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MAY 28, 1999 B-SCHOOL Q&A: FINANCIAL AID Meet Michigan's Financial Aid Director A Conversation with Kristina Nebel, Director of Admissions at the University of Michigan Business School
The cost of an MBA degree has been going through the roof the last couple of years. For example, this year, out-of-staters shelled out $25,000 to attend Michigan Business School (in-staters paid $20,000). Meanwhile, the Class of 1992's (out-of-state) tuition equaled just $15,826. Are more students now approaching you seeking financial assistance? There hasn't been an increase. But whether the tuition is $23,000 or $27,000, it's still a significant investment. We have, however, continually seen an increase in what we're able to award through increasing donor amounts for scholarships. But I wouldn't say that's directly tied to tuition increase. In addition to tuition, students also have to take into account the cost of living in Ann Arbor for two years. What annual budget do you recommend students have in mind for their two-year stay? In addition to tuition, we provide an estimate -- including things such as books and supplies, room and board, federal loan fees, and other personal costs -- that averages to roughly $12,000. So, with tuition, the budget works out to be about $37,000. Does that student budget increase at all, entering the second year? No, definitely not. If anything, the students will have had the experience of being a summer intern during that time period, so they would potentially have some additional spending money as a result of interning. There are several ways to put a dent in your MBA debt. The most economical way, of course, is through fellowship or scholarship. What types of opportunities are available at Michigan? Basically, we use scholarship and fellowship interchangeably. They are merit-based or need-based assistance that you don't have to repay, like you would loans. In the past year, 1998-99, somewhere around 40% of our students have received fellowship. And that 40% is counting only those students who receive fellowship through our financial-aid office and the office of admissions. Other special programs, such as our Tauber Manufacturing Institute and the Corporate Environmental Management Program (CEMP) are able to provide some additional funding. Our typical award is around $7,500. But they range from $5,000 up to full scholarships. We have over 150 named scholarships for students, and then additionally, we have a large amount of undesignated dollars that we use for scholarships. You mentioned that an increasing number of donors have been contributing to Michigan's scholarship fund. Does that mean that there's now a greater number of fellowships available? It depends on how you want to cut up the dollars, I suppose. We definitely have seen our scholarship budget increase over the past five years. Just from last year to this current year, it went from $3.7 million up to $4 million. Earlier in the '90's, it was down in the $3 million range. So we really have seen an increase, and we're expecting it to continue. Is that scholarship aid earmarked specifically for the full-time program, or is it for both Michigan's full-time and part-time evening programs? It really is for the full-time day students rather than the part-time evening folks. A lot of the part-time evening students have sponsorship from their companies and also just apply for federal loans. How does an admitted Michigan applicant apply for a fellowship? The only thing you need to do to apply for the fellowship is complete a Michigan scholarship form that is bundled with the admissions applications. Once you send that in, you're eligible to be considered for some of our scholarships. Unfortunately, some students forget to fill out and send in the form. But I'm working to strengthen the wording in our application so that they can't miss it. Does the scholarship form only make you eligible for merit-based fellowship? No, it makes you eligible for need as well. So it's a combination. Then, additionally, if you want to apply for federal aid, there's another form you need to complete. What does filling out the fellowship form entail? Basically, it asks for personal, household information in terms of marital status. It also asks for assets, home debt, other debt, value of stocks, bonds, income, etc. And then it talks about some general comments on whether you've ever defaulted on a student loan and other things that might go into it. Again, that form qualifies you for both scholarship and financial aid (though you still have to fill out a FAFSA form for federal financial aid). So, if you want to be considered for any of our business-school scholarships, you need to fill that out. I think sometimes students see the form, which is titled "Scholarship and Financial Aid," and they think, "oh, I'm not applying for financial aid," and they don't fill it out. When that happens, we can't consider them for any scholarships. So, like I said, I'm going to be working to make sure everyone is aware of that, because there have been cases where we've wanted to award some scholarships, but the folks have not completed the appropriate forms. So, all the applicant has to do to be considered for scholarship aid is fill out the form. Otherwise, he or she should have a wonderful record and a great application. That's the other, harder part of the equation. How does the school's internal scholarship board determine its aid decisions and amounts? It comes down to how you come across in the application, in most senses. It's the presentation you put forth in your essays and your experiences and your interview that we're looking at, from a merit standpoint. Anyone who's getting into the University of Michigan has high merit; I mean, they've been able to kind of cross that bar. But to really stand out in that pool comes across in the application, and that's one of the things we look at. Then, there are some specific named scholarships that are included in our bulletin. You don't apply specifically for those, though. We allocate them out. Does the school have any full-tuition scholarships? We do. We award 10 to 12 Dean's Fellowships, which are full-ride tuition for both years. We don't offer that to many of students, however, mainly because they're so prestigious. We also have our Consortium fellowships for the Consortium Graduate Study in Management Program, which are for our underrepresented minority students. Are the 26% of Michigan's class who are non-U.S. citizens also eligible for merit-based fellowships? Yes, we do have scholarships for international students. We