Announcement of New Financial Aid System
Dean Jon Levin and Assistant Dean Kirsten Moss write to the Stanford GSB community describing new criteria for the financial aid process and fellowships.
In January, we launched an initiative to review and redesign Stanford GSB’s financial aid system. Many members of the Stanford GSB community contributed time and ideas as we explored and deliberated different approaches to allocating fellowships and loans to students offered admission to the MBA program. These decisions are important in enabling students from a wide range of backgrounds and circumstances to attend Stanford GSB. We write today to describe the initiative and the system that will go into effect in December.
We sought from the start to include faculty, students, staff, and alumni in the Financial Aid Initiative. The Stanford GSB Student Association, and around 200 MBA students, provided influential input through discussions, surveys, and community meetings, including a design thinking session that envisioned how financial aid should look from an applicant perspective. We consulted with dozens of alumni, and held focus groups in California and New York. We formed an advisory group of faculty, staff, and alumni to assist Kirsten Moss, Assistant Dean and Director of Admissions and Financial Aid, who led the initiative. The advisory group met multiple times over the spring and summer to review the team’s progress and provide advice. Their input was critical in shaping the plan. Additionally, we sought input from university and outside experts.
The first phase of discussions helped us to articulate a set of 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.
We found that these goals resonated widely and captured a shared vision for our community.
We then considered possible models for offering financial aid. 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.
Our forums and discussions revealed a variety of thoughtful perspectives. Many students advocated for a solely need-based formula on the grounds of access and fairness. 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 Stanford 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.
With these considerations, and acknowledging that the income of our endowed financial aid funds are already awarded on the basis of financial need, we decided to proceed with awarding Stanford GSB fellowships based solely on financial need. We decided further that all financial aid offers will incorporate a minimum loan, the size of which will be determined on an annual basis. This approach will apply for the general Stanford GSB fellowship pool, which constitutes roughly 85% of our fellowship budget. Stanford GSB also awards a set of named fellowships that have specific criteria, including the USA Fellowship, the Africa Fellowship, and the Reliance Fellowship. Our review did not encompass these awards, as none of these will change and continue to be awarded alongside the general Stanford GSB fellowship process.
This decision led us to tackle several additional issues over the summer.
The first is how to assess financial need. Historically, Stanford GSB has assessed need based on a student’s current assets. 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 second is the applicant experience. We heard repeatedly that applying for aid was cumbersome, complicated, and frustrating. 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 third is how to deal with exceptional circumstances. In our 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.
Additional specifics of the new financial aid system will be available for MBA applicants in December.
Our review and redesign of the Stanford 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 Stanford GSB. Again, this reflects the contributions of many members of the Stanford GSB community, and we would like to thank everyone who participated in this process over the past year.
We look forward to rolling out this new system in December.
Philip H. Knight Professor and Dean
Assistant Dean, MBA Admissions and Financial Aid