Author Topic: Accept help paying for MBA?  (Read 4061 times)

Hoosier Daddy

  • Stubble
  • **
  • Posts: 100
  • Location: Indianapolis
  • Indiana Hoosiers: 5 Banners and counting
Accept help paying for MBA?
« on: August 09, 2015, 06:37:25 AM »
Hey everyone. I was wondering if you all could give me your thoughts on my current situation. I will be going for my MBA part time starting next March. My employer is willing to pay me $7000 per year towards this goal. The total cost of the program will be about $66,000. Spread over four years that is $28k of help, making the cost to me $38k. That is just under $10k per year, which being very conservative I could pay and graduate with a top 20 MBA debt free. However my employer will want a 2 year commitment in return after I graduate. The issue is that my employer does not give you a raise when you graduate with MBA because you're still doing the same job with same responsibilities. However even if you can get a job that would normally pay $120k, if you currently made $70k, they would let you do the job but would not pay you the $120k because "the pay raise is too large on a percentage basis". The largest raise I have ever heard of by far was 14%, thus approx $80k to do a $120k job... So this kind of sucks, but I could leave after two years and get the raise. Or the other option would be to go into debt and graduate with approx $30k of debt and be able to leave immediately and accept other offers of $100k or whatever the market is paying at that time. I currently make $55k and will be 26 soon which means upon graduation I will be approx 30 years old making probably around $70-75k. Thus the raise I would get would wipe out my debt in 1 year by itself.


Thus the question: would you accept the help from current employer to graduate from MBA debt free or would you go into a hair on fire emergency to get the benefit sooner?

forummm

  • Walrus Stache
  • *******
  • Posts: 7396
  • Senior Mustachian
Re: Accept help paying for MBA?
« Reply #1 on: August 09, 2015, 06:42:45 AM »
Seems like half dozen of one, 6 of the other. I guess I would take the money from your employer. Worst case is you can pay back the money if you can get a great job offer that's worth it. Otherwise you can just put in your 2 years and get a different job if you want.

Papa bear

  • Handlebar Stache
  • *****
  • Posts: 1108
  • Location: Ohio
Re: Accept help paying for MBA?
« Reply #2 on: August 09, 2015, 06:46:27 AM »
Just because you have an MBA doesn't mean you're magically worth 120k/ year to employees.  Keep in mind the industry you are in and the job prospects available.  Do not believe the university telling you what your salary could be. 


Sent from my iPhone using Tapatalk

AlwaysLearningToSave

  • Bristles
  • ***
  • Posts: 437
Re: Accept help paying for MBA?
« Reply #3 on: August 09, 2015, 07:02:18 AM »
I second the above comments. My suggestion is to take the help while you work through school. If you are lucky enough to get an offer for a higher-paying job after you graduate, do the math and determine whether the increased salary and benefits are enough to pay off the old employer and still let you come out ahead, keeping in mind the lifestyle you want to live.

The important part, though is to thoroughly understand the terms and conditions of your employers offer BEFORE you accept the help so that you go in with eyes wide open and understand what will be expected if you don't stay the full two years. Don't sign up to an arrangement with draconian penalties and interest.

Zamboni

  • Handlebar Stache
  • *****
  • Posts: 2363
Re: Accept help paying for MBA?
« Reply #4 on: August 09, 2015, 07:07:13 AM »
^, ^^, and ^^^ are all true. +1 for reading the fine print, but just be clear on what it is, don't over react to it if it seems reasonable.

My ex has an MBA from a top twenty school and it did not magically result in a near doubling of salary. Eventually the money rolled in, but not instantly.

So, I say take the money from the employer. If someone ends up offering you $120K right as soon as you graduate, then you just inform your boss, give him/her a chance to match, and then accept the offer and pay back your current employer if they won't match. No big deal. A couple of my ex's classmates did this; it's really no big deal. If no new offers come flying in (for example, if a major recession hits over the next couple of years and the job market goes in the toilet), then you are in the happy situation of being gainfully employed for a long period of time. Besides, if they really want to keep you and you get a gigantic competing offer, then that gives you more negotiating leverage in your current job than you think. What you are being told now about a possible raise might not be the same story when you graduate (bosses can change, policies can change, etc.) and besides they might just give you a raise and a promotion to keep you. For one thing the company does not want to set you up with unrealistic expectations that this degree will magically vault your career there; how well you are doing in your job matters more. Don't let the experience of others cast in stone your own expectations down the road about this.

