The MBA Scholarship Wars: An Often Frenzied Pursuit For The Best Students

The first in a series on the growth in MBA scholarship money and what it means

The first in a series on the growth in MBA scholarship money and what it means


It’s not a sign you’ll see hanging from any respectable business school, but highly regarded institutions across the U.S. are increasingly providing deep MBA discounts as they fight ferociously over the most talented applicants.

Rivers of scholarship cash are flowing from schools to candidates—well over $200 million a year from the top 25 U.S. business schools alone—drastically cutting MBA costs for many students. As the money pours forth, it’s countering the rise in tuition costs, creating a two-tier market for a business education. There’s the high sticker price for the degree, and then there’s the discounted price for the most sought-after candidates.

At the moment, schools’ battle for students has become so frenzied that several prominent schools are quietly negotiating with candidates, often competing with rival offers from other MBA programs. And some second-tier institutions have quietly contacted at least one major admissions consulting firm to present a highly unusual proposition: send your most impressive clients to us, and we’ll give them scholarship funds that we’ve set aside especially for your clients.


Surging numbers of international applicants plus a growing number of MBA spaces globally are ratcheting up the intensity in the battle for students, so schools are spending more and more money on scholarships, says Alison Davis-Blake, dean of the Ross School of Business at the University of Michigan. Some buy candidates that will improve a school’s standing in business school rankings that measure incoming GMAT and GPA scores and outgoing salaries and job offers. Other schools are simply hoping to land the best and brightest to their programs in the expectation that their latter success will reflect well on the institution.

“It’s a nuclear arms race,” Davis-Blake says, before switching metaphors to address tug-of-wars over stellar applicants. “It’s more like hand to hand guerrilla warfare – it’s fought sort of person by person. There are people that are going to be more in demand, and you have to negotiate with them individually. “We see scholarship amounts increasing. We see more large awards. We see a broader array of students getting awards.”

The Top 25 business schools in the U.S. annually dole out some $232.7 million in scholarship money to their MBA students, according to estimates compiled by Poets&Quants. No school beats Harvard when it comes to the biggest pile of cash: A $31.5 million scholarship war chest for little more than 1,800 MBA students, up from $22 million just four years ago.  All told, Harvard Business School’s scholarship money is roughly 29% of the school’s gross tuition revenues. Another way to look at this: HBS is routinely discounting the sticker price of its MBA by 29%.


Yet, as high as that support is, there are still other prestige MBA programs offering more. Rice University’s Jones Graduate School of Business, with a $6.7 million scholarship budget for just 216 MBA students, is handing out scholarship support equal to 59% of the school’s MBA tuition revenue. Washington University’s Olin School and Notre Dame University’s Mendoza School are also known for their generosity. Both schools are spreading so much scholarship aid that they are at 39% and 37%, respectively, of their gross tuition revenue.

It’s also not merely a game played by the more well-endowed private institutions. Several highly selective public universities have more recently anted up, including the University of Michigan’s Ross School and UCLA’s Anderson School. Ross now boasts a financial aid budget $19.2 million, with an estimated $15.4 million in scholarship funding equal to nearly 28% of its tuition revenue; Anderson has more than doubled its scholarship support in the past five years to $12.1 million from $5.8 million.

In fact, it’s a rare school that has not significantly boosted its scholarship funds in recent years or is not in the midst of a fundraising campaign for which a major portion of the new money will go to discount tuition. At Yale University’s School of Management, Dean Edward “Ted” Snyder says scholarship funds now total 13% of gross tuition revenue for the 2014-2015 academic year, up from only 5% in 2011-2012. For Yale, that roughly translates into a $6.2 million pot, still well below many peer schools.


In most cases, the increases in scholarship support have vastly outstripped the off-putting sticker price of the degree. At Stanford Graduate School of Business, tuition has gone up by 16% in the past five years, but the pool of money available for scholarships has risen 80% to $15.7 million this year from $8.7 million. Stanford’s average student fellowship grant this year is $35,830, higher than any other business school. Many MBA admission consultants now claim to have won their clients multiple millions of scholarship aid. Stratus Admissions Counseling, an admissions consulting firm based in New York, says its MBA clients alone have captured more than $15 million in scholarships since 2011.

This is largely an American business school game. Most of the leading European schools, which have meager endowments and are far behind in tapping alumni for fundraising campaigns, have very little money to lure the world’s best students. INSEAD, for example, has just $3.8 million in scholarship money for more than 1,000 MBA students, less than 5% of its estimated gross revenue tuition of $80.2 million, or less than one-fourth the median scholarship support at a Top 25 U.S. school.

