HBS Adds Scholarship Support For Low-Income MBA Students

Members of the Class of 2016 celebrate Commencement Day at Harvard Business School

Taniel Chan, 27, graduated this year from Harvard University, a dual-degree graduate whose impressive resume now includes an MBA from Harvard Business School and a Master’s in Public Policy from Harvard Kennedy School. He’s also the proud son of a father who has worked as a waiter in Times Square restaurants for more than three decades ever since immigrating to the U.S. from China.

While at Harvard, Chan recalls one classmate whose family depended on her for weekly groceries and another who wondered how he would juggle the financial responsibilities of the children he hopes to have with those of his parents who are were unable to save for retirement. And then there was the classmate who spent part of her childhood living in a homeless shelter with her mother, couch surfing between in the homes of church members before they got back on their feet.

So when Harvard Business School last week announced a new scholarship program to support MBA students from families of low socioeconomic backgrounds, Chan had plenty of reason to feel grateful. He was involved in helping to establish what HBS is now calling the Forward Fellowship, a grant program to insure that the school continues to admit students from all types of communities.

A LESS-EVIDENT DIMENSION OF DIVERSITY: A LOW SOCIOECONOMIC BACKGROUND

Son of a New York City waiter, Taniel Chan graduated with his Harvard MBA this year

“When it comes to diversity,” Chan says, “things like race or gender can be readily apparent. But there is a dimension of diversity that isn’t so evident, the socioeconomic one.”

The fellowship is designed specifically for students who carry significant financial burdens or obligations as a result of their family background and circumstances. Beginning with the Class of 2020, awards will range from $10,000 to $20,000 in each year a student applies, above and beyond the $34 million in annual need-based aid that the school already offers.

Just how much the new program adds is not yet known. “We don’t think there will be a rush at the door,” says Jana Kierstead, executive director of Harvard’s MBA program. “Demand-wise, we are going to learn as we go. But this is meant to be an additional pool of money, above and beyond what students would get through the need-based process.”

Scholarship support to MBA students at the school hit an unprecedented $34 million last year, up from $32 million in 2015. That increase brought the average annual fellowship per MBA student to a record $35,571, up 8% from $32,919 in 2015.

AVERAGE MBA DEBT AT HARVARD LAST YEAR WAS $84,000

The scholarship support reflects the school’s strategy to price its prestige MBA program at the midpoint of peer business schools. In the past five years, the school’s average two-year MBA fellowship award has grown from $53,563 for the Class of 2012 to $69,000 for the Class of 2017. Roughly half of the school’s MBA students currently receive fellowships, which now covers about half the cost of the annual tuition of $72,000.

Despite the generous amount of support, Harvard MBAs who had to borrow to finance all or part of their education left school last year with average student debt of $84,000. After feedback from students, the school concluded it could do more, especially for students who grow up in a lower-income household or who provide parents with financial support during or after they complete the MBA program.

Chan, then the only student on HBS’ financial aid advisory board, began work on the program as an independent project as a way to give back to the school. As a first-generation American who was born and raised in Brooklyn, he reached out to classmates with similar stories, creating mini-profiles that could be shared with alumni to raise funds for the new fellowship.

“HARVARD MADE ME MORE CONSCIOUS OF THE DIFFERENCE IN SOCIAL BACKGROUNDS.”

Unlike many of his classmates who went to Ivy League schools, Chan got his undergraduate degree in finance from Binghamton University and had worked for Goldman Sachs and the New York City Department of Education before entering Harvard. At times, his father worked as a waiter at two restaurants to support the family. Yet, Chan never felt poor, disadvantaged or even different in any meaningful way. “I never thought too much about it because for me it was all I really knew,” he says. “It wasn’t until I went to Harvard Business School that I started to feel a broader spectrum of class, but not in any way that was exclusionary.

“I always had enough to get by, but compared to a lot of my peers at Harvard I was pretty different. I never had the opportunity to travel. I was 22 when I took my first international trip. When I arrived at business school, a lot of my friends knew how to ski. I had never done that. A lot of them had beach holidays and knew how to swim. I never learned how to swim. For me, Harvard was a place of many firsts, and I am tremendously grateful for the experience.”

The Forward Fellowship program is not only a first for Harvard but also thought to be a first among all business schools. “This is on top of Harvard’s regular need-based formula so you won’t receive this in lieu of that other support,” says Chan. “I think this will help a segment of people who might not have received any money at all or received smaller grants. One of my classmates, for example, pursued investment banking after undergrad not because he wanted to but because he needed to take care of his family abroad. Every single month, he sent a check to them. In turn, he was penalized by the financial aid system because the school looked at his tax returns, without knowing he was also supporting his family. So this is Harvard’s way of acknowledging one of the imperfections in a need-based system of financial support.”

APPLICANTS FOR THE FORWARD FELLOWSHIP NEED TO WRITE A NEW ESSAY

The new program, moreover, is not being made to increase the school’s population of U.S. ethnic minorities which total 26% of this year’s incoming class.  “It’s not meant to be a pipeline program,” explains Kierstead. “Our gut is that it will be more about debt relief” than significantly increasing the number of students from lower-income backgrounds.

Unlike regular need-based fellowships that consider a student’s individual financial situation, the Forward Fellowship’s application process will take into account the student’s family circumstances and financial history so the available funds can be distributed to those who need it most. The awards are intended to alleviate some of the financial concerns associated with earning an MBA and to help these students make an investment in themselves.

“We have a fair amount of diversity in the applicant pool and in the classroom,” says Kierstead. “So we are happy with the diversity of the students we have but it will really go to the quality of their experience. For those who have outside burdens, this will help that.”

Applicants will be required to complete a supplemental application to qualify for the aid, along with a brief open-ended essay on why they believe they would be eligible for the extra financial support. “In the process of evaluating the circumstances, we really want to make sure we deploy the resources to the neediest people,” says Kelly Quinn, associate director of admissions and financial aid.

HBS WILL LOOK AT FAMILY CIRCUMSTANCES AND FINANCIAL HISTORY

“We will handle this supplemental application process somewhat differently,” adds Kierstead. “In the regular process, we only look at individual students, not where they come from or where their parents come from. In this case, we would look at family circumstances, income and assets. What we think we will find is that there are students who are adverse to taking on debt and they may play a role in supporting their families.”

In looking back on his MBA experience at Harvard, Chan says he found it particularly interesting when he learned about the different things his classmates worried about and how different they were from what kept him up at night. “I appreciated the honest sharing of what we were concerned about, be it our family, careers, relationships, etc. These kinds of conversations were made all the richer when we meaningfully connected with people we otherwise might not have met.

“It’s difficult to be a leader who makes a difference in the world if we feel financially compelled to pursue roles that we don’t truly love. Following opportunities in entrepreneurship, the public sector, or the social sector may not be financially judicious when debt is among the many obligations to consider. The Fellowship may allow us to pursue careers spurred by passion rather than money.  Neither your postal code nor the amount in your savings account precludes you from a transformative two years here.”

DON’T MISS: HBS SETS NEW RECORD FOR MBA SCHOLARSHIP AWARDS

About The Author

John A. Byrne is the founder and editor-in-chief of C-Change Media, publishers of Poets&Quants and four other higher education websites. He has authored or co-authored more than ten books, including two New York Times bestsellers. John is the former executive editor of Businessweek, editor-in-chief of Businessweek. com, editor-in-chief of Fast Company, and the creator of the first regularly published rankings of business schools. As the co-founder of CentreCourt MBA Festivals, he hopes to meet you at the next MBA event in-person or online.