Webcam Interviews Disconnect Imposters

Phone interviews allow for possible deception, but the growing use of Webcams by schools is making it more difficult to use a stand-in

by Alina Dizik

Who's really on the other end of the line during a phone interview? It could be the student on the MBA application—or a well-spoken cheater.

It used to be that business school officials couldn't necessarily tell one from the other. But now, with the widespread use of Webcams, one avenue for potential cheating—including coaching or having an imposter sit in for the applicant—is being narrowed.

Busted!

While most B-school interviews are conducted in person, that's not always possible, particularly when candidates are living in other countries. And that's when the temptation to test the boundaries of ethics, such as referring to prepared notes or using a stand-in, can come into play.

No one knows how often it happens. Anne Cooper, the admissions director at University of Georgia's Terry College of Business said in an e-mail that she suspects—but can't prove—impersonation in one or two cases in each incoming class of about 120 full-time students. Cooper says the difference in a student's English-language skills once he or she comes to campus is an automatic tip-off.

"There's no way to confirm that you are speaking with the same person that shows up," Cooper says. "It's disconcerting when it happens, because you want to know that you're dealing with someone of integrity."

Starting this month, Georgia is requiring that phone interviews be conducted via Webcam. Several other schools, including Penn State, Arizona State, and Ohio State offer it as an option. While cutting down on cheating is just one of the reasons schools are adopting Webcam interviews, the technology has other benefits they're not ignoring.

When Is It Cheating?

"It's always suspect, in terms of dialogue, who's on the other end of the phone [line]," says Rudy Pino, the director of admissions at Arizona State University's W.P. Carey School of Business. Over the phone, interviewers listen for suspicious clues such as rustling paper, delayed responses, and requests for the interviewer to repeat questions—possible indications that the candidate is searching notes for an answer or consulting with someone.

Pino estimates that every year close to 5% of about 160 full-time students receive an unethical amount of help—which includes anything from scripted answers to having a well-versed helper present during their phone interview.

Besides outright impersonation, its not really clear where the ethical lines in phone interviews are, admissions experts say. Even if it's not strictly forbidden, when admissions officials like Carrie Marcinkevage, the admissions director at Penn State's Smeal College of Business, get a scripted or delayed answer, they automatically become concerned about the applicant's ability to succeed in an MBA program. An applicant can use notes to "hide language deficiencies, glide over unfavorable parts of an experience they don't want to reveal, or worse, to give someone else's answer," Marcinkevage explains in an e-mail.

But Los Angeles-based admissions consultant Stacy Blackman says there are different expectations for a phone interview than for an in-person meeting. "I don't know that [script reading] is necessarily unethical if you prepared it yourself," adds Blackman who discourages her clients from reading word-for-word answers because that prevents them from coming across as genuine.

Webcam interviews also let schools record and store images for later use. Alison Merzel, admissions director at Ohio State University's Fisher College of Business, another MBA program that officially started using Webcams this year, is impressed with the screening potential. "You can capture an image and compare it with their GMAT or TOEFL image; it gives you the option of having identification," she says.

VoIP Makes It Easy

Although Webcams have been around for years, the proliferation of VoIP technologies like Skype (EBAY) (BusinessWeek.com, 11/29/07) or Yahoo! Messenger (YHOO) means that MBA admissions offices can now see them as a feasible, low-cost option.

Mandy Stowers, a first-year MBA student at Ohio State who's on the admissions committee, says she hasn't received any negative feedback on their new Skype-based offering because of the applicants' familiarity with the program. Stowers predicts that more than half of this year's international students will choose Webcam interviews conducted over Skype rather than speaking via telephone and says that many candidates already had Skype IDs and simply had to log in. "It's been pretty positive—we've had people who scheduled phone interviews actually switch to Skype interviews."

Georgia's Cooper said the school has started using Cisco's (CSCO) WebEx technology, which has the capability for one-on-one interviews. With WebEx, an applicant can log in and schedule a date and time while having technical support readily available, says Cooper. And even though the service is costlier than just signing up for Skype, Cooper says the investment is worth it. "We wanted to find reliable alternatives, and I believe more schools will be moving in that direction."

Smile, You're on Camera

The adoption of Webcams for admissions interviews is changing the rules in more subtle ways as well. For instance, with this technology an applicant can't interview for business school in his or her nightclothes. On the other hand, it's a little more forgiving than an in-person chat. For his Webcam interview with Penn State, Ross Cain combined his everyday shorts with a suit and shirt because he knew his interviewer wouldn't see below his computer desk. "I was kind of like the ESPN sportscasters," he recalls.

