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MAY 13, 1999 B-SCHOOL Q&A: FINANCIAL AID Meet Wharton's Financial Aid Director A Conversation with Bob Alig, Director of MBA Admissions and Financial Aid at The Wharton School
Bob, tuition is on the upswing -- this year it costs about $26,300 to attend Wharton. And when you factor in forgone income and living expenses, the price tag of earning an MBA education can climb to an incredible $200,000. How would you suggest prospective MBA students approach paying off their MBA education without landing themselves in the long-term red? I think a lot of people, when they begin this process, do the quick calculation that you've just done, and $200,000 is a pretty significant sticker shock -- and it's realistic. But there are a lot of resources and a lot of ways to help finance the MBA over the course of the two years. There are, for example, a lot of avenues with prospective employers that, upon graduation or upon starting a job after graduation, reduce that $200,000 dramatically. The most important thing a prospective student can do just after they've completed their undergrad degree is perhaps live just a little bit beneath their means and begin strategizing that three or four years out, they'll spend a couple of years without even close to the same income level. Sock away ten or twelve thousand dollars, keep your credit cards paid off, and lay the groundwork for [shouldering the cost of an MBA]. Many people underestimate the amount of money that gets sunk into earning an MBA degree. How much should incoming students budget for each of their two years at Wharton? In round numbers, we tell admitted students that tuition fees and living expenses for their entire first year at Wharton are going to be about $45,000. That actually decreases moving on to the second year because Wharton has a full pre-term in August which students pay for, and they obviously absorb living expenses during that month. So it actually comes down a little bit for the second year. When applying to Wharton, is there a separate area on the application where candidates can request scholarship or financial aid? No. Once students are admitted, they can request that we send them a one-page form that they fill out to access the Wharton Loan Program. And that form is identical for both domestic and foreign students. There are also a number of private scholarships based on different criteria that are listed on the Web site and in the catalog. But students don't need to apply for scholarship separately and shouldn't send us any additional information than what's on their admission application unless we contact them. We will automatically consider them for any scholarship they're eligible for. That's an issue that a lot of applicants feel uncomfortable with -- how a B-school decides which student to give scholarship aid to. I think that's a perception because there's a fairly tight time frame between when a student gets admitted, when they need to matriculate, and when we are able to process financial-aid decisions. We're currently sending out financial-aid packages right now for students admitted in late February/early March. It typically takes 8 to 10 weeks after everything has been processed on our end. So, oftentimes a student needs to make a decision to attend Wharton without knowing how much scholarship or fellowship they're going to receive. For me, the decision-making process that I went through 12 or 13 years ago when I was a student is that [attending Wharton] was much more than simply a dollars and cents equation. I was focused on Wharton for a lot more than tripling my income from the time I left my previous employer to when I graduated. I was looking at an experience that was a lot more than simply what I could quantify in dollars and cents. Students are going to need to make their decision on a number of other [non-monetary] issues as well. But they also need to understand that there are a lot of resources out there. If they work with us, we are going to make sure that an education at Wharton is affordable to everybody. I'm very sensitive to this because I come from a background that would not have afforded me the luxury of attending a private university like Penn for undergrad or an MBA program like Wharton's. I needed to borrow money, and I needed to work hard while I was in the program. I was a graduate assistant to the MBA Admissions Office. I did a lot of things, and frankly, I did what a lot of current students do: I accepted a full-time job offer upon the end of my first summer, and my prospective employer gave me a signing bonus which basically helped pay for my tuition in my second year. That's happening a lot with banks and consulting firms. So I think you need to be creative, you need to live maybe a little bit beneath your means, and you need to work with us. In the end, we will figure out a way to make this MBA program affordable. How many students typically receive scholarship at Wharton? This past year, approximately a third to 40% of our students received scholarships from the school -- not loans -- and about 80% of eligible students availed themselves of loans for the program. Has Wharton's scholarship budget grown on par with the school's increasing fees? (Editor's note: Wharton's 1989/90 tuition was $16,500. It has since mushroomed to $26,300 for the 1998/99 school year.) Yes. In fact it has exceeded it because we've also had some very loyal alumni who have been aggressive about making sure that a Wharton education is affordable