Employers 'cutting back' on employee tuition support

Business school is as expensive as ever, and companies nationwide are closing their pocketbooks.

Over the past few years, employers have become less willing to pay for their employees to receive Masters of Business Administration degrees, according to the Society for Human Resource Management.

This trend is evident at the Wharton School.

“The latest evidence shows that employers are cutting back on all tuition assistance plans,” Wharton professor Peter Cappelli said.

For the Executive MBA Class of 2012, only 38 percent of students will receive more than 50 percent sponsorship from their employer, according to the Class Profile.

This marks a decrease from the Class of 2010 and a significant change from the 1990s, when most MBA students were funded by their companies in some way or another, Cappelli said.

Now, “it’s a very small minority” who receive tuition perks from large companies, said Kat O’ Brien, a second-year MBA student.

Nationally. the numbers are even lower, with 28 percent of students receiving employer support to pay for their education, according the Graduate Management Admission Council. This is a five percent decrease from 2003.

“Employers don’t think of [tuition benefits] as investments but as benefits to employees,” Cappelli said. “This is just a continued squeeze on compensation” he added.

Businesses that do view an MBA degree as an investment “are often concerned that they won’t see any benefit from them,” he said. “I believe this is a mistake.”

The trend is most apparent for executive MBA students, who work during the week and attend classes every other weekend, Cappelli said.

However, all MBA students are affected, since “individuals have to come up with the money themselves” and “carry bigger loans,” he said.

Despite fewer sponsorships, many students pursuing their MBA degrees feel their education will be worth the expense.

“It’s a great long term investment,” O’Brien said.

Other students believe tuition benefits from select companies are here to stay. Most consulting firms still tend to sponsor their employees, second-year MBA candidate William Weinstein said.

“If businesses want to retain the top talent, they need to help with the tuition,” he said. However, receiving tuition benefits is “not an expectation that anyone has now,” he added.

Rangel Barbosa, a second-year MBA candidate from Brazil, is receiving full tuition sponsorship from his employers at the global consulting firm, McKinsey & Company. His company wants him to network in the United States and will require him to work at the Brazillian branch of McKinsey for at least two years upon receiving his degree.

“There are not as many American companies willing to sponsor their employees as foreign companies,” he said. “Most developing countries don’t have these MBA courses. They want their employees to go abroad and gain knowledge.”

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