have a pool of dollars, allotted specifically for international scholarships, that runs somewhere between $300,000 to $500,000. And it's important for international students to apply early so that we can get them the scholarship information because, in many cases, they need to get their I-20s and fulfill their visa requirements. Just how early should folks apply for fellowships? We recommend that you have the Michigan scholarship and financial-aid form (that's rolled in as part of the application) in to us by Mar. 1 because we do a lot of our awards in the early spring. By about this time, we've for the most part been offering the majority of our awards. So folks applying in the later decision periods really should still get their scholarship information in. From a federal standpoint, I've been told you can apply basically at any time. But it behooves you to get it all done by Mar. 1. Financial aid is another way of tackling the education financing game. How many of Michigan's roughly 850 full-time students receive some sort of financial aid? Approximately 52% receive government funding. We don't actually emphasize this, but if you were going to total financial aid plus scholarships, over 75% of our full-time MBA students get support. Does that percentage fluctuate much? Some schools offer set two-year awards while others only offer one-year deals that need to be renegotiated upon entering your second year. No, typically our scholarships -- though I'm not positive on the financial aid -- are awarded for both years, assuming you do well. If you had some problems academically and what not, we would reconsider. But scholarships are guaranteed for both years, assuming you hold up your side of the bargain. A 1998 Michigan grad racked up an average of $42,800 in loans. Has that been increasing significantly over the past several years? Or is that the standard amount of debt students have been graduating with? I think it is. You mentioned early that tuition has increased, and, yes, more students are looking for financial aid. But I don't think we see great fluctuations in [debt at graduation]. Does Michigan have any preferred lenders it would suggest future students contact for aid? We have a number of good programs that we offer to our students. One of them is named Citi Assist, the Citibank loan program -- we're one of their preferred schools. Another is called the MBA LOANS Tuition Loan Program. And a lot of this information we provide to our students, both on our Web site as well as in our admissions binder. In addition, some of our prime lenders include: The Michigan Alternative Student Loan, the Professional Education Plan (PEP) with the Education Resources Institute, and the Business Access Loan with the Access Group. These lenders all provide competitive rates. And the competition really helps to lower the rates. Because of an interest in each of these programs -- many of our students have loans with at least one of them -- lenders are coming back to us offering some very competitive packages. We're in discussions right now with a couple of them, which is really great, because it helps the students out. International students are eligible for scholarships, but they face far more restrictions when it comes to loans... Right. We have two programs that are quite foreign friendly. The Citi Assist International Loan Program is one in particular that is good for international students. It does not require a cosigner; however, right now, it does require that you document your assets. The good part is that they don't have to be liquid assets, so there's a little bit of flexibility there. We've had that program in place for at least the past two years. The other program that we have -- and it is only for students in Central and Eastern Europe and Central Asia -- is the EBRD ABN AMRO loan. We're the only U.S. school to be part of their consortium. It's an opportunity for students from those parts of the world to apply for loans. Yes, there are some requirements, such as within three years, you have to go back and work in that region, not necessarily from the country you came from. But it's a way to help with development in those areas. There are a number of schools -- Wharton, Harvard, and NYU, to name a few -- who have recently forged partnerships with several lenders to provide loans specifically designed for their international students. In short, they make it as easy for an international student to grab a loan as it is for a U.S. citizen... We're currently in discussions with Citi Assist, trying to look at whether our foreign students would need a cosigner for their international loan and seeing what we can do to make it easier for our international students in general. Does your school offer a discount to its foreign students who pay their entire tuition up front as a way to safeguard against defaulting on loans? Actually, we do not. But I'll keep that in mind. A lot of international MBA aspirants have E-mailed me asking whether it makes a difference to lenders if one is an international student who has U.S. residency, has worked at a reputable company on U.S. soil for several years, but does not have U.S. citizenship. Do lenders treat a person with that type of background any differently than a foreign applicant who has never set foot in the U.S.? That would not make any difference in the eyes of a lender. Those two profiles would be treated the same. However, an international student working in the U.S. may have more connections if they need a cosigner for a loan. Plenty of folks are now using the Web to investigate sites that provide enlightening information on financial-aid resources and scholarship opportunities. Do you have any handy sites you would suggest they surf? Actually, we provide -- on our own Web site as well as in our admissions binder -- a lot of information about sites that students should check out. In particular, a couple of very good ones include the Sallie Mae site, fastWEB, and College Net. Additionally, there's the traditional books that are out there. For example, The College Blue Book of Scholarships and Fellowships provides a lot of opportunities by category. Lastly, some students should investigate whether there are companies that will provide some sort of a sponsorship for them -- that's another way that students are able to finance their education. Another way to help loosen the debt noose is through assistantships and work study. Does Michigan provide assistantships or have any opportunities for students to work alongside a professor or work in the admissions office to whittle away their tuition bills? We have assistantships, though