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The ROI of an MBA for international students

If you’re not a US citizen and pursuing (or thinking of pursuing) an MBA in the US, the financial picture isn’t always clear.  On top of the typical MBA variability, international students deal with huge questions around financing their degrees, and successfully recruiting for the jobs they covet.
What interest rates can I get from a private lender?

Do I need a cosigner?

After graduation, will I be able to work in the US?

If so, what firms will hire me?

What salary will I make?
At TransparentCareer we’ve teamed up with Prodigy Finance to analyze the situation faced by international students. Of course, these numbers won’t be 100% accurate for every student; rather, we intend to demonstrate how the financial picture differs for non-US MBAs and encourage students to think through these crucial differences.

International students largely seek US jobs, end up in tech

According to Poets & Quants, 87% of international students at US MBA programs desire to work in the US after graduation.  Of course, visas are limited, and GMAC estimates that just 28% of MBA employers intend to hire international students.  Our data shows international MBA hires heavily overindexing in technology fields – Ecommerce & Internet, Software, and Hardware. In each of these fields, an international student is 33% more likely to receive a full-time offer than you’d expect given the total population size.  Moreover, our data shows 77% of offers are based in the US, with New York, Chicago, San Francisco, Boston, and Seattle the clear leaders.
The largest sponsoring companies won’t surprise you – Deloitte, McKinsey, Amazon, Google, and BCG topped the list.

Compensation for international students close to US citizens

Assuming you land a stateside job, though – how does the compensation differ, if at all?  Our data shows overall compensation averages $176,000 for international students – not far off from the $190,000 reported by US students.  The difference is entirely driven by lower average salaries, as signing bonuses reported were almost identical at $25,000.
Diving deeper into the numbers, we see that the issue doesn’t seem to be unfair pay for international students.  Rather, it’s a question of job mix – international students only join higher-paying consulting and investment banking firms 22% and 5% of the time, respectively. Compare this to 35% and 9% for their US classmates, and the differences in overall average salary become evident.  If we compare an industry-by-industry basis, it reduces much of the pay gap seen in the overall averages – so, if you’re an international MBA and lucky enough to land a job at McKinsey, Deloitte, or BCG, don’t expect to get paid less than your US colleagues.

International students less likely to negotiate offers

One of the most interesting questions we ask at TransparentCareer is whether MBAs negotiate their offers, and if so, if they are successful.  After all, negotiating your salary or bonus structure up-front can be daunting, but very few conversations can be nearly as lucrative. Of MBA students reporting full-time offers, we found that international students were less likely to engage in negotiation (24% of offers vs. 29% for US students).
International students were almost as successful when they did negotiate, however, with 16% of overall negotiations marked as successful (read: a monetary increase of some form or another).  US students came in at about 19%.  The major difference comes from the negotiated amount, where US students drove the lion’s share of compensation increase at an average of $11,500 per full-time job offer.  By contrast, international students were able to negotiate a $6,500 increase on average.

What’s the return on investment for an international MBA student?

So, now that we have a clearer picture of the compensation numbers for international MBA students, we can more accurately analyze the return on investment for these students.
First, the average debt question: while the average MBA student in the US graduates with $48,000 in debt, students from the top 30 MBA programs carry significantly higher amounts.
Second, as we’ve alluded to, TransparentMBA data shows slightly lower average salaries for international students, largely due to job selection.  This is important to bear in mind if you’re an international applicant to a US MBA program.
Finally, the interest rate and term of the loan are crucial to your post-MBA lifestyle and comfort level.  For international students, it’s not uncommon to see interest rates at 12% or above, especially without a cosigner.  In the table below, we demonstrate the massive difference in both total lifetime interest, and monthly payment as a percentage of your taxed earnings to give you a clearer financial picture.  Prodigy Finance offers community-sourced loans to international students to give you a (much) better interest rate in financing your MBA – here, we’ve used 7.5% as an example.
Compared to private loans, you could save over $20,000 in interest payments, while dedicating just 12.5% of your monthly post-tax salary to student loan payments.

Student Loan Financials by Loan Type

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Questions, comments? Reach out to kevin@transparentmba.com – we’d love to hear from you!

Prodigy Finance offers no-cosigner, no collateral loans to international graduate students at top-ranked programs globally. Students are assessed individually with rates between 5.5-8.5% and 7 or 10 year loan durations. To learn more please visit their website.