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Ethics of MBA Admissions

Ethics of MBA Admission || Show Me The Money
Response From B Schools || The Legal Recourse || The Way Forward

Ethics of MBA Admissions
May we have our refunds, please!

You’ve deposited over a lakh of rupees for an MBA course. But then you get admission to the B school of your dreams. Be prepared to see your Rs 1 lakh go down the drain – Nilesh Gupta and Rashmi Bansal

Priyank Bhardwaj was very happy when he received a call from Symbiosis (SCMHRD) in Feb 05. He was told to deposit Rs 109,500 immediately. Completing a management degree from a reputed college had been his long cherished dream. And so, with joy in his heart, he deposited the money.

Little did Priyank know that was destined for some thing even bigger; for in the month of April he received an admission call from IIM Ahmedabad. His excitement knew no bounds; he immediately wrote to SCHMRD about his selection in IIMA and the desire to withdraw his candidature from SCHMRD.

SCHMRD paid him a mere Rs 10,000 in the name of refund against the Rs 109,500 that he had deposited. The important thing to note here is that the academic session of SCHMRD was to start only in the month of June – two whole months later.

This is not the story of Priyank alone. Many aspirants face this dilemma every year, as the sorry-no-refund policy prevails across a broad spectrum of management institutes.

Abhishek Roy, a PGP 1 at IIM Ahmedabad had a similar experience with NITIE. He had paid Rs 136, 500 to NITIE in March 2005. When he got an admit letter from IIM A and withdrew from NITIE he lost Rs 50,000.

Gunjan Arora is a first year student of IMT Ghaziabad. He had deposited Rs 55,000 with Fore School of Manangement, New Delhi before getting a call from IMT. Says Gunjan, “I requested Fore both in application and in person to refund my money, if not all at least some amount of it. They kept assuring me for 3 months that they will do something but after that they refused to return anything.”

Similar is the story of Puneet Sharma, also studying at IMT Ghaziabad who paid Rs 60,000 to Nirma Institute of Management and later decided to withdraw. “It was clearly mentioned that the amount is non-refundable after a certain deadline date but the course had not started when I asked for my refund. At least the bare minimum 50% should be returned,” feels Puneet

And there are many more such stories (see “Show me the money“)

The Money Trap
The problem lies in the fact that there is no one standardised test like GMAT in place. And even if a number of institutes use one screening test –such as the CAT – they choose to follow their own schedule when it comes to admission calls and payment deadlines.

Several institutes finalise their admissions by February end or early March. By finalising their admission early, these institutes leave the students no option but to deposit the hefty fees (to the tune of one lakh) in March itself.

Since the results of various other B- schools (the IIMs, XLRI) are not out by this time, students generally don’t take a chance and deposit these fees without delay. To make the plan foolproof, these institutes take a written undertaking from the students that if they withdraw their admission, a substantial amount deposited by them will be forfeited.

For example, the last date to deposit fees at NITIE was March 31st, 2005. Results of IIMs were declared between April 6-11, 2005. Thus anyone desiring to withdraw from NITIE and join an IIM would lose Rs 50,000. However, no MBA aspirant can be sure of getting into an IIM and therefore cannot take the chance of rejecting the NITIE offer.

The institutes themselves lose out on nothing, as the seats vacated by students who move out are immediately filled by others in the wait list. But the plight of the students who leave does not stop here. Now they have to arrange a second set of fees for admission to the b school they are joining.

And finally, there is the dilemma of students on a waiting list. Say you get admission to IIM C or IIM K and pay the fee (Rs 40,000). 10 days later you get into IIM A or B and wish to withdraw the previous acceptance. The money paid once again goes down the drain.

Shobhit Chaturvedi, currently a PGP 1 at IIM A, was originally wait-listed 10 at the institute. So he paid Rs 40,000 to IIM Calcutta to secure his admission there. On shifting to IIM A, he lost that sum.

This issue gains added relevance as the same cycle is about to repeat with the new admissions commencing in a short while.


Show me the money!
The issue has been festering for a while now. More students speak out against what they term an unethical practice by b schools.

