Stanford GSB Aid Director: ‘Guess I Shouldn’t Have Told You That’

Nearly 18 months before an MBA student revealed that Stanford’s Graduate School of Business had misled applicants and students about its scholarship policies, the school’s head of financial aid apparently conceded he had the authority to parcel out scholarship dollars to applicants the school hoped to enroll regardless of their financial need.

Doing so, however, was in conflict with the school’s long-stated policy of providing fellowship grants only to applicants and students who could prove they and their families needed financial help to attend Stanford’s pricey MBA program. Most business schools provide substantial scholarship dollars to increase the quality and the diversity of their incoming classes, but only two schools–Stanford and Harvard Business School–have claimed that they only provide money to students on the basis of financial need.

The apparent admission by Director of Financial Aid Jack Edwards—made in a private meeting with an undergraduate student—makes clear that Stanford’s top officer was knowingly violating the school’s public policy of granting aid solely on the basis of financial need. At one point in the conversation, according to junior Adam Behrendt, Edwards said: “”I guess I shouldn’t have told you that.”

DEAN PROMISES MORE TRANSPARENCY OVER FINANCIAL AID PRACTICES AT GSB

It wasn’t until November of 2017—some 17 months later—when Stanford Dean Jonathan Levin publicly admitted that the school had misled thousands of applicants and donors about the way it distributes fellowship aid and financial assistance to its MBA students. Levin conceded that the school “has offered additional fellowship awards to candidates whose biographies make them particularly compelling and competitive in trying to attract a diverse class.”

He has also promised that the school would be “significantly more transparent about the principles and objectives being applied in making financial aid awards, and about how different awards are made. We are committed to working on this for the current admissions cycle.” The financial aid policies precede Levin’s deanship which took effect on Sept. 1 of 2016, but they are a consequential part of the school’s value proposition because two-year tuition alone in the MBA program now costs $137,736. With additional program fees and a living allowance, Stanford estimates the cost of its MBA for a single person living on campus at $225,594.

The whole issue had come to light as a result of a computer breach that exposed 14 terabytes of highly confidential student data detailing the most recent 5,120 financial aid applications from 2,288 students, spanning a seven-year period from 2008-2009 to 2015-2016.

DISCRIMINATION ALLEGED BY GENDER, INTERNATIONAL STATUS AND FINANCIAL BACKGROUNDS

The information was uncovered by a current MBA student, Adam Allcock, in February of 2017 from a shared network directory accessible to any student, faculty member or staffer of the business school. In the same month, on Feb. 23, the student reported the breach to Edwards, and most of the records were removed within an hour of his meeting with Edwards.

Allcock, however, spent 1,500 hours analyzing the data and compiling a lengthy report on it. His conclusion was that scholarship money went to women, domestic students and those with financial backgrounds who did not demonstrate a need for the assistance. Wrote Allcock: “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.”

The scandal has already led to the dismissal of GSB’s Chief Digital Officer Ranga Jayaraman, but it’s not clear if Edwards who appears to have knowingly allowed the school to falsely claim that it provided scholarship dollars only on a need-basis has been disciplined. Edwards, who also knew of the data breach in late February of last year, apparently failed to report the issue to Dean Jonathan Levin who has publicly said that he learned about it eight months later in October when Allcock sent the dean his analysis.

AN UNUSUAL ADMISSION IN JULY OF 2016

Edwards, who has been director of financial aid at Stanford GSB for nearly 11 years, made the admission in a private meeting with an undergraduate student, Adam Behrendt, on July 25th of 2016. A U.S. Navy veteran, Behrendt came to Stanford as a transfer student in 2015 and has since waged a personal campaign to make the University more accessible to veterans of military service.

Among other things, Behrendt alleged that Stanford was shortchanging undergraduate veterans like him out of the majority of their federal education benefits. He and a veteran representative on campus, Dustin Noll, met with Edwards in late 2015 to better understand “need-based” financial aid at Stanford’s graduate schools.

Behrendt had recently read a highly acclaimed book on the history of American Student Aid, “Aiding Students, Buying Students,” and was surprised when Edwards casually described using “need-based” financial aid to matriculate preferred applicants.

INCREASING AID FOR A ‘BLACK FEMALE ENGINEER FROM MIT’ OR A ‘WHITE MALE FROM RUSSIA’

During the conversation, Behrendt says that Edwards explained how he could increase “need-based” scholarship support for an MBA student who was, for example, a “black, female, engineer from MIT.”

When Behrendt asked him how he thought the above example was “need-based” aid, Edwards said, “I guess I shouldn’t have told you that,” according to Behrendt.

The comment shocked Behrendt. “Essentially, financial aid administrators like Director Edwards have the flexibility to adjust awards for students whose financial circumstances are not well captured by established formula,” he says. “For example, they can increase financial aid for students with extraordinary medical expenses. But this flexibility has been abused to discriminate between admitted applicants: to offer more lucrative awards to preferred applicants and, at worst, make education unaffordable to the less preferred.”

The meeting turned awkward when Edwards was  pressed for a more substantive explanation, recalls Behrendt. “[Edwards] then gave us another example, of increasing awards for a white male from Russia, to emphasize that he didn’t just prefer black females, but it was clear the conversation was over.”

STANFORD GSB HANDS OUT MORE THAN $16 MILLION A YEAR IN MBA FELLOWSHIPS

Among highly competitive business schools, scholarship money has become a weapon of sorts to win the best and brightest MBA students. The most highly selective programs toss around millions of dollars in fellowships and tuition discounts to craft quality, diverse classes of incoming MBAs. In many cases, they are buying higher GMAT scores and GPAs to increase their standing in rankings, especially U.S. News & World Report, which considers those factors in ranking MBA programs annually. But the MBA admission officials also use the money to alter the mix of students in their programs, most typically hoping to enroll more women or underrepresented minorities.

Only two schools have long claimed they only provide scholarship money on the basis of financial need—not merit or diversity or any other criteria: Harvard Business School and Stanford GSB. Revelations that the GSB has been less than honest about the way it parcels out the more than $16 million in MBA fellowships each year has rankled many because it also means that by funding students who have the wherewithal to to pay their own way, less support is available to students who more desperately need financial support.

“The policy isn’t the problem,” says Jeremy Shinewald, founder and CEO of mbaMission, a leading MBA admissions consulting firm. “It’s the lying that is the problem. The MBA community wouldn’t care if Stanford said it was using the money to build the best class. Every single other schools out there is saing we do it to shape a good diverse class. What is surprising is the need to pretent that it was not going on. It’s the opposite of what would be taught in any ethics class at Stanford.”