Home
| Register/Subscribe Home | /common_adcode/bs_qnafinancialaid_10.htm
|
 UNDERGRADSMain Page2007 RankingsAdmissions Q&AsCareer Q&AsUndergrad ForumReading ListRecruiter Q&AsSchool Report CardsSchool ToursUndergrad 24-7Undergrad VideosNews HeadlinesPREMIUM CONTENT
| |
AUGUST 16, 1999 B-SCHOOL Q&A: FINANCIAL AID Meet MIT's Financial Aid Director A Conversation with Stan Hudson, Senior Associate Dean at the Office of Dean of Students and Undergraduate Education at the Massachusetts Institute of Technology
To start us off, Stan, what should incoming Sloan students budget for one year's worth of study? We have a basic cost of tuition, room and board, and related expenses at the Sloan School of $49,375. That figure is based on what we know for living expenses here in Boston. It's also the basis on which we evaluate financial aid eligibility. Has the Sloan School's student budget increased markedly over the past couple of years? No. It's tracked by tuition increases, which have [grown] in the last five years by an average of about 5.6%, and also by living costs in Boston, which are a little bit higher than that. The tuition increased from last year by 4.1% Last year's tuition at Sloan was $27,100, and as you mentioned, that'll be a bit higher for this fall. Generally speaking, have you seen an increase in the number of students seeking financial aid? No, actually we haven't seen a big jump from one year to the next. The tuition and expenses in Boston have been tracked, as I say, at 5.6%. So students certainly have been interested in financial aid options for as long as I've been working in the business here. It can be an expensive proposition in any case. Of the roughly 700 Sloan students who enroll each year (for both the first and second years), how many receive some form of financial assistance, be it federal aid, institutional fellowship, or graduate assistantship? About 22% receive fellowship support, which is money comprised of outright grants and that doesn't have to be repaid. In addition, about 70% of the students receive some sort of federal or institutional loan support. Now many in that 70% also have some fellowship support...so that's not additive. Then, there are additional folks who receive work-study and teaching assistantships. I'd say about 36% of Sloan students get fellowships, assistantships, and grants. Does most of Sloan's fellowship money cover both years of study? Or do most students need to renegotiate their aid packages midway through? Let me explain how things work here at MIT as I answer some of these detailed questions. The central financial aid office deals with all of MIT's graduate departments as a lender of last resort. We are very decentralized when it comes to awarding fellowships and teaching assistantships -- the departments have complete control of those funds for graduate students. In other words, the Sloan School determines the amounts and selection criteria for their assistantships and fellowships. The students come to us (the Central Financial Aid Office) for additional loan support when those department fellowships, teaching assistantships, and what not, don't meet the student's full budget. Generally speaking, [the extent of an award's coverage] depends on the source that you're talking about, and the amount varies. For example, merit-based fellowships worth $5,000 to $10,000 only last for one year and then need to be renegotiated. But our minority fellowships, which are worth $10,000 to $12,500 per year, last for two years. And other donor fellowships vary widely in award amount and length. But certainly for loans, the reapplication is required for everybody. Do assistantships vary depending on the academic department or project that a student is assigned to? Yes, those types of positions are renegotiated on an annual basis. And while the majority of Sloan's teaching assistantships come from within the school, many students also receive assistantships from other academic departments. Sloan students bring skills that are obviously helpful in departments outside Sloan, such as economics. Of the aid channels available -- fellowship, federal aid, teaching assistantship, and work study -- which is most attractive to students? That's an easy one: Fellowships, because you receive a bunch of money and all you have to do is show up. Then in order of preference come work-study/assistantship positions, and then loans. Teaching assistantships are attractive often for students who are doing research in an area that's of direct interest to their academic program. But although they can be very helpful, they do require a commitment of time which may take folks away from their primary interest. Obviously, you're going to have to repay the loans, and that dampens their attractiveness. Despite that, loans comprise the largest source of our aid. Let's focus on fellowship for a moment. As an applicant, what can I do to put myself in the best possible position to pick up a fellowship? Does Sloan grant fellowships on the basis of merit? Need? A combination of the two? We award fellowships based primarily on the basis of things other than need, although need does come into consideration. I provide evaluations of the need levels, which is one piece of the data that we use to evaluate the applications for fellowships. In addition to need, there are lots of criteria, including academic performance and geographic distribution. Depending on the source of the funds, it could really depend on a whole bunch of different items. Some of our fellowship awards come from restricted funds, and the restriction on the award, depending on what the donor wants, might be that those monies be used for a student who has insufficient resources. If a donor requests that both need and merit be a consideration, then we would clearly offer those funds to a student who meets the merit