I faced this issue with NITIE in 2000 when I had deposited Rs 85000 bucks initially and then when I received the call from IIML , I joined L but never got the money back from NITIE. I really tried hard including sending a legal notice to NITIE as well as meeting the director.
Balaji Ganesan, IIM L batch of 2002

“I had to surrender more than Rs 50,000 to SP Jain in 2004. After I got into IIMC I asked the registrar whether I can get a refund… was given part refund and was told that I could have got more refund if I would have informed SPJ as soon as the IIM C results came out . Of course nobody was there to take the call at 5:30pm. Same happened to other friends.
Manish Sinha, PGP 2, IIM Calcutta

Got selected in 1st list of IIM – K in 2003. deposited Rs 40,000. Got selected in 2nd list of IIM – L same year. Lost Rs 40,000 (no refund policy).
Manish Panwar, IIM Lucknow batch of 2005

I submitted the fees for NITIE for 2005-07 session before getting final call from IIM Calcutta which I finally joined. Out of Rs. 136500 submitted , I only recieved a refund of around 50000.Around 80000 were forfeited, despite the fact that I had withdrawn the application well before the start of session.
Manish Jaiswal, PGP 1, IIM Calcutta

I know that I have signed an undertaking accepting the rule but I totally disagree with the rule. I agree that I was involved in the process before joining the institute (group discussion and interview) and for that I paid them when I purchased the application form. Now when I am not a student of Fore, they should return my money.
Gunjan Arora, IMT Ghaziabad student who lost Rs 60,000 by withdrawing from Fore school

This is a partial list of institutes where the problem appears to be prevalent.

If you have had a similar experience email the details to edit@jammag.com and we’ll add your name to the list


Response from B schools
What is the b school side of the story? JAM gives the concerned institutes a chance to explain the rationale behind their policies.

JAM magazine emailed/ faxed the following questionnaire to NITIE, SCMHRD, S P Jain, Fore School and Nirma.

a) If a student drops out of your B school in mid-April, is the seat offered to some other student who is on the waiting list?

b) An substantial amount is deducted from the student while giving a very small refund. What is the rationale for this deduction.

c) Is the same policy going to be implemented for the academic year 2006-8?

JAM also requested information on what would be the last date to confirm an admission for the 2006-8 session by paying fees, and thereafter what amount would be deducted if a candidate withdrew from the institute.

In response, we have received one reply, from Sundeep Reddy, Co-ordinator, Admission Team SCMHRD

Thank you for your questions regarding our admission process. If it is primarily related to create transparency about our admission process among the student community, we are very much interested to clarify the issues you pointed out. The very fact that I as a second year MBA student coordinate the admission process goes on to prove the concern we have for the student community.
We believe in the following principles for our admission process
1. We need to get the best students
2. We shouldn’t deprive deserving students
3. We should allow students to take a decision
4. We need to avoid tendency of students to block seats and deny chances for other students

If there is any suggestion from student community, we shall be glad to consider it & incorporate it as a policy. I would just like to add just one process statement, when student cancels his admission we don’t intend to find out the reason, as we don’t consider it our right to do so.

We are still awaiting a reply to the specific queries posed, as listed above.

Response from NITIE
This has reference to your Fax letter. We reproduce below the existing Refund Rules as printed in our admission brochure.

“A candidate who does not join the programme after paying the tuition fee and has intimated the Institute of his/her decision and if this intimation is received by the Institute at least 7 working days in advance before the commencement of the course, the 50% of tuition fee will be refunded along with the Institute Caution Money Deposit, the Hostel Caution Money Deposit and the Mess Caution Money Deposit.

If a student fails to intimate the Institute of his/her desire not to join the course on or before 7 working days before the commencement of the course, the tuition fee will be forfeited. In this instance, the Caution Money Deposit paid by him/her will be returned along with his/her deposits such as Hostel deposit and Mess deposit, as applicable.

A student who discontinues the course after joining the programme whether it is in the beginning or mid-way, the tuition fees, hostel charges and other annual charges paid by him/her will be forfeited. His/her deposits including Institute Caution Money Deposit, Hostel Caution Money Deposit and Mess Caution Money Deposit, etc., will be refunded after deducting the outstanding amounts specified with regard to the NO DUES CERTIFICATE issued by various departments.”

The last date for confirmation of admission will be announced at the time of declaring the list of short-listed candidates.


The Legal Recourse
So, do you have any option but to pay up? A few students have tried to raise a voice but were unable to achieve any results. But, that may change soon.
Rashmi Bansal

In 2003 before getting IIM L call, Tanuj Shori got through Shailesh J Mehta School of Management, IIT Mumbai. He was asked to deposit Rs. 50,000 with the clause that it was “non refundable”.

Says Tanuj, “I did try to wage a lone battle, to get the refund, In fact also sent a notice to them but they did not bother to reply. To take the route of consumer court was not feasible for me at that time as it demanded my presence in local jurisdiction i.e. Mumbai.”

