bit higher, no? In your opinion, how much is too much debt for an IBanker?</p>
<p>Since most bankers go to prestigious, expensive schools I'm guessing a good amount of these grads would be carrying around 6 figure debt levels (although financial aid at these schools certainly helps)</p>
<p>Also, how much can you make as an IB intern in the summers? It seems like that would help college kids out financially a lot, although I realize that landing an internship is not all that easy. </p>
<p>I’m not in Investment banking, and I attend a public university. Personally, for me, (because I’m not doing IB and prestige of undergrad institution doesn’t matter to me much) too much debt for undergrad would be more than 30k. I am low income and get a lot of financial aid tho. For professional/grad school, I am willing to pay for up to 300k, depending on calculated return of the degree and if going to a more expensive school is worth it.</p>
<p>I see, but it’s different from IB. I mean, if you <em>do</em> get a job, you can expect to make 70k-140k depending on bonuses. 30K seems low for IB-ers since that doesn’t even cover tuition for 1 year at most target schools.</p>
<p>^If you’re paying 30k+/year for college, then its way too much. Interest alone would be a killer. Also it is kind of risky to just take out a lot in loans assuming that you will get the job. If you don’t, then you’re screwed.</p>
Not really. IBanking tends to be centered around areas with a very high cost of living. Rent alone will put a huge dent in their pockets. Combine this with the fact that the industry is, at some level, very concerned with image; there is this flawed mentality that you must “appear” to be successful which means that you will be spending a lot of money to “look” the part.
How many entry-level Ibankers are able to “save” a decent percentage of their income?
As for debt, there are no guarantees that you will have a great income as well as great potential for advancement within an organization so take it for what it’s worth.</p>
<p>If the total cost is higher than your first year salary, then it’s too much. Of course, you won’t know the answer until after you get (or don’t get) a job, which makes sense.</p>
<p>If you want to be realistic, look at the caliber of university you’re attending. If you’re at any Ivy League school majoring in business/economics you can expect to make $100,000 right out of college. If you’re at umass boston (just to take a local example), you’re not likely to see more than $40,000, even with a lucrative major. So, in terms of debt, if you’re at a non-elite state school or not-so-prestigious private university, you don’t want to take out more than $20 or $30,000 becuase you’re going to want to go to graduate school before you hit the job market. If you’re at Harvard, then fuc.k take out $200,000, it doesn’t mater, because in three years you’ll be pulling in $300,000/year.</p>
This isn’t the 1990s. It’s 2012. No one is handing anyone from an Ivy League $100k/year just for being from an Ivy League. If you think otherwise, you’re delusional.
At non top 20 university, your major will matter more. In fact, I can say with certainty there are probably a few ROTC graduates from whatever program UMass Boston is part of that are earning about $60,000 after tax as a 2LT. They will be promoted automatically to 1LT 12-18 months after date of commission and an 1LT will take home a bit more than $70k/year after tax. This is not tied with any particular degree. There are also prestigious corporations that recruit solely based on an individual’s talent and not the school that they went to and they pay well (ie. Google, Microsoft, etc.)
Why would someone want to go to graduate school if they can be successful on the job market? Going to graduate school only makes you “over-educated and under-qualified” for a job. It does not necessarily improve your job prospects.
Maybe if you’re Mitt Romney. I’m willing to bet the vast majority of Harvard grads do not approach that figure.</p>
<p>If you had absolutely no financial support (either from your school or parents), your total debt would be around $191,055.13
Assumptions: 50k/year total expenses, 6.75% interest rate, work 10 hours/week during the school year @$8/hour, 40 hours/week over the summer (10% effective annual tax rate) and $15,461 before taxes for junior year internship (15% effective tax rate).</p>
<p>If you have a 30year loan, monthly payments would be approximately $1239.18, ($14,870.16/year).</p>
<p>Now, for comparison purposes, imagine you were choosing between your state school (estimated total expenses of 25,000/year and a private school with total expenses of 50,000). Total debt at graduation under the same assumptions would be 78,410 and total payments would be approximately $508.57, a difference of $730.61.
Assuming a 5% interest rate, this difference over 30 years results a present value of
136,099.12</p>
<p>If you were to work for 40 years, assuming a 5% interest, you would need to make $7,875.18 more per year to make up the difference. </p>
<p>median starting salary before bonus from Wharton is $70,000.00
median starting salary before bonus from penn state’s business school is $ 55,000.00
This gap will only continue to grow as you move up in the ranks.</p>
<p>In terms of affording student loans on an ibanking salary, it is not an issue.
You can deduct up to 2500 of student loans.
70k-2500 leaves you with 67,500 and 14,870 payment on loans.
After taxes, this leaves you with approximately $47,700.
14870 in loans = $32,830
rent(1500/month) = 14800
-subway card (1200) and food(dinners are provided, breakfast = leftovers. Around 3600) = 10,000
-gym, dry-cleaning, utilities (850+ 900+2250) =
6000 leftover before bonus and sign/on.</p>
<p>Correction: “This gap will only continue to grow IF you move up in the ranks.”</p>
<p>Moving up in the ranks is not certain.</p>
<p>People often confuse “potential” and “expected” where “expected” usually reflects the “average”. The “average” ibanker does not last in the field. But heck, everyone thinks they are better than average.</p>
<p>The “I am a better than average driver” syndrome.</p>
Perhaps may earlier statement was poorly worded, but regardless, the average person in corporate development or wherever else ibanking drop-outs go still gets paid much better than the average person in Big 4 audit.</p>
I’m certainly not saying you’re wrong. I’m just trying to remind those that there’s a very large possibility things won’t turn out as “rosy” as they would have imagined.</p>
<p>There’s always the question of “Would you rather be a small fish in a big pond or a big fish in a small pond?” This question holds individual ability/talent constant as opposed to comparing the average of those who did get into investment banking vs. those who went into accounting.</p>