Stanford GSB Revamps Financial Aid Policies

Stanford University Graduate School of Business – Ethan Baron photo

A year after Stanford’s Graduate School of Business publicly conceded that it misled thousands of applicants and donors about the way it distributes financial assistance to its MBA students, the school today (Nov. 5) announced that it is revamping the way it assesses and awards fellowship and loan requests from applicants. The new system, will be effective for the Class of 2021, would award GSB fellowships based solely on financial need.

According to the new policies, Stanford decided that all financial aid offers will incorporate a minimum loan, the size of which will be determined on an annual basis. The new approach will apply to the school’s general fellowship pool, accounting for roughly 85% of its multi-million-dollar annual fellowship budget. The GSB also awards a set of named fellowships with specific criteria, including the USA Fellowship, the Africa Fellowship, and the Reliance Fellowship, which will be treated differently but will continue to be awarded alongside the general GSB fellowship process.

Though Stanford had consistently claimed it only awarded fellowship grants to MBAs on a need basis, an analysis of the school’s awards by Adam Allcock, a first-year MBA student, demonstrated that the school’s claim was not true.  Allcock, who was able to access confidential financial aid data from a shared network directory accessible to any student, faculty member or staffer of the business school. The information detailed the most recent 5,120 financial aid applications from 2,288 students. Allcock said he spent 1,500 hours analyzing the data and compiling an 378-page report on it.


His conclusion: “The GSB secretly ranks students as to how valuable (or replaceable) they were seen, and awarded financial aid on that basis. Not only has the GSB also been systematically discriminating by gender, international status and more while lying to their faces for the last 10 to ~25 years.” Allcock found that Stanford had routinely granted fellowship money to students with little regard to their financial needs, often favoring admits who were female and those from the financial sector, even though many had more savings than students who received no scholarship help or less financial support. His analysis also found what he termed “systemic biases against international students” in financial aid awards that appeared to favor students based on gender and race. “This is inconsistent with a need-based financial aid system,” he wrote in the report (see Stanford Misled MBAs On Financial Aid).

Stanford GSB Dean Jonathan Levin

The controversy led to the firing of the school’s chief digital officer (see Why Stanford’s GSB Dean Fired His Chief Digital Officer) and led to a massive review of the school’s financial aid policies. The school gave fellowship awards to 54% of the MBA student sin the Class of 2018, with an average award of $36,414. Total awards to both first and second-year students in the Classes of 2017 and 2018 came to slightly more than $16.3 million.

Today, the school said it will change the way it determines its awards to students. Instead of assessing need based on a student’s current assets, Stanford will now assess need by factoring in prior income as well as assets. The new criteria resulted after students pointed out that the earlier calculation created an incentive to “spend down” assets, rather than saving prudently.

The changes, announced in an email by GSB Dean Jon Levin and Director of MBA Admissions and Financial Aid Kirsten Moss, come after a lengthy review which included discussions, surveys and community meetings with some 200 MBA students, dozens of alumni in focus groups in California and New York and an advisory board of faculty, staff and alumni. The advisory group met multiple times over the spring and summer to review the team’s progress and provide advice.


Among other things, the review led to the conclusion that its application for applicants was burdensome. “We heard repeatedly that applying for aid was cumbersome, complicated, and frustrating,” wrote Levin and Moss. “There is some necessary reporting burden in any system that seeks to assess need fairly and accurately, but it soon became apparent that we could improve the process dramatically. We are working on a new user experience design that we expect to be an immediate improvement and that we can continue to refine over time.

The advisory group also believed it had to come up with a way to deal with what it called “exceptional circumstances.” Levin and Moss noted that over the discussions “it became clear that ‘edge cases’ can arise in determining financial need, where students face complex situations, such as family health issues. Our hope is that by working with students, we can ensure that their calculated need accurately reflects their situation, recognizing that it may change over time.”

The early discussions allowed the school to establish a set of three guiding principles for financial aid, according to the email. The first was to support the GSB’s broad efforts to attract a competitive and diverse class. The second principle was to enable all students admitted to the GSB to attend and participate fully in the educational experience, and finally to ensure that the process treats students fairly and equitably.


“We then considered possible models for offering financial aid,” explained Levin and Moss. “We divided these into three broad categories: 1) awarding fellowships to students in a discretionary manner to maximize yield; 2) awarding fellowships using a formula based solely on financial need; and 3) blended approaches that combine a need formula with an element of discretion.”

The forums revealed a wide variety of perspectives. “Many students advocated for a solely need-based formula on the grounds of access and fairness,” wrote Levin and Moss. “We heard arguments to include an element of discretion, if it would assist in attracting competitive and diverse students. We also heard that once admitted students felt attendance was possible, their decision typically depended on the overall appeal of the GSB education and community rather than the specific mix of fellowship and loans. This view was consistent with a review of recent enrollment decisions, which showed that students who declined to enroll often had not submitted a financial aid application, while a very large majority of students who applied for aid subsequently enrolled. We gained additional evidence from the experience with last year’s transitional system, which awarded fellowships based solely on financial need, and led to a highly competitive and diverse MBA Class of 2020.”

Ultimtely, the pair noted, “our review and redesign of the GSB financial aid process yielded an important lesson. We should move forward with humility, and be willing to question our design choices from year to year. Everyone involved in the process recognized that whatever system we adopted, it would be important to leave the door open for adjustments going forward. That being said, we are confident in the guiding principles that emerged from our process, and believe they capture the values of the GSB.”







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