around the globe. We currently have about $3.5 million set aside for scholarship and fellowship. And many of our alums, especially the international alumni, have helped provide support in scholarships for international students. This year the equation is going to change dramatically. We have a new loan program that is going to make it possible for any admitted student to Wharton to finance up to the full cost of their MBA program -- including living expenses -- with absolutely no cosigner, no credit check, no constraint whatsoever. We've eliminated origination fees of 5%, which is typical with the other lenders. (Editor's note: an origination fee is what the lending body charges to process a loan.) Moreover, interest will be deferred during the two years of the MBA program and up to six months after the completion of the program. And basically the only thing that students need [to qualify for the loan] is a signed letter of admission from me. We're doing this in partnership with PNC Bank, and the program will be taking effect with this incoming class [Class of 2002]. So, starting this upcoming year, there should be absolutely no reason any student -- domestic or international -- will not be able to finance the full cost of the MBA program, regardless of scholarship support, or regardless of a job offer upon graduation. The playing field has been absolutely leveled for both domestic and international students. I think it's a dramatic step forward for the school in literally creating an international MBA program. That obviously will have a big impact on the 31% of the Wharton student body who hail from outside the U.S. To date, have you ever encountered a situation where a foreign student has offered to pay his or her entire tuition up front for a discounted price? We've never had that at Wharton. And, frankly, there's no reason for it because the student is going to have the ability to borrow U.S. dollars for the entire program, regardless of what happens. For example, were any students forced out of Wharton because of the economic downturn that occurred in Asia a year ago? Absolutely not. We did have some students who perhaps had a family member who had promised to help finance their MBA and were no longer able to do so. And we looked at each of those cases on an individual basis because we have discretionary dollars that we can always provide support with. I had a couple of situations with students in Korea who had a very difficult time. And several of them got some additional support from some of our alumni in Korea. They had established a relationship over the course of the admissions process, worked with me and with the alumni, and got some additional support. They're extraordinarily grateful and will be helping to [provide aid], I hope, in future years for other admitted students from Korea. But we've not needed to turn anyone away, and we've not had anyone face insurmountable obstacles while they're in the program. We've worked with all of them. Bob, you mentioned how you took a job offer out of your internship that played a large role in helping you pay off your educational debt load. According to our data from last year, about 20% of Wharton's graduating class received some form of tuition reimbursement from their employers. Are you finding yourself working more closely with the school's career-services office or speaking more openly with admits about this particular way of handling financing? I think prospective students are much more savvy consumers than they were in the past, and many of them have done this due diligence on their own. They know that the resources are out there. Still, we do try and communicate to them that this is a potential. But it's a very careful balancing act because I don't think it's appropriate to choose a company for something as short-term as tuition benefits. Students should be making the decision to go with a company because long-term it's the best fit for them, personally and professionally. The tuition benefit might be a very small part of that equation. But I wouldn't recommend that that's the right reason to choose an employer after graduation. Can you suggest any resources a prospective student should investigate to learn about more financial aid opportunities? There are some scholarships out there [that are awarded] based on career interests and on citizenship. Sometimes, clubs and organization that students or their parents may be involved with might be helpful. For example, Junior Achievement might have scholarships available for graduate study. Sometimes community and service organizations like the Rotary Club have scholarships for their members or their immediate family. There are even some available to students whose parents work for companies that provide scholarship assistance for graduate study. It's always a good idea to look at what types of clubs or activities you or your parents have been involved with. Also, the Web is a great resource... Can you suggest any particular Web sites that may assist prospective students in their quest for financial assistance? First, all of the embassies have sites that will help international students. Several other Web sites that contain scholarship and aid information include: The Grip Scholarship Page, Sallie Mae, The Scholarship Page, and The Scholarship Resource Network. I receive a lot of E-mail about paid scholarship-search services. They're aimed mostly at undergrads, but there are a few cropping up for graduate study. What are you're thoughts on these fee-based searches? I