[00:00:00] Speaker A: Foreign.
[00:00:16] Speaker B: Welcome to the Clear Admit MBA Admissions Podcast. I'm your host, Graham Richmond, and today we're going to talk about one of the thornier issues in the world of B school admissions and paying for school. So often our focus on the show is really about getting into the very best schools on the planet. But the notion of financing the MBA takes a little bit of a backseat for us.
Then you get in and panic may sit in. I, of course, am by no means an expert on financial aid, scholarships, student loans, and everything that goes into funding one's business education.
But I have invited an expert to help me tackle this important subject.
Joining me today is one of the founders of Juno, Chris Abkarian. And Chris actually graduated from HBS in the class of 2020.
He's gone on to become an entrepreneur in the domain of education and finance.
He's also worked in media and entertainment. I think he worked at Netflix. He's going to correct me if I'm wrong on that. Prior to business school, I've always enjoyed my conversations with him. And when we thought about doing a show about paying for business school, I couldn't have imagined a better guest. Welcome to the show, Chris. It's really great to have you.
[00:01:22] Speaker A: Thank you very much for having me here, Graham. It's an absolute pleasure to have the opportunity to speak with your audience again.
[00:01:30] Speaker B: Yeah, so I wanted you, as a starting point, I wanted you to just tell our listeners a little bit about yourself and how you ended up in this space with regards to sort of helping people with financing their mba and maybe give us a little bit about that, you know, the origin story for Juno.
[00:01:45] Speaker A: Sure.
I think the origin story pretty much tells it all. In the summer of 2018, I had just recently gotten into HBS and I was in this WhatsApp group, which with a lot of the incoming students for the class of 2020, some people started asking each other on there where they found the lowest student loan rates.
People started comparing them with each other. And one of my classmates, who's now my co founder, Nikhil, he hatched an idea to see if we could bundle together a few hundred people on that WhatsApp group who all needed to get loans for the same semester, and then ask a bunch of different lenders if they'd be willing to negotiate on the rates and the terms that they'd offer to a group of, at that point, about 100 HBS students.
And we started cold reaching out to a bunch of different places. We got lukewarm responses.
We decided to expand the group to include students at a few other schools. We went back to the same lenders and said, hey, we've got 500 people now willing to do something.
And it worked. They were absolutely willing to.
So this whole thing started as an experiment for our class and an attempt for us to get lower student loan rates for ourselves.
About a year later, during the summer, between our first and second year at hbs, we really tried to grow this from an experiment into a company. We expanded the coverage of it to a lot more MBA programs, and it worked even better the second time as we got more leverage.
And then we spent pretty much our entire second year of school trying to do the same exact thing across more schools with the core idea that the larger we could grow the group of people who potentially needed to get financing, the more leverage we would have over the market and the better products we'd be able to bring to everybody. And now, almost eight years later, we're still doing roughly the same thing, just for a lot more people and for a handful of more products. And it's been a very exciting journey since.
[00:04:01] Speaker B: Yeah, I love this story.
Sometimes there are these business ideas that are kind of right in front of you all the time, but that no one's ever had the forethought to be like, hey, wait a second, all these really smart people are going off to all these really amazing MBA programs. They're probably pretty safe bets in terms of a borrowing profile.
Why don't we all team up and. And get the kind of group rate? It's like the equivalent of when you buy anything in bulk, you kind of get a better price. So it's such a brilliant idea.
But I want to actually, let's step back from student loans specifically and Juno's story, and I want to talk just more broadly about financing business school.
So, very basic question, and I know this is probably on a lot of people's minds as they're applying to business school, what does it typically cost to get an MBA from a top program like, let's say a Harvard or any of these top schools?
[00:04:53] Speaker A: Great question. So for this most recent year, if you look at the 20 largest programs, they tend to be a little bit more expensive.
And so the average cost of attendance for those is right around $120,000 a year. And if you expand it to the 50 largest MBA programs, that goes to about $100,000 average cost per year. And when I say cost, I'm talking about something specific that's called cost of attendance. It's published on your school's Financial aid website, and it includes tuition plus fees, plus an allowance for room and board, personal expenses, transportation, books and supplies.
