In passing, have read threads/articles (sorry, can't recollect where exactly - no citations) that mention firms that buy out your student debt. Specifically, I remember an article mentioning consulting students having their firms pay for their MBAs but then signing with another firm that repaid the student debt they were forced to assume by reneging on the consulting firms.
Which kinds of firms do this? Do any consulting firms pay for an MBA post-degree? PE firms? Hedge funds? AM shops?
Thinking about an MBA and am curious. Obviously won't be planning a career based on which firms do this kind of thing, just very curious to learn more.
What Companies Pay for Your MBA?
First - it is important to note that very few major firms will pay the entire cost of your MBA. However, some firms will and some will offer a portion of the costs. Consulting firms are most likely to help with MBA costs with some even offering living expenses for those that were working with the firm before MBA. Banks are less likely to do so with Bank of America and Wells Fargo seeming to be the only firms that offer a small reimbursement (~$5,000 per year).
Our users shared insight below:
Accenture will pay $80k towards your second year and Deloitte will pay $50k. Both is assuming you intern with them and sign full time for 2 years (I believe)
User @sadface" explained the structure for consulting firms (as of October 2014):
Pre-MBA:
Many of the top firms (MBB, Deloitte, Parthenon, dunno about booz/atk/other Big 4/etc) will cover MBA costs for top associates who get into good MBA programs and commit to returning to the firms for a period of time post MBA. You can look up these policies on their websites.MBA Internship:
Deloitte and Accenture will pay 2nd year tuition for summer interns who accept full time offers at an early date (prior to standard FT recruiting season). No other firm offers this from what I can tell.2nd year, Full Time Hires:
No special support.
User @acrew09" shared some insight on the payment structure:
Saying companies completely buy you out is somewhat misleading. They generally provide you with reimbursement of one year's tuition for each year you work for them post-MBA. So if your tuition was $60k, you'd get $60k at the end of your first year and $60k at the end of your second year. However, because they aren't directly paying the school, they're paying you, this gets treated as income and is not tax deductible. So you'll actually get about 1/2 of your tuition money back from them after the government takes ~50% in taxes, since the money will be taxed at the highest marginal rate. (Posted Sept 2014)
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The major consulting firms (Bain, BCG, McKinsey) and some of the big name private equity players that value MBAs (Bain Cap for example) will pay for it. I don't think investment banks typically pay for your MBA, but I could be mistaken. I worked at one of the BBs and most Analysts used b-school to transition out of IB. If you wanted to stay and you were good they typically just promote you directly.
The basic structure is they pay for all of your tuition plus a budget for personal expenses (I think it's like an extra $40k per year - can a consultant confirm?), and in exchange you pledge to return to the firm for a minimum of two years upon earning your MBA. It's an EXCELLENT deal, and I don't blame any consultants for taking it up. Two years of employment is nothing when you consider you're saving about $200k in your mid- to late-twenties...
wow thats incredible. I get the impression that the people who are working for those firms don't even need that assistance anyway though.
Sure they probably don't "need it" but what's your point?
How do you figure? A BA2/A2/AC2 is making like $80k. A $200k sponsorship is pretty substantial.
Regarding the original question, I've never heard of any specific "buy out provision." Many consulting firms reimburse/forgive tuition loans if you come back for 2-3 years. There are also firms who pick up the second year of tuition (though the gross amount varies quite a bit) for returning interns regardless of your other options. Examples in the US include Deloitte, Accenture, and LEK.
OP's question refers to buying debt post MBA. MBB doesn't pay for debt if you are a new hire after graduation.
Deloitte and Accenture
Saying they completely buy you out is somewhat misleading. They generally provide you with reimbursement of one year's tuition for each year you work for them post-MBA. So if your tuition was $60k, you'd get $60k at the end of your first year and $60k at the end of your second year. However, because they aren't directly paying the school, they're paying you, this gets treated as income and is not tax deductible. So you'll actually get about 1/2 of your tuition money back from them after the government takes ~50% in taxes, since the money will be taxed at the highest marginal rate.
I'll take 50% of something instead of 100% of nothing any day of the week. but yeah, a complete buyout is definitely not 100% true. it's not like they endow a scholarship for you and pay the school directly so you fork over $0 out of pocket.
Yes, the consulting firms are the most likely to reimburse those who return to their pre-MBA employers (i.e. not new hires, although I'm sure there's exceptions in particularly hot job markets such as pre 9/11 during the dot-com bubble).
The value of the reimbursement is typically the 2 years' of tuition (although I do know of cases where it was more - for additional tuition on joint degrees and such so, like anything, it's ultimately negotiable).
Unless they've completely changed it, the way it's technically structured is in the form of a "forgivable loan" where the loan is forgiven/written off at the end of 2 years. At least with the folks I knew, you don't get partial credit - so you either serve the full 2 years, or you have to pay back the full loan.
I'm not a tax expert, but my guess is that it changes your tax liability during the term of the loan (it's not considered income until the loan is forgiven) so it's a deferred tax liability for the employee, and maybe even lower the tax liability? Who knows, but it's usually structured like this for a reason.
