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MAY 4, 1999 B-SCHOOL Q&A: FINANCIAL AID Meet Chicago's Financial Aid Director A Conversation with Carol Swanberg, Director of Admissions and Financial Aid at the University of Chicago Graduate School of Business
Every B-school approaches financial aid in their own distinct manner. How does the University of Chicago administer aid? Do students have to take the initiative and apply for it? Or does the school work behind the scenes to pick the most notable applicants for specific fellowship? It's a little bit of both and depends on what kind of aid we're talking about. Financial aid at the University of Chicago is pretty much comprised of scholarships and loans. For the loan process, students have to apply through different programs. There is, for example, the Federal Stafford program. Then there are also private loans available. We send packets out to students so that they can decide which loan program they want to apply to. They then submit the forms to our office, and we process them. Scholarships are a different matter. We actually look at all the students who've been admitted to our MBA and IMBA (International MBA) programs and offer them scholarships. Students don't need to apply for scholarships -- we determine what scholarship they would be getting from us. It sounds like securing scholarship is somewhat of a "black box process," where admitted students don't really have a clear idea of how the financial-aid office decides to dole out monies... All of our scholarship money is awarded on a merit basis. So we look at everything that the student has submitted in their application to make those fellowship and scholarship awards -- those terms are pretty much interchangeable at Chicago. We're talking about money that doesn't have to be paid back to anyone in any way, shape, or form. Yes, the student really can't do anything because we're really looking at everything that they submit in their application. We hope that they've submitted everything about themselves in their application and that there should be no reason that they need to submit anything in addition to that. The one thing we don't have is assistantship that comes with teaching or research positions. So, to be considered for scholarship, all student can to do is check off, say, a box on the U of C admissions application that says, "Yes, please consider me for financial aid?" Right now, the box that is checked off on the application is primarily so that students can get a loan packet. We indicate that only U.S. citizens or permanent residents of the United States are eligible for Federal Loan programs. International students generally aren't eligible for those loan packets. So instead of wasting paper and sending a lot of packets to a lot of people who wouldn't even be eligible for those loans, we send them only to U.S. students who are permanent residents and have checked off that box. The box has nothing to do with scholarships. Once we're done with our first two rounds of admission, we take the list of all the admitted students and start offering scholarships. The aid process is not done as part of the admissions process; it's done completely separately. And if someone applies really early, it doesn't give them any kind of competitive advantage over someone who applies in the second deadline. What we state in our application is that if you want to be considered for aid, you should apply for the first and second deadline. Later on, if we have some students who are awarded scholarships who decide to back out and not come to the University of Chicago and we have [scholarship] money left over, we will then look at third deadline applicants. But there're very few who will be rewarded in the third round. So the point here is if you want to go to B-school and save money while doing it, it's best to apply sooner than later... Chicago GSB's annual tuition runs about $26,300, up 21% from just five years ago. Is Chicago upping the amount financial aid it awards on par with the tuition rise? Well, this year we've actually approached our dean's office to ask for some additional funding to offer different levels of scholarship. What we've offered before was pretty much the same package to everyone because we had a very small budget. This year, we've asked to be able to tier some of these things and maybe have a variety of different kinds of packages that we can offer to the incoming class. They'll affect about the same number of people, but we're hoping to be able to offer several packages of differing amounts. We have nothing at the moment that is a full-tuition scholarship. We're trying to grow the scholarship budget gradually. We can't just, all of a sudden, come up with the kind of money that we'd need to offer a lot of full scholarships overnight. What is Chicago's current financial-aid budget? That's really hard to calculate because that budget involves a number of different components -- endowments, gifts, and then our own unrestricted fund. What happens is the [budget] number changes all the time, depending on gifts and things, because gifts tend to come along during the year. So I'm a little hesitant to come up with a number because that might not be exactly what our budget is next year. I can tell you, however, that it has been growing, and that this year, we've asked for a little bit higher increase of our unrestricted money from the dean's office, which we've been granted. I'm quite pleased with that, but I must say that the increase isn't significant. It amounts to an additional several thousand dollars, not several million. Graduate education isn't cheap. We recognize that and so we'll probably approach the administration to say: Can we come up with a tiered system of awarding people different levels of scholarship money so that it's not just this minimum, little package. I think we're going to be able to move to a tiered system with the increase that the dean has granted us. Carol, though you recently joined the GSB in October, 1998, do you feel the economics behind graduate education are becoming more cumbersome for a growing number of aspiring MBAs? I don't think so. I think a lot of people look at B-school as an investment in their future. Most graduate and MBA programs are going to be expensive when you start adding living expenses and everything else. But I think people look at it as a two-year investment that they'll get the return on a little bit later on, five and ten years out of school. Have you turned anyone away based on their not being able to afford tuition and fees, living expenses, etc.? I don't know that we've ever turned someone away. Yes, people choose not to attend a university for lots of different reasons, and I'm sure financing is part of it for some people. Currently we offer 20% of our Class of 2000 some form of scholarship money. That's held steady each year. Then, it looks like about 90% of our students take out some loan money. I think most people expect to borrow some portion of money to help with the financing of their education. What's the range of fellowship aid that the school doles out to its students? For the most part, we offer fellowship aid worth $10,000. But there are several other packages that are usually under named gifts and are worth different award amounts. They can be smaller than the $10,000, and some of them are worth close to full tuition. They vary across the board. Does aid tend to decrease as a first year moves on to his or her second year of study? That's a really good question. I don't know. I haven't really broken that