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Banks tighten tuition reimbursement policy

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As we reported earlier this year, the number of applications to Financial Engineering, Quant Finance programs fell significantly in 2009 as the conditions in financial markets continued to deteriorate. In follow-up conversations, program directors ascribed a large chunk of this drop to decreased applications for part-time programs and courses, the students of which typically make up about a third of an incoming class. The primary culprit appears to be stricter tuition reimbursement policies for employees of banks (particularly sell-side banks). Other causes seem to be the increased reluctance of employees to avail themselves of what benefits are still on offer (for fear of jeopardizing their jobs in a climate of continuing layoffs) and the increased volume of work (resulting from the layoffs of the last few years).

Organizations such as, for instance, Morgan Stanley, Bank of America Merrill Lynch, Citigroup, and Goldman Sachs have explicit policies on how much tuition reimbursement may be claimed, on what basis (e.g., certain grades achieved), and for what kind of courses.

Morgan Stanley will reimburse up to $5,250 and $10,000 per calendar year for part-time and full-time employees, respectively, according to internal tuition reimbursement policy obtained by Quantnet. To receive this reimbursement, "employees must be full-time or part-time regularly scheduled to work 20 hours or more per week and have completed 6 months of employment with the Firm in the above classifications prior to commencement of the course. Employees must also have a satisfactory performance record. At Bank of America Merrill Lynch, both full-time and part-time employees can receive at most $5,250 per year for both undergraduate and graduate courses and degree programs provided they are “job-related". At Citigroup, employees receive a mere $3,000 per year for tuition. Goldman Sachs, known for its generous employee benefit, does not provide an absolute number but sources have told us the amount of reimbursement is based on the grade. For grades of A+ to C- an employee receives 100% of the course fee while grades of D and F merit no recompense.

Our various sources claim that these policies, both officially and unofficially, have become more stringent over the last few years. Many of our members mentioned that their employer reimbursed 100% of the tuition as recently as 2008.

While it's easy to see why banks have to cut cost amid the economic downturn, it's interesting to note that once-approved seminars, workshops are now being questioned. One source contends that his employer now questions whether a requested course cannot be done in-house (using, say, computer-based training or in-house courses), whether the material is not available gratis on the Net, or whether indeed the course requested is relevant to an employee’s current or possible future job in the organization. Another source of ours indicates that his organization will reimburse the cost of courses only if both the employee’s supervisor and Human Resources approve – previously Human Resources would give an automatic assent (provided the eligibility criteria were met).

A quantitative analyst at Citi informed us his employer questioned his need for a two-day $2,899 seminar --“Steven Shreve on Stochastic Calculus” – arguing that the analyst should already know the material. Some banks have stated explicitly the kind of courses and degree they will or will not reimburse. Morgan Stanley states that certificate programs or courses leading to professional designations are not covered. Courses, seminars or exams that are completed in one month or less are generally not covered. BAML states that "to be reimbursed, your course or degree program must support your job, help advance your career or develop your current and future job skills at the bank". Among the courses and degree legible for reimbursement, it lists Business Administration, Computer Science, Finance or Accounting.

Early reports from Financial Engineering programs in the NYC area indicate that the number of applications this year is at par with, or slightly better than, last year’s figures.

Part-time students usually take two classes per semester. CMU MSCF tuition for Fall 2011 is $3,228 per class (a typical class is 6-unit at $538/unit). NYU Math Finance program bill its students $3,987 per 3-point class using the 2011 estimate of $1,329/point. At Baruch College, the only public university offering an MFE degree in NYC, a typical 3-credit class costs $975 at $325/credit.
 
I went to graduate school twice financed by different companies. The best policy was Bankers Trust. They paid 100% regardless of your grade (this was 1999). You only need to pass the class.

Deutsche Bank used to pay only $5250 and then they bumped the maximum to $10000 (year 2000). State Street used to pay 100% as long as you got A or B (this was ~2006).
 
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