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JULY 13, 1999 B-SCHOOL Q&A: FINANCIAL AID Meet Krannert's Financial Aid Director A Conversation with Chuck Johnson, Director of Professional MS Programs at Purdue's Krannert Graduate School of Management
Chuck, to start, what annual budget should future Krannert students have in mind for their MBA study? It varies a little depending on a student's residency status as well as according to needs with housing and personal expenditures. For an in-state resident, it would fluctuate from $15,000 to $18,500 a year, which includes tuition and living expenses, books, and all direct costs. For a nonresident, it ranges from $23,500 to $27,000 a year. Has the student budget been increasing markedly over the last couple of years? It has grown somewhat as tuition has grown. Typical growth in tuition has out-paced inflation, like most places, [and ranged] around 4% a year in the last few years. But the cost of living has remained relatively constant. Krannert's out-of-state tuition fee tops the in-state one by nearly $8,000. (Editor's note: Krannert's 1998-'99 out-of-state tuition is $15,424, while it's in-state tuition is $7,176.) Does the school make it possible for its out-of-state students to earn a second-year out-of-state tuition waiver? A number of our second-year students receive funding through a variety of vehicles, the primary one being graduate assistantships, which provide a waiver of most of the tuition, including the out-of-state portion of tuition. But we don't have a specific vehicle to waive out-of-state tuition for second-year students. The state is very strict on its resident's requirements and will not waive tuition just for out-of-state [students] or grant residency status just for someone who's been studying for two years. However, if someone's spouse is working in Indiana or if [the student] is working on campus specifically, they can be classified as an Indiana resident as long as they're working on a full-time basis. Though tuition costs continue to rise each year, there are a number of options students can take advantage of to help them finance their two years of business school. What aid opportunities are available to incoming Krannert students? There are a variety of options available, including federally funded subsidized loans, such as the Stafford loan. The Stafford offers a low interest rate and has a limit of $18,500. And a fair number of our students get one, year in and year out. They can be a tremendous way to help pay for the cost now in anticipation of the increased salaries that students are going to receive upon graduation. The government has worked hard to try to keep those affordable and make sure that those are easily accessible to students. In addition, students can pursue, as I briefly mentioned, graduate assistantships, which are a work-study type of arrangement where students work 10 to 20 hours a week in exchange for a waiver of most of their tuition, plus a monthly stipend that will range on the order of $500 to $1,000 a month. The assistantships are a tremendous vehicle for funding many of our students' education, especially our second-year students who've had a chance to make contacts and know the ropes. Somewhere on the order of 25% to 30% of our second years get an assistantship, and a small percentage of first-year students also get one. The assistantships can provide two benefits: One is the tangible financial benefit, and the other one is the opportunity to work with faculty on projects for the university. The third alternative for students is fellowships or scholarships, which we use interchangeably. We refer to a fellowship as a merit-based award that may not be a full fellowship in the traditional sense, but it will defray a portion to all of the cost of tuition. For example, students may get a scholarship offer of, say, $2,000 to $8,000. But there are a few cases when they'll receive some worth as much as $10,000 or more. Are graduate assistantship and fellowship applications folded into the admissions process, or are they separate and apart? The fellowship award process is included as part of the admissions application, and we take an active role in managing that. We actively scout candidates who are eligible for fellowships, based on qualifications relative to the incoming class. We try to bring approximately 10% of the top 10% of the class in on fellowships. For assistantships, we have a section on our Web site where we post open graduate assistantship positions for all students including our incoming students. We provide them with contact information and students are pretty much on their own for finding those kinds of positions. There's a core number of assistantships that are available year in and year out. They include positions within Krannert such as working in the Management Placement Office or working in the Admissions Office or Executive Education Center, and supporting specific programs such as our Technology Transfer Initiative or our Center for International Business. Then there are ad-hoc research-associated positions that are driven by funding or by upcoming projects or consulting work that a faculty member may be doing. There's also a whole host of positions that are available outside of Krannert, including residence hall counselorships, positions in administrative roles, or even some teaching positions in Spanish, technology, or some other areas of the university. Krannert hosts 380 full-time MBA students each year. How many of those students receive at least one form of aid that you just described? About three-fourths of our students receive some form of aid, whether it's fellowship, scholarship, or a federally funded loan. Scholarships are the most lucrative form of aid, given that students don't have to pay any of