And exactly how you handle yourself during the interview is also a bit jarring. During a Webcam interview in December, Xiaoyu Zhang, a Penn State applicant from Shanghai, had a hard time deciding on how best to make eye contact with Smeal's Marcinkevage. Zhang had to look at the Webcam above the monitor, instead of into Marcinkevage's eyes on the computer screen. But other than a few mishaps, Zhang says the Webcam was worth it. "Via phone you can only convey 7% of the whole message—I can't use my hands, I can't smile." He's surprised more schools don't provide the option.

Another factor with Webcams: They give a glimpse into applicants' homes and work environments. So interviewees and interviewers have to think about set design. "I think you could do two things: take it in a very professional direction and draw the attention away from the background so all the attention is on you, or you could use the background to develop a sense of who you are," recommends Marcinkevage. (She's also had to modify her own interviewing space. Since starting the process in November, she's removed unkempt-looking binders from a shelf and found a new spot for her purse—both of which could be seen through the camera lens.)

But even though most admissions officials encourage in-person conversations that take place on campus, both applicants and interviewers are pleased with the Webcam. After the first year of conducting Webcam interviews, Merzel says Ohio State hopes to continue taking advantage of emerging video capabilities. "There's limitations, it's still not perfect," she says. "But we will move toward [using Webcams] as technology improves."

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A Shaky Season for Student Loans

Subprime woes and recent legislation have lenders tightening standards for applicants, and the credit crunch is eating away at other sources for tuition money

by Alison Damast

Shortly after New Year's Day, Pat Watkins, financial aid director at Eckerd College in St. Petersburg, Fla., placed a worried call to National Education, a student loan company she has been working with for nearly two decades. She had heard rumors that the company was no longer funding federal Stafford and PLUS (Parent Loans for Undergraduate Students) education loans, but had received no official word from the company.

She found out that the phone of National Education's local rep had been disconnected. Later she learned that Chicago-based National Education was not planning to accept applications for new loans for the spring semester after Jan. 15, though they planned to fund disbursements for students who received loans for the fall.

Federal Loans Lose Funders

That was the first surprise. In mid-January, Watkins received a letter from Phoenix loan company NextStudent saying they, too, would not be funding new Stafford or PLUS loans for the spring semester, only funding loans where there has been a fall disbursement.

At least one other student loan company, San Diego-based Goal Financial, has also pulled back their federal loan lending, according to college loan officials. Federal student loans are low-interest loans guaranteed by the federal government. Congress outsources many of these loans to private companies and has recently passed legislation that has eliminated many of the subsidies they gave these lenders to encourage them to participate and administer the federal loans.

"I haven't seen it this bad before," said Watkins, who has worked in the financial aid industry for 34 years. "It is going to put a lot of students in a bind." She said she will help students find a new loan provider, but for students with existing loans this will likely incur more costs and a second loan to be repaid.

Student financial aid season—which started on Jan. 1—is getting off to a shaky start. The industry is experiencing jitters as the fallout from the subprime credit crisis trickles down to lenders who make private loans, as well as companies that also issue federal loans. For the moment, the credit mess has had a limited effect on student borrowers, but experts said they expect students to be affected in the next few months.

Tougher Standards

For instance, students with poor or only decent credit ratings—those with FICO credits scores under 650—may encounter difficulty obtaining a private loan with reasonable interest rates or, for that matter, obtaining one at all. Loan companies may refuse, in some cases, to make loans to students at schools that have high default rates, financial aid directors said. And families that have relied on home equity borrowing to pay college costs may turn to private lenders as the home equity market tightens up (BusinessWeek, 1/16/08).

Students also may need to change their loan application tactics. In the past, students who were authorized account holders on their parents' credit cards could get loans with interest rates based on their parents' credit rating. They now will be required in most cases to apply for such loans with their parents as co-signers. Those applying for federal loans may also find their options more limited, as many major loan companies that work with the federal government temporarily pull out of the federal student loan program.

While the subprime crisis has created the most news, student lenders are also facing fallout from legislation passed by Congress last fall that eliminated nearly $19 billion worth of federal subsidies to student lenders. The combination of these two developments has made for a challenging financial environment for student loan operators, says Mark Kantrowitz, publisher of FinAid, an online provider of student aid information. "The joke in the industry is that Congress took away half the profits, and the asset-based securities markets took away the other half," Kantrowitz says.