Jakejake

  • Pencil Stache
  • ****
  • Posts: 714
  • FIRE: June 17, 2016
Re: Accept help paying for MBA?
« Reply #5 on: August 09, 2015, 07:10:11 AM »
Worst case is you can pay back the money if you can get a great job offer that's worth it.

If that works out to be an interest free loan, it looks like a great option! Would you have a way to pay it back? Would it be required to pay it in a lump sum, how would it work?

Yankuba

  • Handlebar Stache
  • *****
  • Posts: 1357
  • Location: Long Island, NY
Re: Accept help paying for MBA?
« Reply #6 on: August 09, 2015, 07:13:15 AM »
Just because you have an MBA doesn't mean you're magically worth 120k/ year to employees.  Keep in mind the industry you are in and the job prospects available.  Do not believe the university telling you what your salary could be. 


Sent from my iPhone using Tapatalk

Ditto. Generally the people getting the big money after the program were the folks already working in finance and consulting. I know a couple of people who weren't in high paying areas and they got MBAs and it hasn't helped them at all salary wise.

Bumbling Bee

  • Stubble
  • **
  • Posts: 184
  • Location: New York City
    • Journey of a Thousand Face Punches
Re: Accept help paying for MBA?
« Reply #7 on: August 09, 2015, 07:16:08 AM »
Cosigning what everyone else said.

Also, depending on your industry, etc., if the new employer really wants you, they might be willing to make you whole on the tuition assistance. It's definitely something to negotiate on.

Zamboni

  • Handlebar Stache
  • *****
  • Posts: 2363
Re: Accept help paying for MBA?
« Reply #8 on: August 09, 2015, 07:22:14 AM »
^Yes, and please also realize that the "average" starting salary the program might be quoting has a lot of factors in it. For one thing, in a part time program, some of the students already have higher paying jobs when they start the program. Additionally, at top-rated schools, a fair number of graduates have family connections that lead to ridiculous pay. For example, one of my recent students has a dad who founded a large investment firm, and there is a building on campus named after him (you wouldn't know that from interacting with the student, who seems like average Joe.) I guarantee you that his starting salary out of school will be at least double or triple what the school is advertising to you as average graduate salary. That is balanced out by most of the rest of the graduates who get more normal pay that is lower than the average. Just the way it is.

mozar

  • Magnum Stache
  • ******
  • Posts: 2957
Re: Accept help paying for MBA?
« Reply #9 on: August 09, 2015, 09:18:39 AM »
Whatever you do, go through on-campus recruiting to try to get an offer. That's where the big bucks jobs are, and are not always available to part time students.

rmendpara

  • Pencil Stache
  • ****
  • Posts: 602
Re: Accept help paying for MBA?
« Reply #10 on: August 09, 2015, 11:37:31 AM »
I was struggling with a similar decision tree last year when thinking about b-school. The terms were slightly different for me, I think 8k per yr, but similar idea.

The two MBA programs nearby for me would take ~3yrs, and same for those within 4-5 hours (which I would do as weekend programs).

For you, it seems that you'll be in the 75k in 4 years. Assuming you stay in the same field, I'm not sure where you are getting 120k from. Outside of investment banking, consulting, brand managers, product managers, etc. at top companies, total pay for new MBAs will rarely cross 150k right out of school. Corporate finance post-mba is more like 115-135k base and bonus.

The issue with part time MBAs is that employers rarely reward you for it apart from maybe contributing some toward tuition each year. The real payoff is in the first few years post-mba when you jump in the pay scale to take a new role (for traditional full time mba). Advancement after that depends more on you since no one will care any more where you went to school.

For you, the assistance is solid, but the 2 yr commitment stinks... especially if you aren't moving into a different pay band and/or position. 2 yrs at 25k lower pay per year (assuming you could get 100k post-mba) doesn't justify the 28k they give you.

For me, the numbers just never made sense. In 2014 I was at ~90k all in as a junior financial analyst. I was considering an MBA, and it was borderline whether it made sense unless I needed/wanted to get into a different field where it's necessary (consulting, banking, brand mgmt, etc.). I decided to hold off and perhaps apply for fall'16 admission, but ended up getting promoted in 2015 to a senior analyst making ~110k all-in. At this point, an mba would ONLY make sense if I wanted to change fields. I should be at ~130k judging by what I estimate my company pays to post-mba candidates in finance, but I may be able to close that gap internally over the next 2 years somewhat, and also by switching companies if it makes sense then.

I ultimately decided that I would hold off on getting an MBA, and consider an executive/weekend MBA in the future if I felt it was holding me back from progressing.

