Matida Ndlovu has been lucky twice over in her education.

First, as a teenager, she emigrated from Zimbabwe, which at the time was plagued by economic undertainty and instability, to Germany, where she completed her undergraduate studies.

Her African roots provided her with a second piece of good fortune for business school, since they qualified her for a full scholarship under the Kofi Annan Fellowship programme, named after the former UN director-general. This bursary covered the €25,000 fees for her masters in management at Berlin’s European School of Management and Technology (ESMT), plus money to cover food and rent.

Ms Ndlovu insists she did not choose the school for the scholarship. But she cannot deny that securing financial aid has made studying a comfortable experience — even more than her undergraduate existence, when she had to work part-time to pay her living costs.

“I feel the difference now a lot because I know the pressure you have to fund your own studies,” she says. “It is pretty excellent.”

Scholarships have traditionally been seen as a way of enabling those who would otherwise struggle to get a postgraduate education to achieve their dream. It is why alumni are often more willing to give to support financial aid rather than a new campus building.

However, business school endowment strategies are increasingly being driven by the use of financial aid as a carrot to lure the most promising students rather than to enable access to education for the most needy.

Sarah Brown, a former financial consultant from San Francisco, received substantial offers from Stanford Graduate School of Business (GSB) and the University of Pennsylvania’s Wharton School. Ms Brown, who asked for her real name not to be used in this piece, admits the generous scholarship offered to her by Wharton, more or less covering her fees, was key to her decision to accept a place there.

“If I hadn’t got financial aid I would have had to think harder about my decision [to go to business school] because it is a lot of money,” she says, noting that her plan is to start a second career after graduation in a social enterprise, paying much less than her previous job.

A quarter of the students coming to MIT Sloan School of Management receive some form of financial aid at present, according to David Schmittlein, the school’s dean.

He predicts a day will come when all MIT Sloan students receive such support. Scholarships have to be “meaningful”, he notes, which means something well into five figures.

Competition between schools is driving offers of support to attractive students, but Prof Schmittlein claims that each school will be concerned only with a small set of what it considers to be rival institutions. He names five — all in the US — that MIT Sloan would view as direct competitors for the best students. Offering financial aid is part of that process.

Bruce DelMonico, assistant dean and director of admissions at Yale School of Management (SOM), agrees that there has been a shift in focus within admissions teams from needs-based to merit-based, which contrasts with the approach when he started working at the school 11 years ago.

“It is very competitive,” he notes. “We are evaluating everyone who applies, both as to whether we are going to offer them admissions and if we offer them some sort of scholarship.”

Financial aid at Yale SOM can range from $10,000 to full tuition. The average is about $20,000. A third of the incoming class has some sort of support, double the percentage five years ago. And according to Mr DelMonico it is not just financial aid that is offered as an inducement. He says some students at other schools have been offered preferential access to certain faculty members or guest speakers. “We haven’t done that,” he adds, “but that is certainly something we have seen and thought about.”

Bhavik Trivedi, managing partner of Critical Square, an MBA admissions service, agrees that scholarship offers are really only valuable in differentiating within tiers of competing schools.


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“Let’s say someone applied to Wharton and Chicago Booth, and Booth really wants them, they could use money to attract them. Booth and Wharton are within the same tier of school so money would be useful when the rest is mostly apples to apples.”

That said, some schools that are trying to compete with institutions that are deemed to occupy a more elevated position might use scholarships to lure students. But unless someone has a reason to be cost sensitive, Mr Trivedi says they should choose the school that is seen to occupy the higher tier.

Schools often employ scholarships to get someone unique or to round out their class witha certain type of applicant, according to Mr Trivedi. “Gender diversity is important to schools and competition to attract top female talent is steep,” he says. If an applicant is viewed as being unique, “that just ups the package”.

Nick Barniville, associate dean of degree programmes at ESMT, differentiates between “real” scholarships providing financial aid to those that would otherwise struggle to pay fees, funded from donations to the school, and merit-based scholarships, which are essentially discounts offered from the school’s own tuition budget to attract and convert top applicants.

The split between real and merit-based scholarships is about 50:50 at ESMT, which reflects a rebalancing in favour of merit-based awards and the increase in competition between schools, according to Mr Barniville.

ESMT only competes for candidates with certain other schools, all of whom are European, such as Mannheim’s Business School and Insead. When it comes to more expensive schools like Insead, Mr Barniville claims to have an advantage because he does not have to offer potential students as much as his rival to cover ESMT’s fees in full.

“Deciding how much to offer is actually quite a sophisticated process,” he says. “But it is often more art than science.”

Not everyone is seeing a rise in scholarships. At Stanford Graduate School of Business, California, the proportion of students receiving financial aid over the past decade has hovered at about 75 per cent. However, in the academic year 2013-14, that figure dropped to about 70 per cent. It fell again last year to 65 per cent, and looks set to fall further for the intake from the latest academic year, according to Jack Edwards, financial aid director at Stanford GSB.

The reason might not be so much due to competition between a top school and its rivals, but the resources of the hopeful candidates. “Students tell us they are turning to sources outside Stanford GSB, including using their own . . . and other resources,” Mr Edwards explains.

Judith Hodara moved from Wharton, where she was acting director of MBA admissions, to co-found Fortuna Admissions, a consultancy of former admissions directors from the world’s top business schools.

“It’s probably not a secret that certain industries or backgrounds are really enticing to programmes, and they will fund to woo the candidate,” she says.

Financial aid can make a difference “if it’s a high number”, Ms Hodara adds, but many of those receiving such sums would have gone to the school regardless, so the amount of money could also be seen as irrelevant.

At Wharton, there was an interest in finding the “tipping point” for the most desirable students, Ms Hodara recalls.

“It was an exercise to figure out what the right number was,” she says. “In some cases it was not necessarily high, but it signalled to the student that we cared enough to offer something.”

Some fellowship offers came with money and a promise of the opportunity for engagement in a smaller setting with specific faculty or alumni, according to Ms Hodara. “We lost students that we really wanted, but in the end, there are no really bad decisions, just different ones. In admissions, you can’t take it personally, but it sometimes felt that way.”

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