Now, that number itself is also not fully encompassing of all of the costs that go into school. This is not going to cover things like a lot of the more expensive business school trips or clubs or activities that people do. So we run surveys of people every year and we tend to see that depending on the school they're going to, there's roughly another 8 to $12,000 per year of additional costs that people should at least plan ahead for.
[00:06:06] Speaker B: Okay. And so again, that figure that sort of, let's call talk about the top 20 programs. That figure of 120 is per year.
[00:06:14] Speaker A: It is per year.
[00:06:15] Speaker B: Yeah. So, okay, so pretty big expenditure to go off to business school. And I wondered, I mean, I presume you guys must have surveyed people or just from being in this space, do you have an idea? But how do students typically pay for business school? So we know what it costs now, what are they? I mean, some of them are probably bringing some personal savings, maybe they're getting some scholarship. But how are they typically, like putting this all together to cover all that?
[00:06:39] Speaker A: So the most important thing here, I think, for people listening, is to realize that at least according to a survey that GMAC, which runs the GMAT, ran recently, about 60% of people receive some form of grants or scholarships from the school, which materially brings down that cost of attendance.
[00:06:58] Speaker B: Right.
[00:06:58] Speaker A: And so don't get scared off by the high sticker price, because that's all it is, It's a sticker price. And more than half people are going to pay significantly less than that sticker price.
But a lot of people still need to find a way to pay for whatever's left after that discounting. And from what we see, over 50% of people still end up using student loans in some form to pay for school. The remainder is some people get employers sponsorships, some people do bring in savings. But overall, you still are in a position where more than half of all the people who are attending these top 20 programs are likely going to need to look for some sort of school student loan option to help make it work.
[00:07:44] Speaker B: Okay, yeah, and that makes sense. And I think you're making a really important point about the sort of sticker price. And this is something that's actually changed quite a bit over the years from, say, when I look back to when I did an MBA to today, schools have definitely opened up their wallets a little bit more and are giving out more scholarship. We see this on clearadmit.com when people are reporting their acceptances, often these offers come with pretty impressive kind of financial aid scholarship type packages and things. So that's a really good point. Don't be overwhelmed by the sticker price because a lot of people aren't paying full fare.
Tell me this though, when we talk about the domestic market in the U.S. for U.S. citizens, you used to be able to borrow money from the government, so kind of public or government loans via something called Grad plus. And then you could also borrow from a private lender. But there's been some changes to Grad Plus.
I think they've been ushered in by the Trump administration.
I'm not certain of that, but I think they have. But walk us through. What does all that mean and why might it be of interest to our listeners?
[00:08:51] Speaker A: You are correct. So historically, MBA students have had access to two different federal student loan programs.
One of these programs has slightly lower interest rates and it lets you borrow up to $20,500 per year.
And if you needed more money than that, you would use a second federal loan program called Grad plus, which has slightly higher interest rates but would allow you to borrow the entirety of your cost of attendance. Wow. And so people would typically use both of these in combination.
But it meant that as long as you qualified for a federal student loan, you had access to all the funds that you needed to meet your tuition bill, plus living expenses.
The big change that happened is as a result of the big beautiful bill, there is no longer going to be access to grad plus loans for MBA students who are starting school after July 2026.
[00:09:54] Speaker B: Okay.
[00:09:54] Speaker A: So if you're currently enrolled and listening, if you used a federal loan for your first year of your MBA program, you'll still be able to use the same programs for the upcoming year. But if you are are listening and you're applying in the future, or you're going to start your first year of school in the fall of 2026, then you're going to be limited to $20,500 of federal student loan borrowing. And if you need more than that, then you would need to explore private loan options, which is really what Juno is here to help solve. Our whole reason to exist is to make the private market as competitive as as it can be. We are effectively your advocate. Our goal is to be able to bring you lower rates without fees than what you could get through federal loans historically. And that role has now expanded to making sure that in this new world, we're able to make sure we bring still the lowest possible rates, but for people who now absolutely need the product, as opposed to historically used it just because they were able to get lower rates through, through Juno than what they got through Grad Plus.
[00:11:04] Speaker B: Right. And I remember, yeah, I remember we had a conversation some time ago about, yeah. How you guys were so good at, you know, bringing together a large group and going out at all the banks and finding a rate that often the Juno rate was lower than the kind of federal Grad plus rate, so people would go with it. But now Grad plus is being taken off the table for MBA students.
