24 years old: what's my next move?

[laurence]

Update: 710 on the GMAT. I think that's pretty decent.

Awesome! Congrats!

I would go with U of T if that's a top 20 school, I know nothing, but I have two friends, one who got an MBA at Harvard, and one in an MBA program at Carnegie Mellon who both are very happy they went to top 20 schools, for the contacts alone. If you plan on sticking with your company, companies usually are just glad you checked the box, but I think you'll want to maximize the doors you have open. The cost may be intimidating now, but in the long haul I think it would pay off. My friends enjoy(ed) the peers they were going to school with, felt they were getting alot from being with high achievers. Just two-bits of hearsay from me.

 

[brewer12345]

I think school reputation matters a lot. My program is well known for being (by most accounts) in the top 5 for accounting and finance, and graduates are in heavy demand in the NYC financial industry because people know that the school produces graduates who are well versed in those subjects. Naturally, there is quite a network of alums to tap. TX Proud seems to suggest this sort of thing applies to the UT program, so it sounds good to me.

 

[soupcxan]

An interesting update:

One manager came back with: "maybe we can do 50% tuition reimbursement, not even sure of that, but we'd also require you to work for us for another year after you finish the program." If I start in 2007, that means I'm locked in to them until 2010. That's a long time for only 50%

Another manager came back with: "we can do 100% reimbursement on the Rice part-time program. we can't do anything on UT Austin's part time program for some obscure reason, even though they both cost $75k." They wouldn't require an extra year committment after finishing the MBA. That doesn't sound half bad.

And of course, the option of leaving the company going full-time at UT Austin (or maybe somewhere even better) is still out there. I heard that two employees from my program just left for Stanford and HBS, with similar GMATs to mine. But seems like a high cost when you figure in tuition plus lost income for two years. I have no interest in becoming an i-banker on Wall Street, so maybe I don't need the expense of an ivy...maybe a free ride at Rice is the way to go? Not quite the same caliber as Austin (top 50 vs top 20, says BusinessWeek), but still a well-known school in Texas.

 

[elroy]

As an engineer my MBA (company paid for it) helped me understand and navigate the corporate world. but to me it wasn't as important as my PE license.

 

[brewer12345]

I don't think the numbers work to quit and go full-time.

If it were me, I would probably stick with UT. I would push back on manager #2 to see what the story is and make the point taht it is a better program at the same cost.

 

[soupcxan]

The problem with the part-time UT program is that they view it as an "executive" program (even though it is not labelled as such by the school) because classes are held at a hotel during friday night/saturday morning. Anything that they view as an "executive" MBA has to get CEO approval, which is not going to happen for me. I've tried arguing that it is a better program for the same price, but they won't budge. Manager #2 agrees with my argument, but HR is the one throwing up a roadbloack.

The Rice part-time program is actually held at night during the week, at the normal school campus, so that's why they don't view it as "executive" and can get it approved.

Putting aside the name brand issues, the experience at Rice might actually be better...I'd rather have classes in a real classroom than in some hotel...and I'd have a broader choice of elective classes (UT's part-time has no free electives).

As far as marketability goes, both schools have similar starting compensation averages for their full-time MBAs. UT is generally higher ranked than Rice but still not in Harvard/Stanford territory. Those are the best data points I've been able to come up with.

 

[brewer12345]

Hmmm, then I might just take the free ride to Rice and live with it. Hardly a bad deal, although you may wish to consider a contingency plan if you and the company part ways before your degree is finished.

 

[soupcxan]

The best option may be to sign up with #2 and the Rice deal, but apply to top full-time programs this fall. If any of them come through, I could leave to attend in 2007. If the Ivy admissions process doesn't go my way, I'd stick with Rice and be happy with that.

 

[brewer12345]

The best option may be to sign up with #2 and the Rice deal, but apply to top full-time programs this fall. If any of them come through, I could leave to attend in 2007. If the Ivy admissions process doesn't go my way, I'd stick with Rice and be happy with that.

Remind me again why full time at an ivy program on your own dime and no salary is beter than part time with someone else paying and still getting a salary? I couldn't justify FT economically.

