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MBAs Sour on Strings-Attached Tuition

Imagine your employer offered you a two-year paid sabbatical. You’d spend your days building your network and making yourself more marketable. And when your break was over, you’d have a job waiting for you (likely at higher pay).

Of course, this deal has a catch: You’d just need to commit to working for your employer for two more years. It’s called sponsorship, where companies pay for employees to complete their MBAs. It’s a perk designed to develop and retain high potentials. And it would be hard to pass up … in theory, at least.

But that’s exactly what many MBAs are doing, either during their studies or right after graduation. In the military, they call it going AWOL – and generally punish violators with a dishonorable discharge (if not tossing them in the brig). For business school students, there is rarely a slap on the wrist.

This isn’t a prevalent practice, mind you. Stanford, for example, has 6%-10% students on sponsorship, with The Wall Street Journal reporting that most honor their agreements. And many sponsorships are made through large firms like McKinsey, Bain, and Accenture–the types of companies where MBAs dream of working. So why would any employee walk away from $100,000-$200,000 in tuition and expenses being paid for them?

Even more, many MBAs seek self-determination. Nadine McCarthy, a classmate of Picasso, chose to launch a business, paying off her loans with revenue. And one Harvard graduate chose a private equity position over returning to the Boston Consulting Group, citing career potential. “The choice of what you do after business school should be based on what you want to do long term, rather than short-term economics,” the student said.

And switching companies might be better than the alternative, according to one recent graduate. Although her employer reimbursed her education, she feels trapped. “It feels like you owe them,” she told The Wall Street Journal.

Finally, a lack of repercussions contributes to cavalier student attitudes about sponsorship. At many business schools, students can be fined or lose access to alumni resources for backing out of internships. But they face no such punishments with sponsorships, with one student referring to them as “a put option with cheap financing attached.” Still, employers don’t necessarily see students rescinding sponsorships as disrespectful. As Deb Hill, chief people officer at the Parthenon Group notes, former employees may become future clients. “This isn’t something we view as burning a bridge.”

Source: The Wall Street Journal