out. When it comes to financial aid, we look at everybody and how much money is out there. I haven't really broken it up between first and second year. I think when people are planning to take on an MBA, they always plan for the full two years. We counsel people for a budget that lasts two years. That means that with living expenses, books, fees, tuition, and everything else that the student needs, they should prepare to spend about $47,000 a year. So students are probably not eating out every night anymore. It's back to the dog days of bologna sandwiches, macaroni and cheese, and twinkies for desert. [Laughs] Well, probably not. There're a few people that probably go out here and there, but with all the coursework that's involved, a lot of people aren't eating anything! International students don't have it nearly as easy as their domestic counterparts -- there isn't too much scholarship or loan assistance out there for them. Banks are skittish, given the emerging countries that many foreign students come from, while most scholarship funds stipulate that they are designed specifically for domestic, U.S. citizens. What does your office do to help international students afford the school's $26,000 price tag? All students who are admitted are looked at for scholarships. Internationals are included in scholarship consideration. What we're doing is just looking for the best candidates that we have, the creme-de-la-creme of our admitted pool of students to give scholarship money to. I can't tell you what the break-out is of international students who receive scholarship because I don't even look at that when we're looking at financial aid. I can't say with any certainty that 20% of the international student population is getting scholarship money -- that may not be true. We put everybody on the scholarship list and we start picking people from that list, regardless of citizenship. Are there any specific programs or financial-aid packages that Chicago GSB has conceived for international students? Not specifically, no. Is that a plan for the future? No, it's not. We feel it should be fair across the board. We're not going to separate any group of people out of what we're doing. We want to keep everything on a level playing field. If a gift comes through from an alum or some other donor who wants to specifically give something to an international student, and even from a particular country, then we will oblige them with that. Harvard Business School made news last year when it announced its plans to have the Student Loan Corporation, a subsidiary of Citibank, offer international students loans with competitive interest rates. Moreover, these new loans do not require foreigners to have a cosigner. Does the University of Chicago have a similar alliance to aid its foreign population? We do not have anything like that. As far as loans are concerned, we let the loan companies manage all that. Meanwhile, international students are really not eligible for Federal money. For the private alternative loans, as long as they have a cosigner, they can usually get that funding. There is, I admit, a gap in there, however. A number of non-U.S. citizens can't get a cosigner, so they don't have any kind of loan opportunities. We do direct students to talk to their governments and banks at home. And we have a number of students who get loans from their home country and bring that funding with them. There's also scholarship opportunities for international students within their home countries, and sponsorship from companies, as well. We really encourage students to check into those things before arriving here because there's not a whole lot we can do when it comes to loan funding if they don't have a cosigner. We have talked briefly here about having the kind of a program where we could loan money to international students at whatever rate. But we're not comfortable doing that just yet. We want to see how some of these other programs work out for some of these other schools because there's huge liability there. If people don't pay the loans back, then the school is stuck with the bill. Like the banks, nobody wants to be stuck with the bill at the end of the day. Let's say I've just received my acceptance letter to the University of Chicago's GSB. What do you, as the school's director of financial aid suggest I do to shore up as much financing as possible? The first thing I suggest is for people to get themselves out of debt before they show up here. We're really surprised that people show up to school with credit cards with lots of debt and the added burden of car and insurance payments. The best thing that someone can do is pay off as much debt as they possibly can. If that means dipping into some the savings you have for school, then so be it, because the student loans that you can get through the Stafford Program and alternative loans actually have better interest rates than whatever you're paying on a credit card. You might as well pay your credit cards off so you're not incurring 19% to 21% interest while studying at the GSB without an income. It's better to take on a loan that's at 7% or 8% right now. I think students also need to be very much aware of the added burden of having a spouse, significant other, or children move with them to the Chicago area, particularly if their significant other isn't going to be working while they're earning their MBA degree. All the budgets we come up with for loan processing are for the students themselves. It's mandated by the U.S. government that loan budgets are for students to go to school themselves, not for a spouse or children or anyone else to be there with them. We can adjust some of what we do in our budget for things like daycare if you're here by yourself and there's no one caring for your child. But there's not a lot that can be added to the budget [for] living expenses and those types of things. So students should really think about that: The financial aid budget that we send out is for the student to attend the University of Chicago, not for anyone else who might be coming with the student as a dependent. When should admitted students start devising a financial path that will allow them to go to the University of Chicago for two years time? Either just before or while they're in the application process. There are so many people who don't think about how much [an MBA] is going to cost. They apply to these wonderful schools, they get admitted, and then they start thinking about how they're going to be able to pay for it. By the time students are admitted, which could be March or April, there's not a whole lot of time to secure funding before September [and the start of the MBA program] rolls around. It's not a good idea to wait until you're admitted; you need to be thinking about that way ahead of time. Ideally people should be thinking about financing their MBA even before they determine which B-schools they want to attend. You should definitely look at the costs of each of your "ideal" schools before sending out applications. You may find that you just can't afford to go to a few of them. There's your first B-school assignment: figuring out how to finance your MBA. Thanks Carol, for shedding light on Chicago GSB's financial aid process. Great. Thanks for giving me the opportunity. If you'd like to learn more about the Chicago Graduate School of Business financial aid program, you can visit the school's Web site at: www.uchicago.edu/programs/campus/financia.htm  Nadav Enbar  | | Learn about your online education options |
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