 

[BunsGettingFirm]

So now that I have my score, the MBA question is:

1) Take 2 years off and go full time at UT-Austin (top 20 by most accounts)
Cost: $40k tuition + $120k lost income = $160k

2) Part-time UT-Austin program in Houston (same diploma but not as prestigious as the full-time program? less networking opps? debatable.)
Cost: $60k, may be hard to get employer support at that price

3) Part-time Rice program
Cost: $70k, may be hard to get employer support at that price

4) Part-time University of Houston program
Cost: $25k, but likely to get employer support for some/all of it

While the costs are easily quantifiable, I don't know how to value the expected income growth from one program versus the another. If I plan to keep working in Texas, how much more is a full-time MBA from Austin worth versus a part-time MBA from Houston?

I think you're over estimating the cost of your lost income. Unless you're truly able to save $60K a year, I believe you need to take out taxes and the expenses of going to work. A more realistic estimate of your opportunity cost would be to take your 401(k) contribution, Roth, mortgage principal payoff, and whatever after-tax savings you will not be putting away and use that as your opportunity cost. You can't count food, shelter, clothing, and transportation because these are fixed costs whether you're going to school or going to work.

By the way, if you're going to do a full-time MBA program, have you considered a one-year program? INSEAD, IMD, and Cornell all have one-year MBA programs. The first two schools only offer one-year MBA programs, so they're NOT executive MBA programs. Cornell tries to sell its one-year MBA program as an executive program, requiring that you already have a post-graduate degree. They'd have to. Otherwise, they would be cannibalizing their two-year program.

If you just want to learn the finance stuff, London Business School offers a 10-month M.S. in Finance for about $50K U.S., and afterwards, you'll be right there in London, not exactly the backwater of finance. You can always read the supply-chain management, HR, leadership (or followership which seems to be the buzz word of the moment) books on your own. FYI, the LBS MS in Finance degree is what I would like to do after a couple of years in the industry.

The thing is that there are many ways to do an MBA/MS. The U.S. schools are set on offering only two-year degrees because that is the norm in this country, and, frankly, schools don't exactly have the incentive to hurry you out the door because the longer you're a student, the more you pay.

 

[BunsGettingFirm]

$75k is fine if the school is a top flight place, but not in the top 20? Bad deal. The regional school for $25k sounds better. The way to look at this is return on capital invested. Figure out what the degree would add to your earnings power and compare that to what it will cost to get the degree. This investment will require a lot of blood, sweat and tears from you, so the returns should be good to make it worth it, say at least 15%.

A few things to consider:

- Are you even sure you will be able to stay in one place long enough to finish the degree? It would suck to have to move before you finish the program.

- Doing a degree on top of a FT job sucks. Be ready for the pain, if that is what you choose. Been there, done that, and in the end it was worth it to me (since I went to the #1 part time program in the US mostly on my employer's dime), but it was a painful and exhaisting process.

- Is there another way to skin the cat? You want some letters after your name to help you advance, so why not investigate other ways of doing this besides an MBA. In my profession, a CFA will get you about as far as an MBA (farther, in some cases). It is about as hard to get, but doesn't require sitting in classes. Maybe there are otehr ways of getting yor CPA? What other designations could you pursue that might add value to your career/increase your earnings power?

If I were working/living in NYC, I'd go to NYU's part-time program without hesitation, but that's only if I already have a job in NYC.

The pain, though, is another matter. Imagine always having a 5-minute clock running in the back of your mind that applies to everything you do -- eating dinner, brushing your teeth, checking out the weather, or taking a dump, and you'll have some idea how much pain is involved in doing a part-time program. Add on top an unsupportive if not downright obstructionist boss and weekends at work, and you get the full picture. Oh, yeah, you'll have to sustain the pain for two years.

CPA is hard to get because the number of accounting credit hours has just been increased so that unless you have a combined undergrad and graduate degree in accounting (or the equivalent number of credit hours), you can't even sit for the exam. That really sucks, but, like Brewer said, there are many professional exams you can take. Let's see. There's CFA, CFP, CCM, and CFE.

