Historical Look at Financial Aid
Dean Jon Levin writes to the Stanford GSB community to share lessons learned from a historical review of the financial aid process.
Last December, I wrote to you to apologize because our historical financial aid system had fallen short of our ideals for transparency and straightforward communication. At the time, I stated that we would ask the university to conduct a review of our historical financial aid process so that we could learn from it, implement a transitional process that was clear and transparent, and initiate a process to redesign the financial aid system for the future.
We successfully implemented a transitional system last year using a solely need-based formula to allocate fellowships and loans, and I am happy to report that we have an exceptional MBA Class of 2020 enrolled in fall quarter classes.
Today, Assistant Dean Kirsten Moss and I reported on the Financial Aid Initiative, which engaged dozens of students, faculty, staff, and alumni in an effort to develop an improved financial aid system. I am extremely proud of the work done during this process, and the guiding principles that emerged. I am confident Stanford GSB will be stronger with the new system, and for having gone through this process.
Over the past year, the university also conducted a review of our historical process. This resulted in ongoing discussions over many months. I would like to share some of the lessons from this review, because they informed our decision-making during the Financial Aid Initiative.
First, our historical process involved allocating a mix of fellowships and loans to students who demonstrated financial need, based on their current assets. The mix of fellowships and loans involved some discretion, which increased the fellowship offers of particular students and lowered the loan portion of their financial aid awards. This system evolved over a number of years. The communication and explanation provided to students should have reflected this aspect of the awards clearly and directly, and should have evolved in parallel. It did not. This played a key role in our thinking over the last year. We recognized that to implement the guiding principle of fair and equitable treatment, it would be essential to put in place a system that fostered trust. This favored a more transparent formula for allocating fellowships rather than a process that involved greater subjectivity in making awards.
Second, the historical system was motivated by a desire to attract a competitive and diverse class. Most peer schools, which share this objective, have used and continue to use discretionary awards, either in whole or in part. In this sense, the historical system aligned with the perceived market environment. We took this observation seriously, because we seek to attract talented students who often have many options. After an analysis of alternative award mechanisms, we concluded that in the current environment, with a sufficiently generous fellowship budget, we could continue to satisfy the guiding principle of attracting a competitive and diverse class with a solely need-based formula. At the same time, we recognized the need to re-evaluate this conclusion as we learn more from year to year.
Third, the historical system did not derive from an explicit and publicly stated set of guiding principles. This again informed the process over the past year. It led us to sequence our decision-making, first identifying a shared vision of the principles, and then debating the specifics. It also helped to highlight the need for clear processes and oversight going forward to ensure that we remain aligned with the principles, even if we adapt the specific design as the environment changes.
The past year has been a learning process for many of us at Stanford GSB. I am grateful to the students, faculty, staff, alumni, and others who helped turn the recognition of a problem into the foundation of what I believe will be a strong financial aid system that will support outstanding MBA students for many years to come.
Philip H. Knight Professor and Dean