The $85-billion student loan industry is often criticized because of the large profits private students lenders make off of students by charging them high interest and origination fees. The legislation was propelled by student borrowers who wanted to see the subsidies issued to private lenders channeled back to federal student loans. As a result of the legislation, an additional $11 billion in federal aid is now available to students.

Financial aid officers are predicting that student loan applicants may find the process more daunting and complicated than in years past. As with the mortgage market, many private student loans are packaged and sold to investors as asset-based securities, leaving them vulnerable to aftershocks of the subprime credit crisis. For example, FinAid's Kantrowitz predicts that many companies will no longer issue loans to students with credit scores below 650 to protect themselves from any subprime exposure. In addition, loan companies will require more applicants to have co-signers. "I do expect it to be a little more difficult to get one of these private loans," Kantrowitz says.

Are Lenders Hurting?

Borrowers' worries extend even to the largest student loan lender, SallieMae (SLM), which is also cutting back on federal loans and concentrating more on the private market. Earlier this month, the company said in a Securities & Exchange Commission filing that in response to the financial environment, it would be "more selective" in making federal and private education loans. Since then the company has reassured institutional borrowers that it is in sound financial condition, according to a Jan. 17 report in the Chronicle of Higher Education.

The decision by some companies to withdraw from the federal loan program could indicate that more lenders are hurting, said John Dean, special counsel to the Consumer Bankers Assn., an Arlington (Va.) group that represents bank lenders in the student loan programs. "This is significant because National Education and Goal Financial were well-known operations and were seen a couple of years ago as growing rapidly," Dean says. "We presume that if they are experiencing difficulty that others could be experiencing difficulty as well."

Representatives from National Education and Goal Financial declined to comment on the federal loan suspensions. Next Student did not return phone calls requesting comment.

Private loan companies' investment practices may have led to some "overexuberance" on the part of private lenders, says Robert Shireman, executive director of the Project on Student Debt, a group that focuses on student financial aid. Like Kantrowitz, he expects private loan companies to be more cautious when making loans to students.

Battered Family Finances

In the meantime, financial aid officers are sitting back and anxiously waiting to see how the student lender landscape will shift if more loan companies continue to pull out of segments of the market.

Bill Witbrodt, director of student financial aid services at Washington University in St. Louis, says he has not seen students directly affected yet, but expects that could change. Plus, battered family finances could send more students into aid offices. Right now, students aren't reporting family financial stress from the credit crisis, Witbrodt says. "If this continues, I would expect it [to] and, in fact, I'm surprised it hasn't already."

Students facing the greatest difficulty in obtaining private loans are international graduate students, who are not eligible for any of the federal loan programs, says Rockne Bergman, manager of graduate and professional programs at University of Minnesota's financial aid office. He counsels international students seeking loans from the law, business, and nursing schools, among others, and says he has already seen the market tighten for them.

"These lenders are just being very careful as to whom they are lending to. And they want to make sure they will be able to get those loans paid back," Bergman says.

Financial aid officers like Eckerd College's Watkins say their greatest fear is that the lending environment will create a situation where students strapped for cash will take out risky private loans with sky-high interest rates, no matter what the cost. For example, Watkins says she has seen commercials on TV aimed at students with poor credit ratings and promising no interest or payment until graduation. Those loans tend to come with higher origination fees and higher, unpredictable interest rates that compound the amount students owe after graduation into a "significantly higher amount," Watkins says: "We haven't seen the full impact of this yet, but it is coming."

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Bump or Bust for MBA Jobs?

Job cuts and a looming recession threaten the hiring outlook, but the big banks and other employers don't plan to slow their recruitingby Alison Damast

It's turning into a nervous 2008 for soon-to-be MBAs. Many of the large financial institutions that business school students typically turn to for summer internships and job offers have posted large mortgage-related losses and announced layoffs in the past few weeks. Just last week, for instance, Bank of America (BAC) announced it would cut an additional 650 corporate and investment banking jobs, while Citigroup (C) said it planned to cut 4,200 jobs globally. Suddenly, the employment outlook is looking a bit more turbulent.

Up to now, the academic year has been good for MBA student job-seekers. Recruiters haven't stopped coming to campus to interview for summer internship jobs, career services officers said. Meanwhile, second-year students looking for full-time jobs appear to be doing as well as, if not better than, their counterparts last year, with many schools reporting increased recruiting, more job offers, and higher salaries for this year's grads. But that can all change in a hurry.

