The $20 million MBA draft

April 22, 2011, 1:16 PM UTC

Every year, admissions officials from top MBA programs across the country gather in a St. Louis hotel to dole out millions in funds from the single largest MBA scholarship fund in the world.

( — Not much more than a month ago, Jennifer Arriola and Anthony Webb received the kind of news that would put anyone on cloud nine. Both had already been accepted into top MBA programs, 23-year-old Arriola at Cornell University’s Johnson School of Business and 30-year-old Webb at Yale University’s School of Management.

Arriola and Webb discovered that they wouldn’t have to pay a penny toward the nearly $100,000 in tuition to attend those schools. Instead, they would get full fellowships from the largest single MBA scholarship fund in the world, The Consortium for Graduate Study in Management. This year, the group awarded nearly $21 million in fellowships to 323 B-school applicants, mostly underrepresented minorities. Since its founding in 1966, The Consortium has handed out over $225 million in scholarships to more than 6,000 MBA students.

Arriola, a Mexican American marketing manager for, a mobile app startup in Silicon Valley, and Webb, an African American attorney, got those generous awards by way of a secret draft in a St. Louis hotel where admission officials from top-tier business schools gather to make their picks. Both Arriola and Webb were first-round selections by Cornell and Yale, respectively, their preferred schools.

The draft, which is held in early March, is the culmination of a long, often tortuous process for candidates who must go through all the typical hurdles to get into a top business school: prepping for and taking an entry exam, either the GMAT or the GRE; completing applications to numerous MBA programs; doing follow-up interview rounds with some schools; and convincing The Consortium of their proven commitment to diversity — a requirement for the fellowship.

Webb, for example, met the requirement by serving as co-chair of his law firm’s diversity and inclusion committee and as the founder and CEO of Boys Speak Out, Inc., a non-profit that brings together disadvantaged adolescents with professionals in law, medicine and business.

Arriola, who graduated from Stanford, was a member of the school’s Latino Business Student Association, a group that connects students with companies devoted to maintaining a diverse workforce.

Arriola applied to seven schools: Cornell, Yale, Berkeley, Carnegie Mellon, New York University, UCLA, and the University of Southern California — all Consortium members. Webb, who went to Dartmouth before getting a law degree at the University of Chicago, applied to five Consortium schools — Yale, Virginia, Berkeley, Michigan, and Emory — but also Harvard, Stanford, Wharton, and MIT Sloan.

The Consortium was founded in 1966 by Sterling Schoen, a labor relations professor at Washington University, who had done a study on diversity. Schoen launched the program in the summer of 1967 with three schools and 21 African American fellowship recipients, all of them male. In the 1970s, the organization’s mission was expanded to include women, Hispanics and Native Americans.

In 2004, the Consortium allowed any U.S. citizen to apply for a fellowship to comply with a year-earlier Supreme Court ruling. This year, in fact, 14 applicants offered fellowships are not underrepresented minorities. Six are Asian Americans, and another six are Caucasian.

All told, the Consortium received 980 applications this year. Just over half of them, 491 applicants, were admitted to one of the 17 participating business schools in The Consortium. Some 323 were offered fellowships, roughly a third of the applicant pool and two-thirds of the admit pool. Another 152 were offered membership in The Consortium, which also helps connect students with potential employers and serves as a networking hub for minority MBA students and alums.

It’s at the draft, however, where admission officers essentially dole out nearly $21 million in free tuition awards over six separate rounds.

“We do liken it to the NBA [National Basketball Association] draft,” says Wendy Huber, associate director of admissions for Virginia’s Darden School of Business. “It’s an exciting time, but it’s not about competition. We’re just trying to make sure people end up in the right places.”

Adds Peter Aranda, CEO of The Consortium: “It’s a little bit like the old days of the New York Stock Exchange. There is a lot of scrambling going on because if you are a school admissions person you don’t know who will pass or not pass on candidates. There is a lot of groundwork leading up to the draft, so the schools are all well prepared when they get into the conference room.”

This year the draft began just after breakfast at the Sheridan Clayton Hotel. The school with the most first-choice rankings from applicants went first. An admissions officer from the school publicly announced which of its first-choice candidates would be offered fellowships.

“We go around the table and each school goes through their first-round applicants and will say, ‘We offer fellowships to six, and we pass on these two,’” explains Aranda. “The first-choice school has the first right of refusal. So if a school passes on an applicant in any round, then another school can pick the applicant in a later round.”

The 2011 crop of applicants yielded some 3,011 MBA applications to Consortium schools, roughly 3.3 applications per candidate. Many of these applicants also apply to non-Consortium schools, particularly Harvard, Stanford, Wharton, Columbia, Kellogg, and Chicago. Indeed, in any given year, as many as 50 applicants who are offered Consortium fellowships turn them down — because they prefer go to a Harvard or Stanford which may offer their own financial aid incentives.

During the draft, Consortium schools typically offer fellowships to more applicants than each school has available, to account for the applicants who turn down their offers.

“It’s a lot of art and only a little bit of science,” explains Aranda. “If an offer from Michigan falls out and the person goes to Northwestern instead, Michigan will pick more than they will eventually pay to adjust for that. The whole process takes about four hours.”

When the group was done, 323 applicants were offered fellowships. Aranda, himself a beneficiary of this process 27 years ago, views each of these awards as something of a lifeline to young people who might otherwise not be able to attend a top business school. “Diversity is not a minority problem,” maintains Aranda. “It’s an American opportunity.”

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