In the U.S., many admission officers are shocked at how aggressive the awards have become, especially to candidates whose GMAT scores are under 700. “It is crazy the money that some schools are throwing at people,” says Rob Weiller, associate dean of admissions at UCLA’s Anderson School of Business. “People who we were offering nothing to were getting five-digit aid packages from schools ranked in the top five. I hate the arm’s race it creates, but that is the reality. If you want to play and compete that is what you have to do today.”


This past year, he recalls, a solid candidate with a sub-700 GMAT declined an offer from a Top 20 school and agreed to attend UCLA’s Anderson School of Management. “But they came back and offered him a $40,000 scholarship three weeks before the school’s MBA program started,” says Weiller. “We said, ‘Look, that’s a lot of money and you should be flattered but we are not going to match offers.” The candidate decided to honor his commitment to start in Anderson’s MBA program.

Admission consultants say even Wharton has negotiated with candidates, offering a full ride to a woman with a 780 GMAT this past year who was also accepted by MIT Sloan. In some cases, money is being thrown at applicants who in years past would never have qualified for a merit scholarship. A female candidate with a 660 GMAT score was offered $20,000 a year from the University of Chicago’s Booth School this past year. “She had a solid GPA, undergraduate and work background, but we were not blown away by her,” says a rival admissions director.


  • As someone who has been involved with MBA admissions at four different business schools, perhaps I can add an insider’s perspective.

    First, as I wrote earlier, MBA scholarships are, actually tuition discounts, not cash awards. Schools set their nominal tuition rates and then set the net total amount of tuition they plan to collect as part of the financial planning process. The total net tuition is not equal to the number of seats multiplied by the nominal full tuition per student: a budget for tuition discounts is set at the start of the recruiting season. This budget is then provided to the admissions staff to target in shaping the incoming class.

    Tuition discounts are used to attract candidates who will benefit the program. “Benefit” is a broad concept and it includes considerations like: class diversity, gender balance, international profile, and specific backgrounds (e.g., STEM). All of these considerations usually roll-up into contributing to an MBA program’s rankings. Not surprisingly, then, the same characteristics are often sought by many schools. This leaves the candidates who can contribute in a desired manner to the class profile being fought over by multiple schools and raises the influence that a tuition discount can make in swaying these candidates’ final choice.

    Some of the comments in this thread by b-school alums suggest displeasure at the prospect of selected individuals getting tuition discounts since the personal benefit of earning an MBA will be similar to those who paid full tuition. Well, these same alums might also be upset if their schools fall in rankings. For those alums who feel tuition discounts should be avoided, I suggest they keep the program’s benefits in offering these discounts in mind.

  • UChic

    While I value my UChic MBA to be, I am surprised by the scholarship to the 660 (maybe it was deserving).

    But here is my view: UChic should ask for donations only from the grads that got scholarships. I am paying full freight, so I am making my donation currently.

  • Gerry Lovner

    What I don’t understand is why these schools don’t invest in better facilities, faculty, or career service personnel with those yearly scholarship dollars such that they can entice applicants with more than scholarship offers for folks that may not deserve it (660 GMAT? crazy). As an alum of a top 25 program, I give money back to my school and would be incensed to hear that my program was sharing that with undeserving people. Also, are consulting companies really saving their clients that much $15MM in 3 years (2011, 2012, and 2013)? $5MM in scholarships per year sounds far-fetched. That’s 25 full-rides worth a year. I don’t think so. I’m definitely emailing my development office to see what they’re doing with our money.

  • Comp

    Although I disagree that the point of an MBA is to make a lot of money, the goal of the scholarships in this case is not to make business school a better investment. The schools want to lure the best talent away from their competitors.

    Perhaps an individual does not need a full ride from Duke for the MBA to be a solid investment. However, without the full ride, that individual might attend Wharton/Booth.

  • bwanamia

    I think the whole idea is objectionable. There’s no death of loans available to fund an MBA. At the same time, the purpose of an MBA is to make lots of money (you can forget all that sentimental stuff people write in their essays). If b-school doesn’t make sense as a financial proposition, then it just doesn’t make sense. Either the investment of time and money is positive NPV or it’s not. From a social investment POV, it doesn’t make sense for the b-schools to kick in grant money if it would be negative NPV for the student.

  • Very interesting article with lots of interesting data – thanks.

    One quick observation. While it is (clearly) tempting to use metaphors like “doled out” or “mountains of cash” when describing scholarships, overwhelming these are not cash outflows from schools to students. Scholarships are tuition discounts and, in fact, represent a lack of a cash flow (from the student to the school).

    It all works out to the same thing in the end (i.e., the students who receive scholarships pay less tuition). Of course, it sounds far more impressive for a school to offer a scholarship than to offer a discount. That’s fine, but writing about scholarships in a detailed article like this one should require noting how they actually work.