One other question I had as we're just talking about financing in general, is do you have a sense, like, how much does the average student typically borrow for business school?
Or maybe at minimum, like, what's the average loan amount that Juno clients have borrowed over time, as you see this kind of year in and year out?
[00:11:43] Speaker A: Sure. So over the last two years, the average MBA student that we've seen has been borrowing right around $74,000 per year.
And the way that really breaks down is if you just look at last year, about 60% of all the people we saw were borrowing at least $60,000 per year, and about 25% of them were borrowing $100,000 or more. And I know that that seems daunting, but it is important to remember that a lot of folks are seeking these MBA degrees so that they can materially increase their earning potential. And the ROI in most all cases still works. But it's definitely something we should touch on a little bit more later, too.
[00:12:29] Speaker B: Yeah, I mean, I will say on this show we review the employment reports as schools publish them. It's one of the regular kind of features on our weekly Cleared MITT podcast. And just in the time that we've been recording the ClearDmit podcast over the last handful of years, we've seen those numbers just go up, up, up. In terms of average starting salary, I want to say HBS was like, Maybe, I'd say 180, 180,000 dol a year average starting salary for a graduate of HBS. So, as you might imagine, paying down some debt becomes easy when you're making that amount of money right out of business school.
But let's talk a little bit more in detail.
Interest rates.
What are the typical interest rates on the amount borrowed? So if someone's borrowing $74,000 on average, what are the interest rates? And I know it's hard to predict these things, but I don't know if you have any ballpark and Also, what are the mechanics for payback?
They start paying back the day they graduate.
Is there interest while they're being kind of accrued while they're studying? How does all that work?
[00:13:38] Speaker A: Great question. I'm going to do my best to answer this as succinctly as I can. And we can dig a bit deeper because it gets a little bit complicated.
The interest rates that people get charged on private loans are going to vary from one person to the next. And it's going to be typically based on your credit score or a combination of your credit score score, income and whether you have a co signer. But high level, I can just tell you, last year the average interest rate that MBA students closed a Juno loan at was about 7.5% for a 10 year fixed repayment where payments didn't have to start getting made until nine months after they graduate.
[00:14:18] Speaker B: Oh, nice. Okay.
[00:14:19] Speaker A: And so the range of rates here can be pretty wide. Shopping around is definitely in your best interest. Don't trust me or anyone who tells you that they have the best version of a product to put in front of you. We strongly encourage people to shop around and we've even set up a program where if in the rare instances somebody did not already get the lowest rate they could. Through Juno, we have a process where we can match the lower rate that you found and give you 1% of your loan amount as a cash back bonus. We process it, we run the tech behind it. It's really meant to put our money where our mouth is.
Now. The things to understand about how interest rates fluctuate is when you are looking at any private loan option, you're typically going to be able to choose between a menu of options that vary by the term length that you're going to pay it back. So let's say five year loan or seven or a 10 or a 15 year loan.
You can typically choose whether you want a fixed rate or a variable rate. Candidly, over 90% of people we see will choose a fixed rate. And it makes sense.
And the third thing which I think touches on your last question is that you're also able to choose when you want to obligate yourself to start making payments back.
And so on one end you can avoid having to make any payments until nine months after you graduate, and on the other end you could commit yourself to start making full payments basically immediately, which would mean you take out a five year loan today. You should be done paying it off roughly in five years. But most people end up gravitating to typically around this 10 year term and avoiding making payments until after they graduate.
[00:16:14] Speaker B: Yeah, that makes a lot of sense. And I think one of the things that was just on my mind about graduation and that nine month period is we also read in these career reports about bonuses. So people graduate, they get their job, and there's often like a signing bonus and that averages. This is like uncanny how it's almost always the same number across all the top schools. It's almost always about $30,000. But I'm thinking, wow, you know, you come into 30,000 right away that you know that that kind of gives you a nice run.
Also to be able to pay back some of these loans.