As mentioned earlier, banks typically don't do this (although if you were so loyal to your pre-MBA employer to want to go back, it never hurts to negotiate for it as you never know), and most corporates especially those based in Japan and Korea would normally sponsor their employees, as if it were a 2 year executive program, although I believe that is also not as commonplace as it was 10-15 years ago.
If the firm pays the school tuition directly, I'm not even sure there's a tax consequence for you. They also get a tax deduction for work-related education. This is especially true for part-time programs.
Would be helpful to see if someone has W2s from an employer-sponsored MBA.
In any case, make sure you are maxing out your 401K on a pre-tax basis, because you get to withdraw from your 401K penalty-free to pay tuition expenses. If you work for four years before doing your MBA, there's a good $10K in tax savings from contributing to a 401K and taking a deduction at 28%, and then withdrawing (via a converted rollover IRA) at 10 or 15% to pay tuition expenses during the calendar year that you are not working full time at all.
Furthermore, if your education does not qualify you for a new industry, you may be able to take a from-AGI tax deduction on the tuition, subject to a 2% AGI floor. The alternative minimum tax limits your tax benefit, but it still works out to nearly $8K in tax savings for each calendar year you are able to take the deduction. Take a look at IRS Publication 970:.
http://www.irs.gov/uac/Publication-970,-Tax-Benefits-for-Education-1
When it comes time, you should definitely get some help from an experienced accountant when taking this deduction. Look for someone who's very conservative on telling the truth and filing an honest return but is also aware of the fact that the Internal Revenue Code allows you to be a little more aggressive on taking deductions than the IRS website suggests (for instance, I don't think you need to attend for one year or less to take a tax deduction if going full time.)
I am not a tax expert. This is not tax advice. But there may be an opportunity to lower your taxes here.
I know a lot of sponsored consulting kids. The firm does not pay the tuition. It is not structured as a loan.
As others said above, after your 1st year and then 2nd year post-mba you get paid back your tuition. Its essentially a bonus and thus taxed as income. So basically if you are in a high tax state, you're paying about 50% at that marginal level. Not to mention you probably have been racking up interest the past 3-4 years. So its pretty sweet to get some extra cash but its not like walking away debt free and actually getting your full tuition paid for. I'd say its a great program if you really like your company and want to go back but not really that great to do it just for the money.
Thanks all, some helpful info here - does anyone have additional info on which firms will reimburse tuition post-MBA if you didn't work for them pre-MBA?
@"acrew09" do you have specific firm examples?
Accenture will pay $80k towards your second year and Deloitte will pay $50k. Both is assuming you intern with them and sign full time for 2 years (I believe)
This is the correct answer
Can anyone comment on Bain's MBA reimbursment policy? I have a friend who just graduated from HBS and was sponsored by Bain - she told us that Bain not only paid for her full tuition each year but even gave her extra money for "personal and leisure expense" (read: partying and traveling internationally). In addition to the post-MBA signing bonus she received at graduation, she claimed she MADE money over the two years. Based on this thread it seems like my friend's statements were patently false (or at the very least exaggerated).
Is it common to get offers and mba assistance post internship at consulting firms or other financial firms in general?
To answer OP's question...
The only thing I've heard of that is certain is my friend who took a job with McKinsey in London from a US MBA program. He said they pay the same as the US offices, but in addition to that provide one years' worth of tuition as an added bonus. The rationale is that your European counterparts usually only go to one year programs and graduate with significantly less debt.
I've also heard that Deloitte does something like this in order to attract top talent. I also wouldn't be surprised that this is used for top talent at top private equity and hedge funds where they're taking 1 or 2 MBAs / year.
This is what I'm interested in - specifically whether HFs and AM shops and mutual funds do this, and if so which ones?
I've never heard of a hedge fund doing this. Your "Student Debt Relief Plan" is called a bonus check.
Here's the answer for consulting firms:
Pre-MBA: Many of the top firms (MBB, Deloitte, Parthenon, dunno about booz/atk/other Big 4/etc) will cover MBA costs for top associates who get into good MBA programs and commit to returning to the firms for a period of time post MBA. You can look up these policies on their websites.
MBA Internship: Deloitte and Accenture will pay 2nd year tuition for summer interns who accept full time offers at an early date (prior to standard FT recruiting season). No other firm offers this from what I can tell.
2nd year, Full Time Hires: No special support.
All true. AFAIK, all consulting firms offer sponsorship for top-performers who worked there pre-MBA and go back for ~2 years. @hawainpalmtree, your friend might be exaggerating a tad, but what you describe for Bain's package sounds about right.
I know 3 people who have done an agreement with MLBA for IBD where they get their entire tuition paid for if they agree to work internship and 2 years after post MBA in their IBD group.
If you only do an internship they will pay for your first year.
This is a program you apply to AFTER you get accepted in regardless of whether you are from banking originally or not.
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