their award back. Have the number of scholarships and the amount of their awards increased over the last couple of years? For years we've tried to balance both the breadth of aid for our incoming class and the depth of aid for specific students. I think we do a pretty good job of managing both. This year, for the first time, we have begun to link first-year fellowship scholarship monies with second-year graduate assistantship guarantees. For example, an incoming in-state student can be offered an $8,000 incoming fellowship that just about covers all of his tuition costs. And then we'll offer a second-year graduate assistantship, which pretty much covers all of the direct costs of education for that second year. How many people does that fellowship/assistantship combination benefit? For this year's entering MBA class, probably 8% to 10% will come in with varying levels of support with that guarantee of second-year funding. Is fellowship funding based entirely on merit, need, or a combination of both? The fellowship funding is based on the relative qualifications of the [admissions] application. We do ask that the students come to interview on campus for the fellowships so that there is more in-depth exploration of their capabilities and desires and fit for the program. And we do have a handful of fellowships that are full-ride, traditional fellowships, but those are a very small percentage of what we offer. Does the amount of scholarship award that a student receives fluctuate moving into the second year of Krannert's MBA program? Scholarship offers tend to be first-year-only guaranteed funding. As I mentioned, in the past what has happened is that we've guaranteed first-year funding and made available on a competitive basis graduate assistantships for the second year. This year, we actually began to guarantee assistantship funding for the second year. Generally, about three-fourths of the tuition fees are waived, and then students get a monthly guaranteed stipend of at least $500 to $5,000 on top of that. Do students negotiate these packages? The matching of assistantships for the second year is based partly on skill set and fit for positions. We guarantee assistantship funding for the second year, but we can't guarantee a specific position. So if someone says, "I definitely want to work in your computing center," I can't guarantee that because there may be other folks who are better qualified for that kind of position. But I will guarantee them that we will find an appropriate position for them within the Krannert School during their second year. Is Krannert's scholarship money growing to better accommodate students? It has been growing, and we've been very fortunate to have some outstanding donors and corporate supporters. The amount this past year that we offered in fellowships was just under $500,000. Meanwhile, our graduate assistantship budget was $897,000. So we're approaching a total budget of $1.4 million. Does the possibility of receiving scholarship decrease the longer a prospective Krannert student waits to apply? If you apply in February or March, when the pool is wide open and you are a strong candidate, then I would say that we are much more likely to make an offer to you. As with other schools, our [aid] money decreases and our pool of candidates increases as the admissions cycle unfolds. It's likely that there'll be fewer opportunities for funding if an applicant waits, say, until April or May to apply. Does Krannert earmark financial aid for its minority, female, or foreign students? We have something called the Business Opportunity Program (BOP) for both undergraduate and graduate African American and Hispanic students that is a fellowship and graduate assistantship combination. Essentially, we fund recipients through corporate donations that have been built up over the years. The BOP is an outstanding opportunity for those students to obtain a first-class degree with little or no out-of-pocket expense. (Editor's note: Interested minority candidates can contact BOP Director, Dr. Cornell Bell, at 765.494.4520 for more information.) In addition, the Purdue Graduate School offers several Graduate Opportunity Fellowships to minority students (these awards are offered in addition to the Krannert-based BOP; students cannot accept both BOP support and a Graduate Opportunity Fellowship). Do eligible applicants need to do anything to qualify themselves for BOP funding? Because it's a competitive award, students have to send in a separate form to the program, and that information is typically provided in the admissions application. Krannert has a sizable international student body -- about 36% of its class of 2000 hail from countries outside of the U.S. Is there specific financial aid dedicated to the school's foreign student population? We have some fellowships. For example Dr. Jurgen Grossman, who is one of our benefactors, has set aside a $10,000 fellowship for students coming from Germany, Austria, and other parts of Eastern and Central Europe to encourage individuals from those regions to attend Krannert. Also, a significant portion of our international students get assistantships either in their first- or second-year on a competitive basis. Many of them are highly skilled in technical areas and compete very well with the domestic population for those positions. So Krannert's foreign students are not restricted from receiving either scholarship or graduate assistantship? For fellowship money, we tend to look exclusively -- except for those that are designated -- for domestic students. But for graduate assistantships, the field is wide open. What can I do as an international student to increase my chances of receiving financial assistance from Purdue? For the graduate assistantships, it's key that students have good technical