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Friday, February 29, 2008


Monday is the beginning of my last week at my company. They have reimbursed me for one quarter of my MBA degree, however, now I have decided to leave. I signed a repayment agreement when they reimbursed me. They are going to deduct my last paycheck, my bonus, and my vacation pay from what I owe them. Leaving about $4000 left for me to pay that they would like me to pay off each month over the next six months. If I don’t they say they will send it to a collection agency.

It is legal in my state for them to deduct from my last paychecks I believe, but do I have any other recourse here? I read your article on tuition reimbursement and it was very interesting. Just wanted to hear your thoughts on this specific case.

Do you have any recourse? Why would you? This isn't an involuntary termination--you decided to leave. (If it was a layoff or a non-willful non-performance term, then I would argue your case, but it is not. You resigned.) When you made this decision, you knew you had signed a repayment agreement.

I lack sympathy.

Yeah, paying back money stinks. I would also like to get out of paying my mortgage and yet continue to live in my house. Somehow, I don't think the bank will go for that. (And for the record, I have a 30 year fixed mortgage and a great rate, so I can't even cry that I was duped as part of the sub-prime lending fiasco.)

Suck it up. Make the payments. Your MBA should have taught you at least a little bit about the legalities of signing contracts. If not, your mother should have.


Just another HR lady... said...

When your company loans you money (i.e. under a program like tuition reimbursement), it is a debt like any other. The only commitment your company is asking for in return for the money is your time. If you don't give the required amount of time, then you are required to re-pay the loan. (interest-free!)

Pretty good deal in my mind. :-)

Ms Bart said...

So, are you leaving for more money? And your company is letting you pay the additional balance over time? That sounds really quite generous.

Anonymous said...

Situations like this are why there are policies in place at companies. Your company didn't HAVE to pay for part of your MBA, and you're leaving in spite of their commitment to your continued education yet you seem to think their expectations are unreasonable. Shucks, I wish my company would pay for my MBA. You owe them this money, and I would consider myself lucky that there isn't a clause in there demanding interest.

First Year said...

Well said HR lady.

Why on earth would the question asker have any recourse.

I hope you read the agreement before you signed it and understood what it meant, but if not, its not really their fault.

Why should this company have to shell out money to educate you and get none of the advantages that they were hoping it would bring.

I agree with HR that if you were layed off (not fired for something you did wrong) it might be different, but you're moving on to something else, why would you get to use their training (for lack of a better term) for free?

Anonymous said...

I think the question may have been about deducting it from last paycheck, vacation and bonus, vs. repayment via some other payment plan.

Even if you have to repay a loan, doesn't mean you can afford to do it all at once. I don't know what the terms of the agreement were, but I think the question might have been more along the lines of recourse to pursue payments via someother means, such as making payments for a larger portion of the loan and not forfeit the last paycheck, vacation and bonus $, which may be needed for short term expenses. (Which seems like a reasonable request to me.)

JKB said...

Well, if you can't afford to pay the loan back, then the person shouldn't have resigned. In effect, the debt became due at the moment of resignation. The company is applying moneys they owe to the employee to the debt and permitting a short term repayment plan of the balance. They could probably demand payment in full within 30 days or something depending on the agreement.

This person chose to take an action (resign) that caused the debt to become due and payable. The person should have taken steps to cover their short term expenses when they chose to cause the debt to become payable.

Evil HR Lady said...

Thank JKB. I agree completely. The terms of repayment were undoubtedly clear and this poor person is whining.

Same thing with a 401k loan--except there, even if you are laid off it becomes due immediately.

Read before you sign!

The Engineer said...

A better negotiator would have worked out a signing bonus with the new company (equal to the outstanding debt) and walked away clean. To me, the fact that this loan is a financial problem for the writer means that they didn't think through this job move very well.

As an aside. Those of you who administer such programs may want to make sure you have protections in place. A previous employer of mine (a government agency) didn't have any requirement for an upfront payment of tuition other than a C grade or better. They finally added a time commitment (1 year post completion) and tightened down on what classes you could take. We had a construction inspector going to flight school at one point. Tuition is still paid in advance which is a lot more generous than most employers.

Description said...

Well Said HR Lady,

Company invest in the employee so that in the long run the employee would do something good for the company which will improve the brand image, customer attraction and ultimately more revenue thereby increasing the overall turnover of the company.

Now when company is not getting a return on the investment ie. time required for the employee to stay in the company and perform, then the employee is required to re-pay the loan.


Anonymous said...

Now that we've all sternly enforced the rules of the HR tuition reimbursement payback plan, who will join me in figuring out why the employee is leaving in the first place?

Anonymous said...

Ok, I think we can all agree that this person is an idiot for not planning this whole scenario out in advance, but like another commentor, I think the question is more about working out the details of the repayment, rather than contesting the obligation. Looking for a stop-loss on the initial error, as it were.

I think the only recourse here is for the person to throw themselves on the mercy of the company, asking for modified terms to help work out the situation. Probably the person doesn't have 4k lying around, and perhaps can't pay in 6 months. Like any other creditor, the company would probably rather have the money than the hassle and expense of collection, so perhaps the person could offer a modest interest or premium to extend the payback period, if that's the issue.

Anonymous said...

Banks are in the loan business, not employers.

Go to your bank, get a $4000 loan with a suitable payment schedule, pay your employer and move on.

Anonymous said...

Let's not forget that most companies will screw you given the opportunity without a second thought. For every person who questions the repayment of a tuition reimbursement policy, there are thousands of people who are lied to about workplace hours, compensation, training, and security. That's the life of a cubicle dweller.

Anonymous said...

I know this is delayed, but what if the agreement says you have to pay it back if you leave "volutarily."

I am in a situation where I have had great reviews from my managers and peers, I have been promoted and promised raises (I have these situations documented), but the raises never came. I have two direct reports that make more than me.

I received am external job offer and gave my current company the opportunity to finally give me a raise, but they did not want to match. One of my manager's responses to another manager was, "he's not going to leave because of his tuition reimbursement." The reimbursement is suppose to be an employee benefit, not used to keep my at the company against my will w/o pay that reflects my hard work and contributions.

I feel that the company strategy of deploying roles to cheaper countries and not paying the domestic employees pushed me out of the role - it was not a voluntary leave

Do you think I have a case?