Rohit Verma‘s story is identical. A PGP 1 at XIM Bhubaneshwar, he is one of the students who had deposited 1.1 lakh in SCMHRD and was refunded only Rs 10,000. Says Rohit, “I personally met K Subramaniyan, Director, SCMHRD, but he outright refused to refund anything beyond 10k. I also explored some legal options by meeting a few lawyers but could not do much as I was in Delhi and SCMHRD in Pune.”

Several students also believe that since the prospectus clearly mentioned that a particular amount would be deducted if they withdrew from the institute, they do not have the right to blame the concerned B school. They feel this is the price one must pay for ‘hedging’ against risk.

However consumer activist Arun Saxena, President, International Consumer Rights Protection Council (ICRPC), is of the opinion that students can file a consumer case against the institute. “The institute has no right to deduct any amount when the student does not attend any classes or cancels admission (if another admission is given after his cancellation).”

Gujarat State Consumer Disputes Redressal Commission, Ahmedabad in appeal no. 519 of 2003 had ordered on 15-9-2003, refund of full fee amount of Rs. 23,700 to a student who had cancelled her admission from one college to take admission in another. The court was of opinion that when the student left the first institute, some other student got admission on that seat. So, there was no loss to the institute.

Mr. Arun Saxena states, “In few other similar cases the consumer courts have ruled that the educational institutes do not thrive upon profiteering from the fees collected from students. Retention of the amount of fees and other charges collected by the institute will clearly amount to deficiency in service, even if they have forced the student to sign a contract that the fee is not refundable. If a consumer has paid money for tution fee, and does not get tutions, he has a right to ask back his money, provided that the institute did not suffer any losses due to such refund, and received the same amount of tution fee from another student who filled his place.”

“Not only that, there is provision to ask for refund of tuition money, if the student feels that the services offered by the institute are of poor standard, and not what they had promised while giving admission,” adds Mr. Saxena.

Nilesh Gupta, an ex Indian Air Force Officer and currently an FPM student at IIM Ahmedabad is planning to bring out a lawsuit against these institutes for carrying out such malpractices. Any student who had deposited money and got inadequate refunds in last four years may get in touch with Nilesh at . Says Nilesh, “We will try our best to ensure that justice is done.!”

Saxena is also willing to take up the case. “If many students complain to me I will file a PIL .”

Students who have lost money to a Bschool and wish to file a PIL may contact
Nilesh Gupta at: nileshgupt@yahoo.com
Arun Saxena, ICRPC : consumerhelp@sify.com


The Way Forward
B schools need to come together and establish some common norms on issues like refunds. And in the longer run, there is a need for a few simple systemic changes to streamline the admission process itself.
Rashmi Bansal

Legality aside withholding substantial amounts from candidates who wish to withdraw from an institute well in time is unethical. And ethics is the core of any business, so why exempt b schools? An institute may make an easy few lakhs but at the same time lose goodwill in the student community, which is worth a lot more.

A viable alternative would be for all institutes to establish norms for refund. Yes, there must be some price to pay so that undecided students don’t block seats in several institutes. But the amount deducted should not run upto Rs 50000 or Rs 1 lakh.

A sum of Rs 5000-10,000 is in the acceptable range – it works as a disincentive but will not result in serious financial setback in case a student withdraws.

Secondly, there is no need to take the entire first term or first year fees at the time of admission itself. For example, MDI Gurgaon asks candidates to deposit Rs 20,000 at the time of acceptance – so that’s the maximum one can lose on cancelling admission. In addition, the institute does refund Rs 10,000 if candidates withdraw by a specific date. In 2005 that date was April 15.

Systemic changes
However, what makes more sense is for B schools to get together and work out a system that works for all. Without any ego issues.

Accept that there is a preferred list of institutes in the mind of a student. If a candidate were to know at a fixed date – say April 1 – that these are the B schools who have accepted me, he/ she would pick the b school of their choice.

This would eliminate the need for students to join one bschool even as they await results from others which they are more keen to join. That being the major reason for the cancellation-and-refund goose chase.

Once students have given acceptances at their first-choice B schools, the waiting list can be cleared.

The schedule could look something like this:
# April 1: List of accepted candidates put up online
# April 15: Last date to confirm acceptance of offers by paying fees
# April 20: Waitlist candidates notified of vacant seats
# May 1: Waitlist candidates confirm acceptance
# May 1-15 : Second and third lists can be released

Academic session can start in June.

Given the demand for an MBA, no good b school would find it difficult to get students. The non-refund policy does not, in any case, prevent most students from shifting colleges. It only results in poor word-of-mouth publicity for the institute concerned.

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