Are Elite Business Schools Swindling International Students?

Unable to enter the U.S., foreign admits are asking MBA programs to let them defer. Many are refusing.

When Arun Swaminathan applied to Northwestern University’s Kellogg School of Management in early January, COVID-19 was just one of many world events. There were no known cases outside of China. In the United States, headlines were dominated by Donald Trump’s ongoing impeachment trial. Even Wuhan had yet to enter lockdown.

By the time Swaminathan was admitted in March, the virus was exploding across the globe, and countries everywhere were asking citizens to shelter in place. The U.S. had sealed its borders and suspended almost all visa processing.

Swaminathan was still excited that he was accepted into the program. “You see all your hard work has resulted in something tangible,” he told me. He sent in a $2,000 deposit to secure his place in the class of 2022. At the same time, he knew that the pandemic had radically transformed the shape of travel and education. If he couldn’t start the year in person, it would be difficult to do remote learning from Mumbai, which is ten-and-a-half hours ahead of Evanston, Illinois. It would be even harder to engage in the kind of networking opportunities and internship hunts that make business school so valuable. Eventually, he reached out to Kellogg to ask if he could defer his start.

It wasn’t long before Kellogg gave him an answer: probably not. If he couldn’t attend in person, he should either be ready to attend online or withdraw.

Swaminathan told me it’s not much of an option. “If I’m willing to forgo the $2,000 and my application, all the hard work, yeah, I suppose I have a choice,” he said. He plans to take out hundreds of thousands of dollars in loans to cover the cost. “It’s not very fair.”

Across American higher education, the coronavirus has had disastrous consequences. With dwindling enrollments precipitated by mass campus closures, universities are slashing costs. Many colleges, including some business schools, are worried that they will have to close if they can’t fill their incoming class.

Yet for elite and wealthy institutions with far more latitude, COVID-19 has created a divide. Several top schools, including Carnegie Mellon’s Tepper School of Business and Harvard Business School, are giving all admits the chance to postpone enrollment. But many others, like Northwestern Kellogg, are not. MIT’s Sloan School of Management is only granting deferrals in rare circumstances. Columbia Business School told one inquiring student that it “does not defer students” and that admits uncomfortable starting online—or shifting to its internship-free, one-and-a-half-year program—would need to “withdraw and reapply.” Similarly, Cornell University’s Johnson School of Business rejected one foreign admit’s pandemic-related deferral request by explaining that such delays were reserved “for candidates who truly cannot begin their program due to extenuating circumstances.”

These policies have prompted an outcry from incoming students in general and international students in particular. Many students from abroad applied to these programs in hopes of joining new communities, shifting jobs, and perhaps even immigrating to the United States. Instead, they feel like they are now placed in an untenable situation. They can either give up the thousands of dollars they’ve already paid to schools, withdraw their acceptance, and forgo a chance to advance their careers—or they can spend six figures to pursue an online education from thousands of miles away.

“It was a really bad experience,” said Marcelo Stilman, describing his lengthy attempt to get Cornell to grant him a deferral. Stilman, 31, reached out to the university because he was unsure if he could get into the U.S.—and was wary of leaving his older parents alone in Brazil while COVID-19 raged throughout the country. The business school ultimately rejected his request. “I felt like in the end, they only wanted my money,” he said.

For major American universities, business schools are a lucrative enterprise. With well-paid faculty and upscale amenities, their operating costs are high. But with six-figure prices (an MBA from Columbia costs over $170,000) and generous alumni donations, MBA programs provide schools with a sizable source of revenue. International students, who generally pay more than domestic ones, are especially valuable. Roughly a third of Kellogg’s MBA students come from overseas. In return for the large investment, attendees get an expansive network of classmates and alumni who can help them eventually find high-salaried jobs. Much of the structure of MBAs is designed around making these critical connections, such as by hosting recruitment events.

The coronavirus pandemic has upended this arrangement. All students will face some reduction in quality if MBA programs move online, but the reduction will be particularly acute for international students, many of who face effective travel bans. It’s likely that most can’t even be in the same time zone. They will either have to be awake at strange hours to actively participate in online class sessions, or they will have to watch pre-recorded lectures, a process one student compared to subscribing to YouTube for a six-figure cost. And if these schools do offer any in-person activities—be it classes or networking events—international students will be unable to physically attend.

If universities won’t let them start late, almost all the students I interviewed hoped their schools would at least grant them a discount. “There is genuinely a reduction in one of the most essential points of being in business school, which is networking,” said Swaminathan. For many internationals, including Indians like himself, the currency exchange rate made the over $100,000 dollar price tag even more formidable. “We’re not cheaping out,” Swaminathan said. “It’s only asking for something that’s fair.” As of this writing, Northwestern, Columbia, Cornell, and MIT have not announced any reductions in tuition.