they're not controlled through the office here in financial aid. They're handled directly by the faculty members and the students themselves. Professors select recipients on an individual basis. We don't coordinate the assistantships so, unfortunately, I don't have the specific numbers of the students that get involved. There are opportunities, though, not only within the business school but outside of the business school in the other parts of the university as well. We don't see many students in traditional work-study type positions. That's often because they don't qualify due to the previous salaries that they had prior to coming to business school. Financial aid is handled by numerous offices within a school's administration. It runs through admissions, obviously financial aid, and it also runs through the career-services office, where an increasing number of companies are offering tuition reimbursement as part of their pay packages. Do you find yourself working closely with the other offices to help cobble together a student's aid package? You're right, there are a number of companies that are providing sponsorship and paying for students' tuition in exchange for their return to the company after graduation. There are also some companies that, after you do a summer internship with them, offer to pay your second year of tuition. A lot of that discussion really happens independently between the student and the company. Students, of course, will come into our career center at times, and we will help them with the negotiation. That's one of the benefits of having, at Michigan, the Office of Admissions under the same umbrella as the Office of Career Development. There's a lot of dialogue. [Tuition reimbursement] really is a student-to-company discussion, but we're there as a resource for them if they want to bounce off ideas. I want to backtrack for a moment. I remember you talking about the form that students need to submit to be considered for financial aid and fellowship. Among the criteria considered for financial aid and fellowship is one's marital status. Does marital of familial status have any effect on how much aid you might receive? It doesn't automatically. It's reviewed on a case-by-case basis. From a financial-aid standpoint, federal regulations don't allow universities to estimate living expenses for the student, spouse, or children. You really are looking at the cost of attendance for the student. However, there are extenuating circumstances where the financial-aid officer can use his or her professional judgment and make a decision -- the wife is pregnant and has to be on bed rest and can't work... We'll take that into account. One thing we can do, if it's documented by the student, is take into account child-care costs. But we can't do it across the board. It really needs to be something that is documented by the student and is determined by a professional financial-aid officer's judgment. Let's say that I'm coming to Michigan with my spouse in tow. Does she receive any type of perks as a student spouse? We have a wonderful program here called our SOS Club, which stands for Significant Others and Spouses. It provides a network for your partner that's coming to the program. We've got things such as career networks covering all kinds of areas -- from accounting to engineering to marketing -- helping partners find work in the Ann Arbor, Southeast Michigan area. Additionally, we have a number of committees, such as Baby MBA which has play groups and things for folks that have children. There are also social activities, community services, there's a male SOS group...a variety of different things. It's a huge network that really helps kind of make the entire family feel like a part of the program. You mentioned Baby MBA, a children's play group. Is there also a special day-care center or anything set up to make it easier for families with small children to live in Michigan for two years? There are a couple of different things that we have. One, Ann Arbor as a community has a child-care referral service for students of the town and Washtenau County to help parents find licensed, quality day care. Additionally, child care is available through the University of Michigan, but as you can imagine, it's a large school, so it's not always possible to get into those programs. But between the referral service and contacts through SOS, because you've got a network of folks who already have kids who are here, most of the students are able to find good child care. MBAs have consistently been lauded as among the most savvy graduate education applicants. Yet, a lot of them still misjudge the financial burden of attending a top flight B-school. What are some of the most popular mistakes that you've come across? First off, many of our students earn substantial salaries before coming to business school, and they try to maintain the same level of lifestyle while they're in school. It's not to say they have to go back to living like a college student, but you can't always maintain the same level of lifestyle. You just need to be aware and take that into account. From a procedural standpoint, I mentioned earlier one of the things that I see is students not sending in the forms at all or saying, "Oh, I'm late, I didn't get it in in time," and not putting it as a priority. Well, it really should be as much of a priority as getting the admissions application in. We provide a financial-aid help line [734-764-5139] so if people have a question, like "I don't have my '98 taxes done yet, what can I do?" they can call in, and we can provide assistance to them. Students should feel free to get in touch with us and we can help them get through that. What can I do to put myself in the best possible position of receiving aid, be it fellowship, federal aid, or what have you? The main thing, from just an aid standpoint, is to be truthful about your expenses and to get that information in on time. Even if I have bad credit? Well, you do have to indicate that. We're actively working with some of our loan partners to come up with ways to essentially get beyond that for students who do have bad credit. But don't lie -- that'll only make it worse. So there's hope for people who have defaulted on their second mortgages? We're trying. Kris, thanks much for explaining the ins and outs of Michigan's financial-aid process. You're welcome. To learn more about Michigan's financial aid program, you can visit the school's Web site at: www.bus.umich.edu/prostudents/mba/finaid/index.html  Nadav Enbar  | | Learn about your online education options |
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