 

[brewer12345]

If I were working/living in NYC, I'd go to NYU's part-time program without hesitation, but that's only if I already have a job in NYC.

The pain, though, is another matter. Imaging always having a 5-minute clock running in the back of your mind that applies to everything you do -- eating dinner, brushing your teeth, checking out the weather, or taking a dump, and you'll have some idea how much pain is involved in doing a part-time program. Add on top an unsupportive if not downright obstructionist boss and weekends at work, and you get the full picture. Oh, yeah, you'll have sustain that pain for two years.

Actually, I did have a job in NYC and I went to NYU at night. But I raced through the program about as fast as humanly possible and it still took me a bit over 2 1/2 years. That's a long time to be counting seconds while taking a dump.

But let's also not lose sight of the rewards. You get through with your finances (more than) intact; you walk away with a very marketable degree; you are all set to make some of that proverbial fat cash; and you NEVER have to do anything that painful for that long ever again.

 

[Texas Proud]

Well, I know you are in Houston...

The UT program IS an executive program... it is all they offer as a PT student... they might not say it out loud, but it is..

If you get paid full boat for Rice, take it. It sounds like the best option you have going for you.. it will be a bear, but maybe you can stretch it another year and not kill yourself.

But, make sure that you do not sign something saying you will work an extra year. The CPA in me has this thing bouncing around in my head saying that it becomes taxable income if you make a commitment to stay at your employer... it there is no commitment, it is tax free... since you are in finance, look it up.. see if I am right or wrong

 

[soupcxan]

The tax impact of a $75k reimbursement is obviously on my mind...based on reading "Publication 970 - Tax Benefits for Education" it sounds like the payments would not be reported as income on my W-2 because the tuition payment is issued directly to the school under my employer's accountable plan. Even if they did report it on my W-2 under a non-accountable plan, it sounds like I can deduct the expense because it is helping me further develop my skills but not qualify for a new line of work. This deduction would be subject to the 2% of AGI limitation. However, if they did it the 2nd way, I would probably get an 8% hit in my pay due to FICA/SS withholding on the imputed income.

Can anyone confirm? I'm no CPA.

 

[BunsGettingFirm]

I got taxed, but the reimbursement came directly to me after I have already paid the school.

BTW, have you decided where you are going? Full time or part time?

 

[saluki9]

The tax impact of a $75k reimbursement is obviously on my mind...based on reading "Publication 970 - Tax Benefits for Education" it sounds like the payments would not be reported as income on my W-2 because the tuition payment is issued directly to the school under my employer's accountable plan. Even if they did report it on my W-2 under a non-accountable plan, it sounds like I can deduct the expense because it is helping me further develop my skills but not qualify for a new line of work. This deduction would be subject to the 2% of AGI limitation. However, if they did it the 2nd way, I would probably get an 8% hit in my pay due to FICA/SS withholding on the imputed income.

Can anyone confirm? I'm no CPA.

I am a CPA and it's still a gray area. Technically because you are furthering the same skills and not learning another career you can deduct your expenses. I beleive there was a tax court ruling recently where a woman had her deduction thrown out though.

I know my sister and her friends from Kellogg all waited with a little anxiety as the 3 year statues ran out on their 1040's from business school.

 

[Texas Proud]

I got my MBA paid mostly by my company.. but it was small dollars over many years... it was not taxable income as it was something that help my employer now and there was no extended contract...

But, my BIL got his EE degree and was taxed. His company let him go to college and work half time with full pay.. also paid for his college, but, he had signed a contract saying he would work two years after he got his degree or he would have to pay it all back to the company... this is what made it taxable income.

Ask you HR people.. .they would know more about what they put on your W-2.. and if they had done so to others in the company

 

[soupcxan]

Hehe...had to pass this latest development along:

The manager who had said that 50% tuition + 1 year extra commitment was a posibility came back to me today and said that his superiors had killed any potential deal because: anyone who wants to get an MBA will probably leave the company. If that's management's attitude, no wonder people leave the company! I should also point out that this business segment has been suffering from low morale problems compared to its peers in the company. Maybe there is a connection??