skills because those skills are always going to be in demand, whether it's computer skills or language skills. We've had a number of our international students come in and teach Spanish or other romance languages, and a bunch work in the Computing Center both in Krannert and other parts of the university. So, when foreigners apply, they should make sure that their skill sets are clearly marked on their resumes. Of course, federal aid, scholarship, and graduate assistantship can only cover so much of the tuition bill. Do the vast majority of students take out some form of private loan? A fair number of students do. In 1998-'99, 40% to 50% of our student population took out loans. Last year's graduating class (class of 1998) took out an average of about $21,800 worth of loans, which is relatively low compared to some of Krannert's competitors. Is that directly tied to the area's low cost of living? It's related to the cost of living, plus our [low] tuition. We have a significant number of in-state students, and their cost basis is about half the tuition as out-of-state residents. (Editor's note: Last year, Indiana residents constituted 30% of Krannert's incoming MBA class.) Which lenders do you suggest incoming students contact? Having worked in the banking industry, my first piece of advice is to always contact the bank that you've worked with as a customer and see what kind of opportunities they might provide you. Banks tend to like people who have done business with them in the past, whom they feel good about, and whose habits they know. So I always encourage someone to work with their existing bank. Outside of that, I'd suggest surfing the Internet to look at bank Web sites. They will allow you to look up competitive loan rates for student loans. For example, Key Bank's Web site contains online student loan information, including an online loan application. And First Union's subsidiary, Educaid includes a lot of resources, including some information on loans for international students. Then there's also the MBA LOANS Program offered by the Graduate Management Admission Counsel (GMAC). This program has worked out well for a lot of students who have had difficulty going through traditional bank lending instruments. They have a little bit more flexibility than many banks tend to. For international students, shoring up loan money is fairly challenging, given cosigner restrictions and high capitation fees. Has Krannert set up any programming that is less restrictive to its foreign population? We haven't set up anything specifically, and to be honest with you, that hasn't impacted us at this point. I know that's a problem out there, but as far as our student population is concerned, they have not come to me requesting a special program. [A more foreign-friendly loan program] is something that we want to look at though, as our student population tends to be fairly strongly represented from outside the U.S. One of the things that draws students to Krannert is our relatively low cost. So the funding question is not as big a bite to take for our students as it is at some other schools. I think many of them are able to fund out of their own resources. Also, because of the wide range of graduate assistantships that are available for our students, especially in the second year, I think that the students tend to graduate from Krannert with a lower debt level. I'd bet that relatively inexpensive student housing helps keep students' costs down. Housing here is pretty cheap, compared to some of the major city locales that other schools are in. You could probably find a one- or two-bedroom apartment for under $500 a month within walking distance of campus. And if you have a roommate, you can split those costs for a two-bedroom apartment at $250 a month. On-campus housing, meanwhile, is plentiful and nearby...although we're probably going to see that change a little bit as our campus population continues to grow. Two graduate houses are located directly behind Krannert and connected by tunnels -- you don't even have to go outside in the wintertime. They offer a pretty good service for the money. Where would you suggest students look for additional aid offered outside of Krannert's mossy walls? One place students ought to look is with their employers, whether it's a current employer or perhaps a future employer. With the great economy that we've had, many employers are becoming very creative about how they incent. We're seeing, for example, an increase in intern employers who are offering some form of tuition-based aid for the second year. (Editor's note: Nine percent of Krannert's Class of 1998 received tuition reimbursement from their employer.) One company is considering expanding its reach by actually putting people on the payroll earlier so that they begin to accrue benefits and eligibility for retirement earlier on. Overall, is the cost of a Krannert MBA education financially burdensome to incoming students? No, I think we've seen quite the opposite. The financial models that I've seen, certainly at Business Week and other places, indicate that the cost of an MBA education is well worth the time and money invested, and I think Krannert offers a low-cost alternative to some of the higher-cost programs. Our students have seen some of the best returns on their investment, both in terms of increased salary and payback. I think that we are very conscious of the value that we offer and want to continue to make sure that that's the case. Thanks, Chuck. Well, thank you Nadav. If you'd like to learn more about Krannert's financial aid program, you can visit the school's Web site at: www3.mgmt.purdue.edu/Masters/Admission/financialaid.htm  Nadav Enbar  | | Learn about your online education options |
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