Following last winter’s scandal surrounding the financial aid award practices at Stanford’s Graduate School of Business, the school has revamped its policies and will now base scholarships solely on economic needs.
Uproar ensued when a data breach revealed glaring discrepancies in scholarship awards. While the school had claimed it didn’t give merit scholarships, an MBA student who analyzed 10-year’s worth of data came to a very different conclusion.
Per the Wall Street Journal, his report showed that, “Students with nearly identical financial situations often receive ‘vastly different’ awards and that, on average, women received more aid than men and domestic students were favored over international ones.”
What does the new financial aid system look like?
Earlier this week, Dean Jon Levin laid out the updated system, which will go into effect this December. From now on, the school will award Stanford GSB fellowships based solely on financial need. In addition, all financial aid offers will incorporate a minimum loan. Levin said the financial aid office would determine the size of the loan on an annual basis.
“This approach will apply for the general Stanford GSB fellowship pool, which constitutes roughly 85% of our fellowship budget,” he added.
New guiding principles for financial aid:
- Excellence: Support Stanford GSB’s broad efforts to attract a competitive and diverse class.
- Access: Enable all students admitted to Stanford GSB to attend and participate fully in the educational experience.
- Fairness: Ensure the process treats students fairly and equitably.
Dean Levin explained that changes to the financial aid process will offer clearer guidance on assessing need. “Historically, Stanford GSB has assessed need based on a student’s current assets,” he explained. “Students pointed out that the calculation creates an incentive to ‘spend down’ assets, rather than saving prudently. To mitigate this incentive, our new system for assessing need will factor in prior income as well as assets.”
The GSB will also make several improvements to the financial aid application process. “We heard repeatedly that applying for aid was cumbersome, complicated, and frustrating,” Levin acknowledged. A new design is in the works and the school expects it to be an immediate improvement that can be refined over time.
Sometimes, exceptional circumstances will come up, Levin wrote, when students have complex situations, such as family health issues. He called these “edge cases,” and said the school hopes to work with students to make sure their calculated need accurately reflects their situation.
Additional specifics of the new financial aid system will be available for MBA applicants in December. For more on this issue, see Dean Levin’s note to the GSB community.