I THINK that it was fine for my employer to pay when I went because it was directly related to my job. I applied for and won a fellowship, and maybe that mattered. I really don’t recall the details but I’m pretty sure I didn’t have to pay any extra taxes, and if I did it was cheaper than paying full tuition.
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The $5250 individual tax exclusion came back in 2002. Prior to that some years there was a tax exclusion, some years all tuition paid by a company was taxable.
I attended an M7 school for my MBA in the early 90’s. The only full time students getting reimbursed by their companies were internationals.
IB is an area where it really doesn’t make sense to get an MBA. If one starts as analyst out of undergrad, they are typically promoted to associate at year 2 or 3 (depending on firm and dept within a firm). That promotion puts their salary at the same level that a newly minted MBA would get if they take an associate level job upon graduation (which is where the vast majority of them would be looking.)
IMO it also doesn’t make sense in the PE world, at least from an ROI perspective. With that said, I know a young woman who has been out of college for 4 years and is at a top MBA program this fall. She spent two years in IB, two in PE. She is going to school because she has some level of tuition scholarship, she wants a break from the rat race, and C) she is hoping to find an SO there. Not kidding.
IMO, I agree with neela that for many students if you can’t get into a top school it’s not worth the time, money, and lost income (and maybe a lost promotion.) Add in job market uncertainty due to AI, and that’s a large investment one just can’t count on paying off like it used to. Maybe if you have full tuition. But you are still giving up income, experience, and potential promotion.
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My d works in manufacturing. The full tuition mba is part time so the expectation is that you would keep working full time. If you leave within 5 years of finishing the degree, you need to reimburse the company.
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I’ve heard this advice time and time again. It’s gotta be Harvard, Stanford, or Wharton, or bust! And especially when you examine statistics like these. But this is just on average; it is very possible for a person w/o a top-5 MBA to make >$10M in lifetime compensation. Just as some Harvard, Stanford, or Wharton grads (fewer) could end up making <$5M. Powerful networking & soft skills plus acquired industry knowledge & experience matter. Going to a top-10 business school just makes it way easier to get your foot in the door for your first post-MBA job.
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A lot of people make money without an MBA. A lot of people make money by just being entrepreneurial, which has often nothing to do with the MBA. If you are looking at making money through the organized corporate sector, in a job, then there is some difference in opportunity between a top 10 MBA and lower down schools. I was in a lower down business school (for something other than an MBA ) and I have seen some of the MBAs go and join the local grocery store. It is a legit job, but it is not something people aspire to when they quit a well paying job and spend a bunch on tuition and lost pay for two years.
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Disagree with this type of non-individualized advice.
Chicago & Northwestern MBA degree holders do very well in the career marketplace. These are just two examples.
Whether or not one should pursue an MBA degree should be a very individualized decision as there are several factors to consider in each case.
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Yes, I am familiar with the M-7 MBA programs. Beyond the M-7, Dartmouth-Tuck grads do well switching industries.
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My son bought a book to start studying for the MCAT when he became unhappy at his first job. Then he met his now wife and stopped studying.
Several years have gone by, and now the opportunity cost would be too high for him. Plus he has other activities he’d rather pursue than a part-time degree.
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I think for many, it’s not just about money.
I was a door knocker - 50 doors a day of people who didn’t want to see me. It’s grueling.
I was on a chairlift skiing with the CEO of my company at a recognition event, and he asked what I wanted to do long term. I said marketing.
He counseled me how being a revenue generator made me non layoff proof whereas marketing would be the first to go because they don’t generate revenue.
But that if it was a path I wanted, I needed an MBA.
So that’s why I went - because one of the captains or American business told me I would need to.
Today or in another situation, it may be different.
I often use a financial lens to make decisions but in that one, I was stepping back financially.
But I wanted/needed a career pivot.
So it’s not all about the Benjamins.
Everyone’s rationale is different.
If it were about money, someone making $60K today, even attending a top 40 school, is likely doubling their salary - so you can’t say - it must be top 3 or top 10. Everyone’s situation, criteria, and desires are different.
The one I do think is wasted is when someone goes straight through - whether it’s a STEM to the MBA which some offer or a kid can’t find a job out of undergrad so does an MBA. You’ll get the same salary or maybe + $5-10K as you would have out of undergrad. You are throwing away the chance to both reinvent yourself and to make more $$.
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I’m looking on my page now. It notes the $5,250 you mentioned - I put the language at the bottom.