would be very cautious of any service that requires a significant outlay up front. Most of the top tier schools have a lot of information on their individual Web sites about private scholarships that are available and other avenues of support, and I would do my own due diligence on the Web and not rely on a search to do it for you. You know if you do the due diligence yourself, you're getting your money's worth. Bob, you mentioned how an assistantship helped you pay for your Wharton education. What types of work study opportunities are available for today's Wharton MBA candidates? Wharton has both research and teaching assistantships available to MBA students, and a significant number of students get those types of positions. What's nice is that because Wharton has an undergraduate program there's a significant opportunity for, say, MBA students studying finance to teach undergraduate introductory finance courses. The awards typically average somewhere around $3,000 to $4,000 a year, and the assistantships sometimes run for one semester and sometimes for longer. In addition, individual administrative offices throughout the school hire a number of graduate assistants. For example, next year we're looking to hire approximately 40 grad students to work in admissions and help us read applications, interview prospective students, and coordinate international outreach. We pay our grad assistants $3,000 to work about 10 hours a week, fall and spring semester. Student Affairs, Career Services, and several other administrative office hire graduate assistants as well. Let's talk a little bit about the students who are coming with significant others and families. Does Wharton tier the amount of aid it provides to its students depending on whether they're coming with a family of four vs. coming as a single person? Yes, We will increase the anticipated budget for a spouse, a family, whatever your circumstances are. And frankly, these aren't static decisions. Students go through life changes while they're going through the program. They, for example, might have children, and we always go back and revisit the situation. Speaking specifically about spouses, does your office help spouses, for example, find a job or attend classes for a discounted price or for free? Yes, there are classes available. The prices are not discounted, but any student or spouse can take courses in the College of General Studies at the University of Pennsylvania. And there is support from our Office of Career Services as well as the Office of International Programs to help partners and spouses of students find employment while they're in Philadelphia. There's also a very significant and important undercurrent that we take care of our own here. Many spouses and partners work in Wharton's administrative offices. There are a couple of Wharton spouses who work in the Admissions Office, and there's a recognition that they're a part of the experience. So they make an enormous contribution to the program and to the experience while they're going through. As the average age of our admitted students has increased in the last few years, we see more students coming with partners and spouses (Editor's note: The average age of Wharton's Class of 2000 is 26.) How about children? What kinds of assistance does Wharton provide to students with small children? Does the school, for example, offer a special day care program? There is one on campus. And we also have a support mechanism for partners and children that acts as a referral network, so that if a parent is interested in a private day care setting -- perhaps in Center City, Philadelphia, or in the suburbs -- he or she can learn about alternatives to the on-campus Wharton facility. Does Wharton also provide many health-plan options depending on, say, marital status? It's a menu, and students can choose different facets of the menu depending on what their needs are. Housing obviously has an effect on the bottom line. Do most students tend to live off or on campus? Most live off campus. Has Wharton bought up pockets of Philadelphia to provide lower housing prices for its students? There is housing available on campus, which is somewhat discounted because it's a nine-month scenario vs. the 12 month scenario. The university does not currently own or rent to students off campus. However, two months ago it purchased a building with plans to rehabilitate it and rent it out at market rate to students two to three years down the line. In Center City, one bedroom apartments range from $700 to $1,300 a month. And in West Philadelphia I would lower that range to $600 to $1,100 for a one bedroom. In closing, what is the most popular financial aid-related mistake you see incoming students making time and time again? Not preparing in advance and coming in with, in addition to everything else and the sticker shock that you mentioned early on, two, three, four thousand dollars in revolving-credit debt. That's an enormous mistake. I see that happening to both our domestic and non-U.S. students. How early should one start preparing financially for his or her MBA education? Within months of graduating from undergrad, they should start thinking about it and prepare. Future leaders of the corporate world, take heed. Thanks very much, Bob. Thank you. To learn more about Wharton's financial aid program, you can visit the school's Web site at: www.wharton.upenn.edu/mba/expenses.html  Nadav Enbar  | | Learn about your online education options |
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