International students also say that the shift to online learning jeopardizes their odds of finding jobs in the United States after graduating, something most of the people I spoke with expressed interest in doing. MBA students traditionally intern with major companies or consultancies during the summer between their first and second years, experience that later helps them land full-time employment. But the U.S. government often requires that international students spend at least nine months studying in America before working for the summer. Only some programs have taken steps to ensure that students starting remotely will still qualify for summer jobs.

The lack of clarity from universities has compounded existing work visa difficulties. The Trump administration’s outward hostility toward foreigners has only intensified since COVID-19 made landfall. The president recently announced a slew of new immigration restrictions and plans to curtail a popular program that lets international students work in America for several years after graduating. Many prospective students worry that if the pandemic persists and Trump is re-elected, staying in America will only grow harder

“Unemployment rates will probably keep rising, and then of course the administration in the U.S. will try to prevent immigrants from staying,” said William Ramos, who lives in São Paulo. A first-generation college student, Ramos plans to take out $130,000 in loans to attend Duke University Fuqua School of Business. To pay them off, it will be all-but essential that he spend several years after graduating working in America. “I’ve lost half my savings,” Ramos told me. They were savings he planned to use to pay for his continuing education.

He is asking for a deferral.

Duke Fuqua has been unclear about whether and under what circumstances it would allow international students to delay their starts. In an interview Monday, William Boulding, the school’s dean, told me that the program would grant deferrals to students who could not make it into the United States by the fall. This would likely include Ramos. Last Sunday, the Trump administration said it would ban non-citizens who had been to Brazil in the last 14 days from entering America.

Representatives at Columbia Business School and Cornell Johnson did not respond to requests for comment. MIT Sloan declined to comment.

“As we have always done, Kellogg will consider deferral requests from admitted students with exceptional circumstances,” said Kate Smith, Kellogg’s assistant dean for admissions and financial aid. “Admitted students can submit a request for deferment that will be reviewed by our admissions team. These requests will be evaluated on a case-by-case basis since each situation is unique.” Multiple international Kellogg admits said their school has indicated to them it would not issue deferrals because of the pandemic itself. So, too, did students at Columbia and Cornell.

These three institutions have almost no financial incentive to grant delay requests. All accept less than a third of applicants and maintain waiting lists if admits decide not to attend. Indeed, Northwestern Kellogg has said that it will now reconsider applicants it had previously rejected. “It’s a brilliant business decision,” said one irritated admit.

Experts say the unforgiving stance is likely driven by fears about enrollment. It’s not all unfounded. Prestigious business schools are selective, but they have seen a drop in applicants over the last several years. COVID-19 is putting even more downward pressure on attendance, particularly by students from abroad. “This matters a great deal because international students almost invariably are paying retail prices,” said Steven Conn, a professor at Miami University Ohio who studies the history of U.S. business schools. Some institutions have pushed back their start dates, hoping travel will open up in time for students to arrive

But while closed campuses may keep enrollments temporarily low, the economic collapse could be good for business schools in the long run. Historically, Conn told me, recessions help business schools attract more students. The robust labor market of the last few years kept applications down because “you didn’t need a business school degree to do well for yourself,” he said. But with millions of layoffs, these schools may soon see a spike in applications once the pandemic subsides.

In the meantime, selective business schools remain extraordinarily wealthy. Cornell Johnson has an endowment of over $200 million. Columbia Business School’s is $750 million. As of 2018, Kellogg had an $882 million endowment. Each parent institution, meanwhile, has a multibillion-dollar endowment. But unlike other rich business schools—such as Carnegie Mellon’s Tepper and the University of Virginia’s Darden School of Business—they are refusing to let international admits simply defer.

That may change, especially if more schools alter their policies. Until then, however, students say they are left with extreme uncertainty. Many schools, for example, haven’t said if students who withdraw because of the coronavirus outbreak will get refunds on their deposits. When I asked Kellogg whether it would do so, the school told me it is “monitoring the situation this summer to inform our decision.”

Other schools have been clearer. After Cornell rejected his deferral request, Stilman withdrew from the school and asked that they return his $2,000 deposit. “It’s more or less like a month to a month-and-a-half of my salary here in Brazil,” he told me.

Cornell declined.

Support the Washington Monthly and get a FREE subscription

Daniel Block

Daniel Block is the executive editor of the Washington Monthly.