criteria and has insufficient family resources. How does Sloan define need? How is it calculated? We use the federal methodology to do an initial pass. There's a standard methodology that takes into account income and assets, makes allowances for income that you earmark for expected expenses (taxes, living expenses, etc.), and provides some protection of assets for retirement and additional cost. It then makes an assessment of what's left to determine what, from a students resources in income and assets, would be available for one year's worth of expenses. Need is the difference between what our costs are and what that calculation is. Our experience is that for independent graduate students, that's a pretty close approximation of what a reasonable expectation of ability to pay is. When assessing need, some schools consider retirement funds off limits. What's MIT Sloan's stance? Assets are an interesting topic. Our experience with assets is that if a relatively young student has substantial assets, it's reasonable to expect some of those assets to be protected as investment for future retirement. But we will assess them. We recognize, too, that these students are coming from a slightly different economic background sometimes than a typical undergraduate student. Frankly, the federal methodology is heavily weighted towards evaluating income and assets for the parent of an undergraduate. Recognizing that an MBA student might have some assets wrapped up in a house, in that case, we would take into account that an assessment against home equity would not be appropriate. What is the size of the Sloan fellowship budget? It's $4.5 million, and to the best of my knowledge, that's been pretty much constant for the past 10 years or so. However, there's clearly a recognition that fellowship is the most valuable money to have, and so there's been some work done on trying to develop that as a resource both from alumni and corporate contributions. There's an effort going on to try to build that up a bit. For a long time we've depended on loans as being the [main] option for students. Now we're getting to the point where that resource is starting to max out, and we need to pay more attention to [alternate] sources of funding. (Editor's note: Federal subsidized and unsubsidized loans offer domestic students a maximum of $18,500 in assistance -- that ceiling has been stable for the last eight years while educational costs have increased each year. Moreover, the financial limit of MIT's institutional loans have increased, adding to the debt taken on by Sloan students.) Is there a separate area on the Sloan admissions application that applicants seeking fellowship or financial aid need to complete? Students have to complete the Free Application for Federal Student Aid (FAFSA), and also have to fill out the school's institutional loan application, which is bundled with the admissions application. All admitted students are automatically reviewed for fellowship. And, as you know, all of MIT's application are now online. You can review Sloan's online application at: http://mitsloan.mit.edu/mba/www/075.html Do fellowship funds decrease moving through the application process? In other words, if I apply during the earlier admissions rounds, do I have access to a larger pool of money? In other areas outside of Sloan, that's almost always the case. But at Sloan, you'll have just as much chance of receiving aid no matter when you apply. In general though, if you're interested in applying for financial aid, being in the front of the line is a much better place to be than the end of the line. Are all of Sloan's students eligible for fellowship, regardless of nationality or citizenship? Yes. Does the school have any fellowship funding earmarked for specific student body constituencies such as its women, minority, or international student population? Yes, we have a total of 30 Sloan Minority Fellowships set up for our African-American, Native-American, Puerto Rican, and Mexican-American students. In addition, we offer three Toigo Foundation awards (an external source for top minority students), one Citicorp minority scholarship, and four WBS Fellowships (a Sloan source for minorities). They're all competitive, and their criteria blend academic merit and need. WBS fellowship recipients receive a total of $25,000, while Toigo Fellows earn $20,000 for both years of study, and the Citicorp Fellow gets $25,000 each year. Toigo and Citicorp have their own requirements. For the Citicorp award, students have to interview at Citicorp in New York. Meanwhile, Toigo recipients also have to interview, and they have to meet past Toigo Fellows. For many unsponsored international students, attending a U.S. B-school hinges on the amount of financial assistance they're able to receive. Does Sloan have specific aid programming set up for its foreign students? As you're probably aware, the federal loan programs are not available to international students, and that's a major source of loan funding for our domestic students. But for international students, we have the MIT Loan Program, which offers an 8% interest rate, has a 10-year repayment plan, and is not subsidized, so it only accrues simple interest (the loan accrues interest while students are in school, but students don't have to begin paying it off until after they graduate). Is the MIT Loan Program similar to the lender partnership programs offered by the likes of Harvard Business School, Stanford, UNC Chapel Hill, and Wharton? Essentially these lending partnerships create foreign-friendly loan programs that, for example, do not require internationals to seek out a cosigner. We're currently negotiating exactly that kind of arrangement with a couple of banks. For a long time, we were able to depend on the MIT loan fund, which has been pretty robust. In fact, when interest