Why Scholarships Are Intrinsic to Business Schools

Providing scholarships to qualified applicants should be a top priority for business school administrators. The fact is that graduate education has become so expensive that even the upper middle class can have trouble paying for it. Students at all levels, including the MBA, are taking on the heavy burden of loans they will be paying off for years to come.

As a result, graduate business students - and sometimes even their parents - are questioning the efficacy of attaining the degree.

Student loan crisis

As of early 2017, there were 44 million borrowers with $1.3 trillion in student loan debt in the United States, according to Make Lemonade and as reported by Forbes. The average tuition for public universities for the 2017-2018 academic year is $9,970 for state residents and $25,620 for those from out of state, according to reporting by QS’ TopUniversities.com. On the other hand, private universities cost on average $34,740 for the same time period.

To provide some perspective, the average household income in the United States was $73,298 in 2014, according to the US Census Bureau. One year of private university would drop that figure to $38,558 should the family pay out of pocket without taking on student loans. This demonstrates that many people leave undergraduate programs already carrying a heavy burden.

In addition to this, earning an MBA degree at a full-time program at a top business school can cost more than $100,000. Granted, many of those students graduate and earn upward of $100,000 per year and have presumably been holding down a job for the intervening years, but the high tuition can still force their hand.

There was a time when companies would sponsor employees’ education. Yes, they would ask for guarantees of employment well beyond graduation, but they would still foot the bill. Part-time MBA programs were, to some degree, built on this partnership.

Over the years, however, fewer companies have been willing or able to invest in education. Most are not paying off the entire bill if they are paying at all, and so students are forced to dig into their own pockets.

A price to pay

Ever-rising tuition and insurmountable student loans aren’t sustainable. Before students ever get to an MBA program, they have to complete an undergrad program, which has been under fire lately.

“Too many Americans, particularly working-class Americans, are not sure that the return on investment is as high as it could be anymore,” said Terry W. Hartle, senior vice president of government and public affairs at the American Council on Education, according to The New York Times. “And that’s where we have to do a better job.”

If you’ve read my piece about why the MBA is still valuable, not to mention why you still need a college degree, then you’ll know how I feel about this. Obviously, the MBA degree, which I myself earned, is for a niche group, but the price might be locking out superstars.

What can educators do

While creating more innovative curricula and career support is vital, business schools can do more to attract and support qualified candidates. Namely, they can provide scholarships. Undergraduate programs have been offering gifts to incoming students for some time now, and business schools are getting in on the act too, as we’ve covered.

With an influx of donors to business schools, there is money to be spent. Buildings, technology, and think tanks are all commendable projects on campuses that raise healthy endowments or simply can afford them. I don’t begrudge such initiatives.

However, scholarship money might be the best investment schools and the government can make. The US Department of Education and colleges and universities dole out $46 billion in grants and scholarships every year, according to debt.org. Still, the bulk of money goes to those in undergraduate programs. Frankly, business schools should make more use of grants and scholarships too.

Why scholarships should be a top priority

• You attract the best and brightest. Money is a great way to lure qualified candidates to your program. These students create an environment ripe for learning and positive peer-to-peer interactions. Much of the MBA experience is reliant on classroom discussion and what you learn from fellow classmates, who were in the field for at least a few years. As a result, your brand gets a boost. Grads become contributors as alumni, which provides payback to the school for the long term.
• Graduates sing your praises. A university’s best advertising campaign is its alumni. They leave campus but carry the school in their heart (if it treats them well). Grads then spread the word about their experience. In addition, they’re willing to network and support the community beyond graduation and their success becomes the school’s success.
• A more diverse population is a necessity. Offering scholarships is a way to attract a more varied population. Some candidates might not consider business school simply because of the hefty price tag. With a scholarship, they might change their mind. In this way, scholarships can broaden the pool of students. This could include those with liberal arts backgrounds, women, or people from lower-income brackets. A more diverse population makes for a better education.
• A quicker route to decent ROI elevates the school. Grads who have received scholarships will pay less for tuition and reach payback at a quicker pace. If the school’s ROI score rises, it could gain points in various rankings. Besides the rankings, faster paths to positive ROI are simply better PR for programs.

Ultimately, institutions of higher learning, including and perhaps especially business schools, need to redeem themselves. Right now, high tuition fees have people questioning the utility of earning a degree. Some think these schools are akin to corporate machines.

Grants and scholarships, along with other initiatives, can help undo this perception. Perhaps, helping students and their parents or employers better afford education will restore their faith. Maybe the schools will win, too, by being able to do what’s at the core of their mission - educate as many people as possible.

This article was originally published on Linkedin.