I did wonder if, like just this, I'm not a math person, so that's why I come up with these kind of fun questions. But this one's a hypothetical. It's like if I borrowed $100,000 because I'm going off to Wharton or Harvard in the fall, I'm part of the class of 2028 at some top school, I borrow 100k, do you have a sense as to like, what would I be paying back per month when that nine month period kicks in? Assuming the interest rate that you cited that I recognize fluctuates and it depends on the person. But if it is 7% or whatever you said 7% or 8%, what am I thinking about in terms of my monthly payback that I'm going to have to be good for?
[00:17:23] Speaker A: Really good question.
Let's assume that you borrowed $100,000 for a 10 year repayment term and you start paying it back nine months after you graduate. Then you'd be looking at roughly a $1,400 a month payment at that point.
But what I really like to emphasize is that student loan refinancing is a big thing and it's something that people should be aware of and thinking about early on.
The general idea of it is similar to refinancing a home, where once you end up graduating and you have a job offer, you're viewed as being a significantly less risky borrower from all the banks and lenders in the marketplace.
And so the rates that they're willing to charge you for refinancing your loan are a lot lower than the rates that you get going into school before you've secured your next job.
[00:18:21] Speaker B: Okay.
[00:18:21] Speaker A: And so we did a really big campaign with a lot of students at Harvard, Stanford, Wharton, Columbia and 20 other schools last May where we connected with all of the people who were in the graduating class and tried to Pull together basically graduation focused refinancing offer for them.
And it worked phenomenally well. And for a lot of people, they weren't aware that they could refinance this.
[00:18:52] Speaker B: Yeah. That early. Yeah, kind of, you know, you wouldn't think of it.
[00:18:54] Speaker A: Yeah, yeah. At that point. The eligibility criteria vary a little bit from year to year depending on the lenders that we're working with. But as long as they had a signed job offer and they had graduated the next day, they could refinance that loan in many cases to a much lower rate.
[00:19:14] Speaker B: Okay. Yeah, that's fascinating. So this is something, I think you're right, like, so this is gold for our podcast listeners in the sense that, I mean, I honestly, I know we had talked about this briefly in the past, but I always forget this idea that once you graduate and as you say you have that job, you become so much lower risk because there are always going to be a few people who go off to business school and they fail. They don't even graduate or they drop out or people who don't get a job or something, or they're delayed in getting a job. So obviously if you do have a job and you graduate, you become a super safe bet. So that makes a lot of sense. So that would probably lower that monthly payment from what you were saying on down. So that's really definitely footnote that everyone tuning in here because that's important to know as you through business school.
I wanted to ask you a question about people who are not US Citizens going to these programs.
There's some unique challenges faced by people studying outside of their home country. And I do know a lot of our listeners, or at least a certain percentage, just like the applicant pool, are going to be non US citizens.
Do you want to just speak to that a little bit?
[00:20:19] Speaker A: Absolutely. And this is something that we have a lot of experience with.
My wife went to HBS from outside the US A lot of core members of Juno's team did their MBA programs coming from other countries.
And we've spent a lot of time focused on international students coming to study and trying to figure out how to help them fill and fix their funding gaps.
Now let me just start off with saying that the reality is that there are fewer lenders who are willing to to provide funding to international students studying in the US Than there are for US citizens or permanent residents. And so because there's a lot less capital going to the international students, the rates that you're likely to see if you're trying to apply without a co signer are a lot higher than what your classmates might see, which is unfortunate, but is unfortunately how it works.
There is something you can do which is if you can somehow find a US Citizen or permanent resident as a cosigner for your loan, then you're going to suddenly get the same exact rates that your US citizen classmates would get. And to put that in perspective, if you look at the last two years, that would mean an international student without a US cosigner was paying roughly 2x the rate of international student with a US cosigner, we end up spending a lot of time, one on one, with hundreds of international students each year, trying to help them understand who can or cannot qualify as a cosigner, helping them understand what the difference in rate would be for one scenario versus another.
And we end up seeing that a decent chunk of people do end up realizing it does not have to be a parent or an immediate relative.
It can really be anybody who qualifies. And I know it's a difficult thing to ask somebody to do, but if you do find a way to secure that cosigner, that can make perhaps the biggest impact in the amount of interest that you'd get charged.
[00:22:30] Speaker B: Okay, yeah, that makes sense. So I appreciate you kind of speaking to that. I know it's a totally different scenario for kind of US citizens or permanent residents versus international students, but it's good to know. I didn't know about this sort of cosigner thing, and that seems like a really nice pathway to get that interest rate back down.