They’ve eliminated the CAP, at least on our internal website, and it says if a degree or certification are related to your job, the company will consider it, etc. So it sounds case by case. I know my boss did a digital marketing thing at Ga Tech they paid for. But who knows - maybe I can get more? Of course, I have an MBA - but I’m thinking law school or an MPA when I retire.
“If you receive greater than $5,250.00 in educational assistance benefits during a calendar year, you must generally pay tax on the amount over $5,250.00. This will be reflected within your paystub and included within your taxable wages (Form W-2, box 1) for any overage amount that must be reported as income.”
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Stern, Haas, Ross, Fuqua, Johnson, and a number of other MBA grads do “very well” in the marketplace as well!
There are certain positions at my D’s company that will require her to have her MBA. When she gets to that point, she’ll need to decide if she wants to go with free T30 vs shooting for a T10. IMO, it will depend if she sees a career path to a C suite position with her company, she wants to change industry, or she’s far enough into her career that an executive MBA would be possible.
“One size fits all” advice is not helpful.
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People really need to understand this.
At 30, I left an executive role in a startup for HBS, and I’ve posted before that I left the program in the first year. People drool over MBA starting salaries, but they don’t understand that most students were making very good money going into these programs, so those foregone earnings are not a mere bag of shells. It’s the delta between the incoming and outgoing salaries that is the telling metric. For me, even if I gave myself a 10% earnings boost due to being one of the older, more experienced students in my section, the breakeven was almost ten years. I knew that going in, but once I was actually in the program, it became clear that it was the network more than the material that was valuable, but that was not relevant enough to keep me from wanting to get back to a serious paycheck and adult life. I’ve never regretted the decision to leave, and it did no harm to my career.
Also note that elite MBA programs are not admitting the average Joe and (most) are not admitting kids right out of undergrad; they require revealing work experience for admission. When I applied to HBS, the minimum was five years, and those years needed to indicate that you were going to be successful with or without the degree as these programs cherry-pick for winners. As was explained to us on a tour, applying to HBS for an MBA is like applying to a bank for a loan. The more you can prove you don’t need it, the more likely you are to get it.
In addition to entrepreneurs like myself, my section was also populated with students from IBs, MCCs, and other large corporations where they already held the positions outsiders might think they were there to attain. Many of these companies were paying for the degree simply to add to the corporate bona fides. The rest of us, who were paying full freight, had unusual resumes and were pursuing the MBA mostly for the network and additional polish, not 10x earnings. Most weren’t there simply for the promise of more money; the size of their current paychecks/positions was partly how they earned their seats.
I left HBS in '89, and I’m still not sure how to assess the value of an MBA. The math didn’t work well for me, and I suspect that if you’re already a successful corporate or entrepreneurial star, even an elite MBA won’t bring you much you haven’t already earned. For others, perhaps the network is the prize, but, ultimately, I think it’s just a very expensive signaling tool, and it’s hard to quantify the value of that.
And here’s the irony. DH (B.A, Economics/Political Science, University of Michigan) spent two decades as a management consultant, retiring as a partner in the consulting practice at IBM. Though he hired MBAs, not once did he think about leaving his lucrative career to pursue one himself. It would have cost too much for little payback.
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My school is #29 this year - but has been from probably #28 to #40.
They say on the website - Full-time MBA Class of 2025
$121,116 average base salary, 90% accepted a full-time offer within 90 days of graduation
So - if someone is 25 and making $60K, having spent two or three years in a call center or doing base work. Or as an assistant manager in a retail store making less, then it can be wonderful from a financial POV, even with the lost money.
Don’t forget, you will likely have a summer internship and mute some of that income loss.
On the other hand, my son is 25 and making a bit over six figures - would it make sense financially for him?
Probably not - but if he doesn’t like his current path and wants to obtain a job he wouldn’t be considered for, then maybe it would.
But even lower ranked schools are placing at very good salaries - maybe not Harvard/Stanford level but relative to the backgrounds of the students coming in.
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I find his priorities to be good priorities in life 
I guess I should have said that implicit in this is the context that I did not outline – I was giving advice to my kids, nephews/neices, and kids’ friends. Their expected starting comp after undergrad ranged from 100k to 200k. An extra two years without an MBA, would have resulted in an additional 50-100k in comp. So this would have been the comp entering an MBA, and there is genuine opportunity cost in that context.
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I worked at a non-profit that paid more for that for a master’s (I think it was 10k a year) back 10 years ago. Need not be IB. Admittedly that was to be done while working..
They would pay up to 5K for year courses..10K for a MA/MS (or similar) if related to work and you stayed 3 years.
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