rates were much higher, our institutional loan fund was the most attractive option on the block. Obviously, with today's lower interest rates and with banks being much more competitive over the student loan business, we recognize that, in this environment, we can probably do better than our MIT loan fund, which is available to all of our students. When will Sloan's new partnership loan program be available? We hope to have it up by the middle of next year, during the spring term of 2000. Last year, a '98 Sloan grad received a diploma nearly $50,000 in the red. Is that something that the school is actively trying to lower? Absolutely. As I said, we view loans as a source of last resort because, obviously, we would like our students to graduate with as little loan liability as possible. Loans do provide capital, however, and for students that have the kind of starting salaries that our students have, we feel that the level that they are carrying is manageable. But we'd rather have the percentage of loan in any student's package be less than what he or she is currently carrying. One of the things that we look at carefully is default rates to make sure that we haven't pushed people too far, and the default rates for our students across the board at MIT are very small. For [Federal] Stafford loans, the default rates are below 3%, and for [Federal] Perkins loans, they're about 1.5%. Meanwhile, the default rates for the MIT Loans are virtually the same as they are for the Stafford loans. The Internet offers a trove of financial aid options. Which sites do you find to be most useful? Actually, there are a number of sites that we have linked to from our own financial aid Web site. We send scholarship-seeking students to fastWEB and Fund Finder. Fund Finder is a College Board product and has an area dedicated to graduate students. I think it is pretty helpful. There's also some helpful information on a page called FinAid!. It's pretty dense. But one of the things that's really good about FinAid! is that it contains some really good information about detecting scams. There's a lot of really good information out on the Internet, but there's also a lot of major scamming going on. And for some reason, scholarships have been a real easy place for people to make a lot of money using very little information. So FinAid! does a good job of alerting users to these scams. What are one or two pointers applicants should keep in mind to avoid being duped? Don't pay money up front for any information that you can virtually get for free. Any time you're asked to pay money up front for information, be suspicious of it. Also be suspicious of hype, particularly the hype that says: "Millions of dollars of scholarship money go unclaimed every year, here's your chance to claim some of it!" That particular pitch seems to pull in a lot of unsuspecting folks. There're always scam artists out there. Keep your guard up. The average age and amount of work experience gained by students attending the elite business schools has been increasing nationwide. (Editor's note: A member of Sloan's Class of 2000 is an average of 27 years old, with four years of prior work experience.) Are a growing legion of Sloan students enrolling with a trailing spouse or even a family? Yes. Does one's marital or familial status affect financial aid eligibility? You have to be careful on the federal side -- the formula limits you to how much aid you can access. But generally, the eligibilities that the federal formula presents are big enough that we have some room. From our institutional budget perspective (i.e. the MIT Loan), we increase the budgets for students with partners. We also increase the budgets for students with partners and families, recognizing that in Cambridge or Boston, if you need an apartment big enough for a family, you're going to need more money to pay for it. So our budget reflects that. For married students, we increase our standard budget by $3,600 for the nine-month school period. Meanwhile, we increase the student budget by $500 per month per child. (An increased student budget extends the amount of aid a student is eligible for.) Does Sloan provide any services for student partners, such as assistance in finding a job? We've got extensive support systems for spouses of students. Sloan itself has a program for spouses, called the Affiliates Program, which helps spouses transition into the Boston area and gives them help in connecting with a community in Sloan. There is also a student-run group named Significant Others of Sloan, and a university-wide Family Resource Center that does quite a bit of work helping folks identify childcare options and providing family support systems. Spouses also have access to the job facilities here. So if someone is looking for work, both the career services and our general student employment offices are open to folks that need to use them. Stan, what should aspiring Sloanies do to best financially prepare themselves for two years of study? Save, save, save. It's like the joke about how do you get to Carnegie Hall -- it's practice, practice, practice. How early should prospective students begin planning their MBA financing? The earlier the better. If you're anticipating the costs, which almost always include loans, the earlier you can do your planning and save your pennies, the more you can cut down on the amount of loan assistance you'll need. There you have it: Start feeding your piggy banks out there! Thanks much, Stan. You're welcome. If you'd like to learn more about Sloan's financial aid program, you can visit the school's Web site at: http://mitsloan.mit.edu/mba/www/08.html Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | AUGUST Learn about your online education options |
 Copyright 1999, Bloomberg L.P.Terms of Use | Privacy Policy |
MBA Insider
Printer-Friendly Version