Let's talk a little bit more about. You've been really gracious with your time and just giving us the landscape and how financing an MBA works generally. But I do want to talk a little bit more about how Juno works, and part of that is because I've always been amazed at the fact that there's no cost to do this.
You'll explain this better than I will, but my understanding is that all I have to do is get into a top school and I can be. Or even before, when I'm applying, I can join the OF pool. And if I get into school and need a loan, I can become part of the pool. But I'm not obligated to do anything right. And there's no fee, so. But I just want you to walk me through. Like, how do you guys go about putting together this group that gets the terrific rate?
[00:23:32] Speaker A: Great question. So the core idea is pretty simple. We try to get in front of as many incoming students as we can. Each year and ask them to fill out a brief form that asks them some information about where they're going to school, what their graduation year is, and a few other things that are completely optional to answer.
And we don't share that information with anybody. We don't charge you anything. We don't even have a way to accept your payment information.
All we do is take the aggregate statistics that say we've got 5,000 MBA students seeking this many hundred million dollars worth of funding and this is the characteristics of the group and take that summary slide and go to a lot of different lending parties and say this is the size of the group that we could present you to. What is the best that you can actually do for this group for this year? We're doing that all year round.
That's a lot of what my job is and my co founder's job is. And we're getting insights into what they would be willing to offer in terms of rates and eligibility criteria. And we're trying to solve for who's going to be the best fit and who's going to really be the most aggressive in trying to win this year's business.
And then what we release back to you as the potential borrower is to right around the end the of of May or beginning of June of each year. It's a really simple way for you to check what rates you might be eligible for with a soft credit check on our website, which means it doesn't impact your credit.
We see some people who check their rates 10, 20, 30 times.
And if you end up liking what you see, odds are you're going to use it.
And if you don't, then you're under no obligation whatsoever to use use it. A lot of people end up joining Juno because it's just a free option in the toolkit. You don't even know if you might need loans to pay for school. But the earlier you join, the more negotiating leverage it gives to everybody in the group so that we can actually get the best rates to the market.
And the other really big thing that we do that I haven't really mentioned is we've turned into more of a financial literacy and advocacy organization where last year we spoke one on one with over 2000 MBA students about issues ranging from how to fill out their financial aid forms to how to appeal their financial aid award, letters to career advice, what schools to select, and then many conversations about how the loan process works and opinions on whether they were doing the right.
And we do that 24, 7 all year round with A team of experts who've been in your shoes trying to help provide some of that guidance and be a feedback loop. And so View is really just as a resource, if you can join the Juno wait list
[email protected], it's going to increase the likelihood that we'll be more successful. And whether or not you use any of the services that we're able to negotiate, we're still here to provide you with that free one on one guidance at any point.
[00:26:57] Speaker B: Yeah, and I know about some of the guidance because we've worked with you guys. We do our big MBA fair every year, usually in May, and we've had you guys come to that to just be there to talk to candidates and provide some of that financial aid advice and how this all works. So definitely would encourage all of our listeners to avail themselves of everything that Juno has going.
I did want to ask you maybe a slightly more complicated question, and I feel like this is something that comes up. I mean, I've been in this space for a long time and I see this sort of come and go, but sometimes you hear people saying, oh, business school is so expensive, the economy's uncertain, I'm making good money, like, why should I do this? So I wanted to ask you if you have any advice for those who are kind of maybe on the fence about going off to business school because of the cost to attend.
Any advice on that front?
[00:27:46] Speaker A: I was asking myself the same questions not too long ago.
I was really enjoying my job at Netflix. Getting paid relatively well, could have stayed there for a long time.
And the idea of spending $200,000 at that time to go to HBS for an unknown outcome after was a bit daunting.
Let me answer this from the perspective of how to think about the finances and then just. Just how to think about it a bit more holistically on the finances front. I've now seen a lot of my friends 5 years post graduation and to a T, all of them are doing very well. And the reality of the MBA network and the ability to have strong earning prospects post graduation holds true.
We may be in sometimes uncertain economic environments, but I've absolutely seen MBA students help each other get jobs, get promotions, find themselves in unique situations that are unlikely to have occurred had they not attended. And so I am a big believer in the economic value of the degree, even if it's not immediately obvious that it's going to be markedly better than what you're already, already doing.