Goldielocks

  • Walrus Stache
  • *******
  • Posts: 6302
  • Location: BC
Re: Accept help paying for MBA?
« Reply #11 on: August 09, 2015, 04:48:34 PM »
Think of it like an interest free loan, get the MBA, then look for jobs and leave or stay depending on the best net offer for you. 

Maybe you would get a signing bonus to help pay back the "loan", maybe only 80k per year jobs are available.

NorCal

  • Pencil Stache
  • ****
  • Posts: 711
Re: Accept help paying for MBA?
« Reply #12 on: August 09, 2015, 07:11:17 PM »
Having an MBA, I would absolutely go for this deal as long as you like your employer and your job, and you would be happy doing this for another six years.

I personally found that most employers don't give a crap about the MBA itself.  They care a LOT about your first few years work experience after getting an MBA.  Having an MBA with several years experience is much more valuable.

I know many people that graduated with an MBA and never got those first few years experience.  They never really got back into the job market at all.  Of course, I graduated in the middle of the financial crisis, so my opinion is colored by that.

Terrestrial

  • Bristles
  • ***
  • Posts: 294
Re: Accept help paying for MBA?
« Reply #13 on: August 09, 2015, 07:47:01 PM »
I have an MBA from a top 25 b-school, as background I accepted tuition reimbursement from my employer (a little less than half the cost) and cash flow-ed the rest out of my savings/salary.  I was required to stay for 2 years (the same ammt of time I was in b-school) and my repayment was prorated for 'time served' if i left before that.  I still work at the same place 5 years after graduating.  Here are my observations:

1 - Do your research on what this will be worth to you in your industry first (I don't see you directly mention it).  My career-long mentor who is a couple steps above me at our company (c-suite) recommended this course to me and was fairly straight forward about what advancement opportunities and salary potential could be expected going forward with an MBA...I penciled out and it looked like a good call so I did it.  In b-school you get very close to people because you are with them ALL the time...I'd say a third to half of my friends from there got no noticeable benefit (salary wise)....at least at this point 5 years later, over where they would probably be anyway. 

2 - I will say independent from salary considerations I would definitely recommend a good b-school (especially if you're doing it while still working) to anyone aspiring to climb the ladder, by the time you're done you will have done countless presentations, tons of collaborations/group efforts, be an expert in time management (out of necessity), and have at least a working/adequate knowledge of most areas of a company's functions - marketing, HR, personnel management, accounting, finance, MIS, operations management, negotiations...it makes you quite polished on a professional level.  Not a ton you couldn't learn anyway through enough time and opportunity at work (not trying to imply it's a necessity by any means), but not everyone's company is gung-ho about giving people exposure to grow, and it's almost like a form of 'forced and supercharged practice'.

3 - unless you are in finance or consulting and want to work for one of the big boys (i didn't see you list your industry or end goal), a 'top 25' school is ABOUT the same as a top 50/75 school in terms of advancement and salary....there's not a noticeable difference for the industries where an MBA is an MBA so if you have a cheaper option for a reputable school, take it.   And if you are in finance/consulting/accounting and are aiming at the big guns like wall street or mckinney/deloitte/pwc/EnY/booz, you need to be a top 10 school otherwise good luck.  big time wall street/consulting rarely hires out of the usual stanford/harvard/booth/wharton/kellogg etc for MBA's and the top level deep into 6-fig starting salaries, so if that's what you're hoping for and your school isn't one of those, save your money or get into a top 10.

4 - in the end if you stay with your employer, you will be worth what you are worth on the open market.  If you're worth it they will pay you what it takes to keep you from being hired away.  That's why i'm still with the same company...within the span of 3 years i got 40% in salary bumps/promos and a partnership with equity/profit sharing.  i second what other people said that i wouldn't hesitate to take the money assuming you don't have to sign something like a non-compete/exclusive.  If you get the opportunity to make 120k out of the gate when all they want to give you is 80, just repay the money and be done with it for the cost of less than a year of salary bump.  I even have friends where the new firm did the buy-out as part of their hiring bonus.  I will caution you though that a lot of people entering b-school have the 'grass is greener/instant money' perception (myself and many of my close friends included).  In reality your real worth really starts a few years after you're done and have learned how to apply your skills.
« Last Edit: August 09, 2015, 08:45:13 PM by Terrestrial »

Terrestrial

  • Bristles
  • ***
  • Posts: 294
Re: Accept help paying for MBA?
« Reply #14 on: August 09, 2015, 08:33:10 PM »
2. If you're smart enough to get into a top 20 business school, then frankly, you're smart enough to make 120K w/out getting an MBA in the first place.

Respectfully disagree, on two fronts.