So this segment sent me a pretty clear message. On the plus side, it makes my decision easier, since the 100% is still on the table from the other segment.

 

[BunsGettingFirm]

Hehe...had to pass this latest development along:

The manager who had said that 50% tuition + 1 year extra commitment was a posibility came back to me today and said that his superiors had killed any potential deal because: anyone who wants to get an MBA will probably leave the company. If that's management's attitude, no wonder people leave the company! I should also point out that this business segment has been suffering from low morale problems compared to its peers in the company. Maybe there is a connection??

So this segment sent me a pretty clear message. On the plus side, it makes my decision easier, since the 100% is still on the table from the other segment.

By creating a cloud of distrust emanating from the top, they have basically put the kibosh on employees' desire to stay after they have completed their degree.

Where are you going again? Rice? Will it be at the main campus?

 

[soupcxan]

Well, there's been further developments...this week a new door was opened for me that I had assumed was closed. I'm now trying to get out of Houston and to a different business segment. We'll see if it works out, no guarantees. This puts the MBA plans on hold, but is probably a better move in the long run.

If this new approach doesn't pay off, I may stay in houston and go to Rice part-time at the main campus. Or I may find a temporary assignment until something in the preferred segment opens up.

 

[Craig]

If you can get an MBA from UT Austin, go for it.  I would agree that so-called executive programs are often not the best quality, but anything is better than nothing.  Longhorns get an excellent education in that B school.

Considering how to pay for the education, I negotiated my own comp down with my employer, he paid my education expenses ("requiring" me to take the classes), and thereby I avoided the tax implications.  We kept it below the radar, but I recognize this is tough with a larger company.  Research it under current law, but it worked way back when.

Here's what I did.  BS Accounting, large, public university, not top 20, but good reputation.  CPA from Big 4 (then, Big 8).  Went back to get an MBA from the same school, part time at first, full time in the last year ... bootstrapped it.

Here's where faith comes in, religious or practical.  You'll have folks tell you your career will dip, the MBA or CPA is not necessary, lost income, ad infinitum.  Nobody really knows.  Bill Gates had none of this.  So what.

Bottom line ... having an MBA is definitely helpful in the business world.  Top flight school even better.  A CPA or CFA, or CA for that matter, are all helpful, IF you have a financial focus.  The world gets more competitive every year, education is more critical, and you will benefit in ways you cannot imagine, for many, many years.

When I got my MBA, it was a b*tch.  Had no money.  Recruiters and others telling me I was wasting my time.  My career would decline for awhile, and take time to recover.  Lost earnings.  Wrong school.  Yada yada.

BS.  Best thing I ever did, and worth the risks.

None of us can know your best course.  But I will offer it is likely that any MBA is better than none.  An MBA from a top flight school is better still.  Structure your course of study so the CPA exam is at least an option.  And, whenever possible, always hedge in your career ... give yourself multiple options, whenever possible.  Life will throw you many, many curves.

[BTW, incredible savings job for your age. Congrat's.]

Best of luck.

 

[Spanky]

None of us can know your best course. But I will offer it is likely that any MBA is better than none. An MBA from a top flight school is better still.

My carpool buddy received his MBA from U of Michigan, and he said that it has really helped his career.

 

[BunsGettingFirm]

None of us can know your best course. But I will offer it is likely that any MBA is better than none. An MBA from a top flight school is better still.

My carpool buddy received his MBA from U of Michigan, and he said that it has really helped his career.

Man, Michigan grads are like Kudzu. They are everywhere!

 

[LOL!]

From the NYTimes, "Was Earning That Harvard M.B.A. Worth It?
http://www.nytimes.com/2006/06/11/business/yourmoney/11harvard.html

In 2003, Professor Mintzberg tracked the performance of 19 students who graduated from the Harvard Business School in 1990 and were at the top of their class academically. Ten of the 19 were "utter failures," he said. "Another four were very questionable, at least," he added. "So five out of 19 did well."

 

[Craig]

It has become clear over the years that the degrees are as much an admission ticket as anything else ... a Harvard (or UT Austin) MBA diploma may get you in more doors ... but what ultimately matters is what you do with the opportunity, period.