Why Top Business Schools Are Focusing on Financial Aid and Tuition Assistance

In the not-so-distant past, universities and colleges rarely paid much attention to MBA financial aid or tuition assistance. After all, many aspiring MBAs had earned a decent salary before business school and are expected to double or even triple their earnings post-graduation.

Still, tuition at top MBA programs can be upward of US$130,000 for a two-year program. Skyrocketing costs and a student loan crisis dominating political debate has led to more interest in financial aid.

Full-time MBA programs are facing challenges, such as stricter immigration policies that are making potential international students reluctant to apply – an unfortunate additional blow for business schools. Similarly, talks about the class divide and a lack of representation of lower-income students at institutions of higher education has also put the cost of college in the spotlight.

As a result, financial aid and tuition assistance have now become the standard at top MBA programs.

Chad Losee, managing director of MBA Admissions and Financial Aid for Harvard Business School’s MBA Program says, “As a school, we are committed to making Harvard Business School accessible to talented students from all backgrounds. Our learning model depends on diverse perspectives in every classroom. In addition to our need-based fellowships, HBS held MBA tuition flat this year to support students.”

Annual tuition at HBS is US$73,440, according to the school’s website. In fact, HBS has spent US$41,500,000 for financial aid programs for MBA students in fiscal year 2019.

UCLA Anderson School of Management has a budget of US$15.5 million for financial aid in a given year for graduate business students. And UC Berkeley Haas School of Business provides more than US$8 million in scholarship funding each year.  

Where to begin

There is a myriad of ways schools address the issue. To start with, many business schools have their own financial aid offices separate from the university. While the process for attaining financial aid varies from program to program, there are some general standard practices.

For starters, merit-based aid usually refers to scholarships or fellowships, which don’t have to be paid back to anyone. Most business schools consider students for merit-based aid when reviewing their admissions application. On the other hand, financial aid is a reference to loans, which will eventually have to be paid back.

Domestic students are sometimes directed to fill out the Free Application for Federal Financial Aid (FAFSA). Some business schools also have an internal financial aid document. For example, Harvard Business School asks for the student’s previous three years of income and asset information to see if there is a need for aid.

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Ways to offset costs

Graduate business school administrators have come up with creative ways to address program costs. One common denominator is a program to help students who take summer internships to pursue a startup or a nonprofit because most of these job opportunities provide either minimal or no salary.

“Duke University’s The Fuqua School of Business Summer Internship Fund, sponsored by both school and student groups, matches what employers are able to pay to students interning with nonprofits, mission-driven businesses, or small businesses and startups so that those groups are able to benefit from the expertise of an MBA intern without significant financial sacrifice,” says Allison Jamison, assistant dean of Admissions at Fuqua.

Fuqua is not alone. Yale School of Management has a student-led Internship Fund that supports students interning in the public sector over the summer – now celebrating its 40^th anniversary.

Another trend taking shape is loan forgiveness programs for those entering the public sector after graduation. These initiatives are intended to help graduates better deal with student loans they have taken on to support their education. Yale School of Management says it’s a leader in providing loan forgiveness, which is something it has done since 1986. Stanford Graduate School of Business (GSB) also offers such an option.

Kirsten Moss, assistant dean of MBA Admissions and Financial Aid at Stanford GSB says, “In order to encourage MBAs to make meaningful contributions to social issues, economic growth, and political stability in organizations where salaries are typically lower, we offer a loan forgiveness program to reduce the financial impact of educational debt, by paying a percentage of graduates’ Stanford GSB loan obligations while they are employed in the nonprofit or public service sectors.”

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How are students paying for their education?

In the end, students must also take responsibility for their education and financial future, and some have come up with a number of ways to pay their tuition. Some take advantage of programs such as the GI Bill, for veterans of the military. In general, there is a mix of possibilities.

Soojin Kwon, managing director, full-time MBA Program and Admissions at University of Michigan Ross School of Business says, “Students are paying for their tuition through a combination of savings, scholarships, and loans. “Additionally, some students are sponsored by their employers. Others take on part-time graduate assistant or teaching assistant jobs. And some companies will partially pay for a student's tuition after the MBA graduate has been hired full-time.” 

For many MBA graduates, the financial future is bright. Business schools want them to consider their education a wise investment.

Rebekah Melville, managing director of Financial Aid at Yale School of Management says, “Even schools with need-based financial aid still use a co-investment model that require you to take loans. You should save diligently, but we also find that our students get out of debt about 6.5 years post-graduation.”

In fact, QS also finds MBA programs to reward students with a healthy return on investment (ROI). 

“We estimate that even among the top 20 global MBA programs, which average an eye-catching US$115,000 in total tuition, that it only takes 40 months or 3.3 years to payback the investment,” says Alex Chisholm, head of Analytics at QS. “This break-even estimate includes the opportunity costs of forgone wages and living expenses during the program. Further, it seems that graduates from these top 20 programs can expect an average 10-year ROI of nearly US$1 million dollars. This is a testament to the value of the degree and the premium employers still place on top graduates.”

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