Monday, February 6, 2012

Mailbag post!

I get a fair amount of reader mail for this little ol' blog all things considered.  I try to write back to everyone who asks a question though I'm not always that prompt.  I thought I'd share with you a question from a reader looking at an executive MBA, my reply, and see if you had any other advice from him.  Without further ado, here's the letter I received from "Justin":


I am considering beginning an application process at some of the top executive MBA programs, and would love to hear more about how you've managed to attend a top business school with no loans or debt.  A little bit more about me, I am a working professional in the IT industry.  I have 6 years of work experience and am working toward my MS in Business Intelligence.  I should finish this degree in spring next year (2013).

I have taken pre-assessments with some universities, where both have said that despite having less than the median amount of work experience (10 years), that I still have a relatively strong candidacy, and should submit applications for Fall 2013 if I choose to apply.  Though I am only 30 years old, I'm hoping that my technical ability, advanced degree, and work ethic will carry me through.  If there is a way I can attend a top EMBA school while not pulling out loans, I am extremely interested in learning about this.  I am very surprised that you were able to absorb this, and would love to learn more about your story.

 I should also state that I'm considering an EMBA because I want to be able to finish the degree while not taking significant time off of work (such as full time), or spending many years pursuing the degree itself.  Also, I have no interest in career changing, and I would be willing to sign a sponsorship which would require me to stay at my company if I were to get support in pursuing this degree.  I have started researching proposals to submit to my management to this effect.  Though my company has a reimbursement policy, I'm hoping I could negotiate some special circumstance.

Thanks for reading,


Hi Justin,

I'm in a slightly different situation, pursuing a full time traditional MBA.  Coming in I didn't have sponsorship as an option.  However, part of the reason I think I'll be able to graduate without debt is that my school offered me a solid amount of need-based grants.  I got very lucky.  My understanding is that there is less non-loan financial aid for exec ed participants and nearly no scholarships.  So your employer is probably your best bet.

However, here's what I can give as advice to you:

How much does the EMBA overlap with your business intelligence degree?  Before you commit a lot of cash to this make sure that the degrees are appreciably different (I don't know) and that adding the MBA will actually have a positive impact on your finances through job opportunities or raises with your current employer.  An MBA doesn't necessarily make financial or career sense, especially if you already have a business degree nearly in the bag.

Looking for employer sponsorship is a great move.  It can take a huge financial burden off your shoulders.  See if anyone else at your office has done it and ask for their advice on getting approval.  However, if your employer is not interested I'd seriously consider the previous point because it's potentially an indication that they may not value the degree and you'd be putting your own money on the line. 

If you decide to go forward with the MBA, my advice to you would be to start living as if you had to
make tuition payments now. (How are you paying for your current Masters program?  Can you ramp that up?) Both to get used to the lower standard of living and to sock away every penny you can before you get there so you have a buffer (or pay down credit card debt if any).  The advantage, as you note, to an EMBA is that you still have income coming in while you're in school.  So you have cash flow to pay your living expenses, but it's even better if you can stretch that to cover some or all of the tuition as well.

Make sure to take full advantage of the tax benefits of any tuition you pay.  Lifetime learning credit or deducting the whole MBA if you're "carrying on business" can reduce your tax burden and give you
more cash to avoid student loans with.  The IRS has fairly readable documentation on this and now would be the time to review their website to see what you can do with any 2011 expenses.

See if your state offers tax credits or deductions for 529 contributions.  You can then use the 529 to pay for tuition.  You'll need to do the math to see if this is a better option than deducting the tuition expenses since you can't double count them.

Consider distance or weekend programs if the NYC metro area doesn't work out.  I think even Harvard is offering one at this point and it will allow you to continue working and potentially have more flexibility with your work schedule.

No Debt MBA

 I'm hardly an expert here.  Anyone else have solid advice for our friend or want to correct my points?

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1 comment:

  1. I want to get my Executive MBA also when I'm around 30. There is a prestigious school in my town (it's the top executive MBA program in the U.S.). They of course don't give scholarships, but everyone who I know that has attended, once they tell their work that they got accepted, their work pays for EVERYTHING because it's so prestigious.