Harbus Editors Accuse Stanford GSB Dean Of “Gross Negligence”

Everything is more expensive in California, and that includes the full cost of an MBA. Stanford University is once again the costliest of all U.S. elite MBA programs at more than $225,000, accounting for such expenses as room and board, tuition, and others. File photo

‘WORSE THAT IT HAPPENS AT A SCHOOL THAT TEACHES BUSINESS ETHICS’

An editorial in the Stanford Daily, the student newspaper at Stanford, also has slammed Dean Levin, claiming that the dean has tiptoed around the more important issue of knowingly misleading the public.  “The data security issue features prominently in the University’s official response,” noted the editorial. “But the greater failure is one of integrity. The leadership at Stanford Graduate School of Business was caught lying about its commitment to “need-based” financial aid, which it has been doing for more than a decade. Yet this is only mentioned in paragraphs 12 and 14.

“Integrity should feature more prominently in Stanford’s official response, as it should in campus discussion more broadly, especially at the business school. University leadership knowingly misled students, donors and alumni, misrepresented its business practices and compromised Stanford’s reputation. This would be inexcusable anywhere, but it is worse that it happens at a school that teaches business ethics.”

The Harbus weighted in on the controversy two days after Dean Levin conceded that the school’s financial aid policies have failed to meet the expectations of students and alumni donors and pledged that the school would be more transparent about how it awards on the more than $16 million it annually provides in scholarship support to MBA students.

HARBUS EDITORS SAY THE CONTROVERSY HAS A BIG IMPACT ON THE GSB BRAND

“The explanation for how we award aid has not lived up to the ideals our students and alumni expect of us, and I deeply regret it,” said Levin in Dec. 7 email to the GSB community. “When differences in fellowship awards across students are not made clear, it leaves students wondering why they received a particular award, and questioning whether the decision was equitable. “It is vital that these fellowship awards are underpinned by a transparent and well-understood process that is forthright about how decisions are made and the principles that are used to make them. Here we fell short and we must do better.”

The statement, however, apparently did little to convince the Harbus editors of Dean Levin’s commitment to get it right. “Brands derive their power based on trust, authenticity, and alignment with customer values,” added The Harbus editors. “Food made by General Mills must be safe to eat no matter what ­ public trust in Cheerios is such that it is the first solid food many parents give to their children. The ice cream company Ben & Jerry’s is now managed by the transnational conglomerate Unilever, yet its “fierce authenticity to its values lead consumers to patronize and defend its scoop shops with a fervor usually reserved for local independent coffee establishments. Drivers who buy Ford trucks believe that their choice says something about their values that a Chevrolet cannot.

“The recent practices of Stanford’s Financial Aid department are a serious blow to the brand of the school on each of these three dimensions. These revelations may cause alumni apprehension when donating to GSB for fear that their dollars will not be used as represented. Students seeking the intimacy of a program less than half the size of HBS may wonder if they can trust the administration to treat them fairly. Applicants seeking financial aid may shy away from programs that intentionally put them further out of their reach. In aggregate, these concerns may cause lasting damage to the school ­ damage perhaps far greater than any external actor could muster”

A RAGING CONTROVERSY THAT GREW OUT OF A STUDENT’S ANALYSIS OF CONFIDENTIAL DATA

Stanford only found out about the data breach after Allcock informed the school’s financial aid director of his analysis in October of this year. When Allcock went through the data, matching the internal records with the profiles of students on LinkedIn, he was astonished by what he found. “GSB fellowships were only in part determined by a student’s financial need despite publicly repeated claims to the contrary,” he wrote. “The GSB has misrepresented and advertised its financial aid system to the detriment of students who make tangible financial decisions on the basis of these representations. Students with identical financial situations receive vastly different GSB fellowships awards and without any knowledge can graduate with up to an additional $80,000 of debt…”

Among other things, Allcock found preferential treatment based on gender. In the Class of 2015, for example, he estimates that female students received average fellowship awards of $37,357 versus $31,059 for men, even though women had higher cash savings, $23,640 versus $20,300. Though Allcock calls this a “troubling finding,” it’s well known that business schools have substantially increased their scholarship support for women to increase their enrollment in MBA programs–but at Stanford and Harvard, the only two schools that have claimed all their scholarship dollars supports students in need, that would be contrary to the stated financial aid policy.

Allcock’s discovery that more money is being used by Stanford to entice the best students with financial backgrounds suggests an admissions strategy that helps the school achieve the highest starting compensation packages of any MBA program in the world. That is largely because prior work experience in finance is generally required to land jobs in the most lucrative finance fields in private equity, venture capital and hedge funds. Stanford  sends a higher percentage of its MBAs into higher paying PE and VC jobs than Wharton, Chicago Booth, Columbia, or Harvard. Last year the median pay for the 12% of the students that went into private equity was a class-high $177,500, well above the overall median of $136,000. Venture capital firms, which hired 7% of last year’s Stanford crop, paid median starting salaries of $167,500.

The level of detail in the report, which includes an appendix that brings its length to a whopping 378 pages, suggests that the student became nearly obsessed with his own probe of the data. To identify the anonymous students in the dataset, he hunted down LinkedIn profiles and other social media. The report contains hundreds of charts and extensive analysis of thousands of data points. Displaying his seemingly formidable skills in data crunching, Allcock applies a good deal of regression analysis to the information he discovered.

DON’T MISS: WHY STANFORD DEAN JON LEVIN FIRED HIS CHIEF DIGITAL OFFICER or STANFORD MISLED MBAS ON FINANCIAL AID