1 - I went to a top 25 program...a few of the people in my cohort were bordering on 'dumbass' from a 'life skills/common sense /professionalism' sense front, and happened to be book smart, decent test takers to get a good GMAT score, and/or socially skilled enough to glad-hand their way to some decent recommendations and a great interview.  Just saying...some people can fake and bake their way into a decent school without having the recipe for success in life.  8 or 9 people dropped out of my class from beginning to end because they couldn't hack it.

2 - Eh....this is kind of a broad generalization...it depends on OP's industry and location.  Some jobs in high COL places pay damn near everyone six figures....and frankly in some places 120k isn't even impressive or special so it defeats the purpose and intent.  120k in the peninsula would be a pretty pedestrian salary and you probably have roommates to afford a decent apartment...120k in southern indiana is probably top 5% living like a king. I live in a pretty moderate COL place...120k jobs just don't fall out of the sky for every smart person that happens along, it takes work.
« Last Edit: August 09, 2015, 08:41:11 PM by Terrestrial »

Hoosier Daddy

  • Stubble
  • **
  • Posts: 100
  • Location: Indianapolis
  • Indiana Hoosiers: 5 Banners and counting
Re: Accept help paying for MBA?
« Reply #15 on: August 10, 2015, 04:47:52 AM »
Hey thanks for all of the feedback. Some unanswered questions: i am very early in my career and am 25 years old. I work at a large US manufacturer so I would not get the immediate $100k or whatever after graduation in this industry I would have to switch to banking or something. Because my employer is so large they do make opportunities to grow their talent and very much promote from within instead of hiring from the outside and the employer is great, the only problem is they try not pay people market rate to keep costs low which stinks. However apart from that it has great culture etc and would not mind staying for another 6 years or for the rest of my career if they kept me close to market rate because where I live if you make $100k you're living like royalty. I feel like I'm rich with $55k I make here haha. Thus if I sum up everyone's feedback correctly the part time MBA (online through top 25 bus school) is worth it in the long run, just doesn't pay off immediately, is that correct? If so it may still make sense to get this credential out of the way before I have to worry about balancing a family etc and doing MBA later...

Blackhawk8

  • 5 O'Clock Shadow
  • *
  • Posts: 2
Re: Accept help paying for MBA?
« Reply #16 on: August 10, 2015, 06:32:07 AM »
Based on your location/description I'm pretty sure we work for the same company. My manager has talked about a program that allows employees to complete their MBA full time while still being paid their salary (after which I'm sure you'd be required to stay with the company for some time). This is obviously very selective, requires at least 2 years (possibly more) with the company with excellent year end reviews, and I believe it requires sign-off from one of the top execs. It sounds like this might be a new program and I'm not sure if it is specific to a department or business unit, but it's worth asking around. Good luck with your decision!

asiljoy

  • Bristles
  • ***
  • Posts: 406
Re: Accept help paying for MBA?
« Reply #17 on: August 10, 2015, 06:40:55 AM »
In my experience, companies recruiting at MBA job fairs are well aware of these kind of things and more than happy to negotiate buy-outs for you if you're the right candidate for their position.

I'm a red panda

  • Walrus Stache
  • *******
  • Posts: 8009
  • Location: United States
Re: Accept help paying for MBA?
« Reply #18 on: August 10, 2015, 07:01:19 AM »
I'd take the money.

If you find another job when you leave the program; return the money to the company.  If you don't- well, at least now you have an MBA, and can keep looking.

AlwaysLearningToSave

  • Bristles
  • ***
  • Posts: 437
Re: Accept help paying for MBA?
« Reply #19 on: August 10, 2015, 07:30:27 AM »
Because my employer is so large they do make opportunities to grow their talent and very much promote from within instead of hiring from the outside and the employer is great . . . . However apart from that it has great culture etc and would not mind staying for another 6 years or for the rest of my career if they kept me close to market rate because where I live if you make $100k you're living like royalty. I feel like I'm rich with $55k I make here haha.

Do not underestimate the value of working for a company that provides training and advancement opportunities and has a good workplace culture.  Sure, it is important to have an idea of your value on the open market so you aren't taken advantage of, but chasing a higher paycheck could easily result in you working in a significantly less desirable environment. 

Since you already make enough to feel rich where you live, then perhaps you don't need a big pay bump to reach the lifestyle and savings rates you desire.  There's a good chance a higher paycheck elsewhere would come with higher costs of living and not be as sweet a deal as it initially appears. 

Many people will chase higher income at all costs and end up dissatisfied because of it.  A mustachian will look to increase his income but not at the expense of his quality of life.