But beyond that, you hear a lot about the social aspects and benefits of going to an MBA program.
And I think everything that you hear on the positive side is even still undersold. It really is one of the most unique experiences.
It is very fulfilling if you are willing to make the most of it. And it's something that's going to lead you to have lifelong connections with a large group of people you otherwise would not have met at a point in your life where it's rare to have the opportunity to spend two years with a group of excellent people without a full time job hanging over your head, taking up all of your time. Yeah, and that's hard to put into words, but I am a firm believer in the value of the experience as well as the positive financial outcome that comes from doing it.
[00:30:04] Speaker B: Yeah, I mean, it's funny, I feel like people have done the math on the roi. I mean, and yet it comes up over and over again and the ROI is clearly there. I mean, is it better in some cycles than others? Sure. But I could not agree with you more about the underselling of everything else. You know, you're going to spend two years of your life studying, you're going to learn stuff, you're going to be with incredible individuals. And I'm actually, I'm kind of excited because I literally just signed up to go to my 25th reunion for Wharton and I was thinking about as I was looking at the people who signed up to come. There are all these relationships you have people that you know and they're all over the globe doing incredible things. And it almost makes you kind of chuckle to think about this, like focus on, well, how much money I'm going to make right away after school. I mean really, it's the long term income gains and network and exposure to people that is so valuable. So to me it's kind of still a no brainer even in these kind of tumultuous times. But I really appreciate, appreciate you kind of weighing in on that because it's just such an important piece.
I know your time is, you know, you're a busy guy so I wanted to ask you one more question, then I'll let you run. But is there anything else that you feel like people should know at this point in time? Whether it's about paying for business school, Juno specifically. I mean, there have been so many great tidbits in this conversation, but anything else you want to share?
[00:31:25] Speaker A: Sure.
I've absolutely found over the last eight years of doing this that talking about financing your MBA feels like a taboo subject for many people.
But the Reality is that the way that you finance this might be the most expensive single decision you've made up until this point in your life. And a lot of other very smart people are thinking about the same thing. If you ask other people what they're doing, if you try to do your own research and help provide guidance to your classmates, and if you reach out to us, us one on one to ask for any questions that you might have, you're going to feel like you're in a much better place than if you don't do so. If you just try to go Google best student loans, the unfortunate reality is that you're just going to get an endless list of sponsored ad links that are highly unlikely to actually be the lowest overall cost for the product that you might might see.
Don't feel like you need to do this by yourself. Use this as a resource. Use your financial aid office as a resource and you will figure it out. And so if there's really just one piece of advice I could give here, it's think about how you finance school as one of your first business school lessons. It's your personal capital stack. You have the opportunity to optimize it the same way you're going to learn about optimizing, optimizing the capital stack for a business and it's going to become a lot more fun to think about once you get into your first year of school.
[00:32:58] Speaker B: Yeah, well, that's terrific advice. Yeah. There's so many pieces, I think of the application process and the matriculation process that are kind of like little sort of business tests, whether it's financing or. We talk a lot about like managing your recommenders as a sort of challenge of managing up. That's a good lesson for people to have as they go through a process. So yeah, really appreciate you sharing all these tidbits from the idea about refinancing when you graduate and have that first job on through to just joining Juno and getting access to these rates because clearly you guys are doing some amazing work when you're beating the government rate on what used to be the grad plus loans.
Chris, I so appreciate you making time to talk today and yeah, just encourage people to head over the website is joinjuno.com Is that correct? I just want to make sure I have that right.
[00:33:45] Speaker A: Correct.
[00:33:46] Speaker B: Yeah. So head over to the site, sign up. You've probably seen all kinds of juno stuff on ClearAdmit's site as well because we're big fans.
But yeah, Chris, thanks so much for making time and hanging out today to talk about all this.
[00:33:56] Speaker A: Thanks, Graham. I appreciate it very much. And thank you, everybody, for listening.
[00:34:00] Speaker B: All right, so stay tuned, folks. That's a wrap on this episode, but we will be back next week and every week with new episodes of the Clear Admit MBA Admissions Podcast. Please remember to subscribe, rate and review the show wherever you listen.