The challenging financial environment means students must be extra diligent when conducting their internship and job searches this year, said Tom Kozicki, board president of the MBA Career Services Council, the umbrella group of school career placement offices. "Those who are attacking the market aggressively, I think, will fare well whether the economy dips or not, but those who wait on the sidelines and hope for something to be delivered to them by their business school are the ones who will get caught if this market turns down," said Kozicki, who also serves as executive director of the career center at the University of California, Irvine's Paul Merage School of Business.

Changing Their Strategies

Brian Mirochnik, 26, a first-year student at the University of Rochester's Simon Graduate School of Business is heeding that advice as he conducts his search for a summer internship. He wants to pursue a career in investment banking, specializing in leveraged finance, but realizes this year he might not be able to obtain a position in that sector, which has been beleaguered by job cuts and financial losses.

He has traveled to New York several times over the past few weeks to talk with nearly 50 investment bankers about the state of the industry. The news hasn't been heartening—they have told him there are about 40% fewer jobs in his area of interest. He has since changed his strategy and is now considering taking an internship in the corporate finance division of investment banking.

"I would be lying to tell you I wasn't nervous about the prospects, because I left a good career to come back to business school to go into investment banking," said Mirochnik, who worked as a commercial banker and entrepreneur before attending Rochester. "I think across the board people are nervous, but you can't let that affect how you go about the recruiting process."

Big Banks Still Recruiting

This year's first-year MBA students have been anxious about the job market from the moment they arrived on campus, said Kenneth Keeley, executive director of the career opportunities center at Carnegie Mellon's Tepper School of Business.

But their fears have been somewhat assuaged by the large number of recruiters who have been on campus to interview students in the past few weeks, including Deutsche Bank (DB), Merrill Lynch (MER), Goldman Sachs (GS), and Bank of America, he said.

"The early numbers again seem to be good. I think many firms will still want to have that pipeline for internships," Keeley said. "The real indicator of how the economy will impact the MBA job market will come next fall, when these firms decide how many offers to give to their summer interns."

So far, many of the big recruiters haven't shown signs of pulling back. For instance, the hiring strategy has not changed at Merrill Lynch—despite a huge $9.8 billion loss in the fourth quarter of 2007, the largest quarterly loss in its history. Merrill plans to hire between 170 and 180 people for summer internships globally, said Sarah Quarterman, the firm's global head of campus recruiting. Last year, Merrill hired 190 associates, but that number was higher than average, said Quarterman.

Taking the Long View of Hiring

The company takes a long-term approach to recruiting, looking ahead several years rather than tailoring their hiring to market conditions, she said. "I think some firms in the past have pulled out of recruiting due to market volatility and then reaped the consequences of that in two to three years' time," Quarterman said. "I think we're all a lot wiser now and realize that the people we hire this year are going to be the VPs of three or four years' time, so if we don't hire them now, we'll have a talent shortage."

Bank of America—which announced on Jan. 22 that its fourth-quarter profit had fallen 95%—is still an active participant in MBA campus recruiting, said Rick Parson, Bank of America's executive vice-president and global staffing executive. "While we have announced some workforce reductions in certain business units in this tough market environment, we still need to look for a variety of skills and diverse experience when hiring," Parsons said in an e-mail.

Second-year business school students appear to be in the safest spot for the moment. According to an Employment Trends Survey Report conducted this fall by the MBA Career Services Council, most of the 85 business schools surveyed reported a 20% increase in overall recruiting activity this fall over last year and a 14.9% increase in on-campus recruiting. The average full-time base salary for the class of 2007 increased by 5.5%, with an 8.8% increase in the signing bonus, the survey showed.

Signing Bonuses Up

The data from that survey seem to be aligning with preliminary hiring figures at schools such as Carnegie Mellon, where nearly 78% of second-year MBA students already had job offers by Jan. 21, up about 10% from this time last year, according to Keeley. "The number of companies making offers is up, and that's a good sign to us," he said. "If that number was dipping, we'd be really concerned."

The employment picture also remains a question mark for undergraduates, according to the National Association of Colleges and Employers (NACE). As of last fall, employers said they planned to hire 16% more graduates in academic year 2007-2008 compared to the previous year, according to a survey released in November. Signing bonuses for undergrads are also up.

But that picture could change in the coming months, said Andrea Koncz, NACE's employment information manager. "We are hearing a lot, of course, about the economy and how it will affect the college job market," Koncz said this week. "We normally do another update survey in late March, but we're probably going to go out sometime in mid-February, just to see if anything is changing at all."

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