The strong job market for newly minted MBAs and the current political climate have been identified as the top reasons for the recent drop in applications to US MBA programmes, according to a survey by Kaplan Test Prep.
The survey of admissions’ officers at more than 150 business schools across the United States found that about 31% of business schools attributed the decline to international students’ concerns about the current political climate in the US. At the same time, 30% of respondents said the strong job market was keeping prospective students in the workforce. About 17% blamed the cost of an MBA education for the fall, while 13% attributed it to lingering doubts about the value of the degree. Around 7% cited the lack of one-year MBA programmes in the United States and 3% pointed to a perception that fewer jobs require an MBA than in previous years.
Top b-schools not immune as applications decline
Applications to US MBA programmes dropped for the fourth successive year in 2018. About 70% of two-year full-time MBA programmes in the United States suffered a drop in application volumes, according to a survey of nearly 1,100 graduate business programmes at 363 business schools by the Graduate Management Admission Council, a non-profit that administers the GMAT exam.
Although application numbers have been falling for a while, this time even the top US universities saw a decline. The Wall Street Journal reported that Harvard Business School saw a 4.5% decline in applications, Stanford's Graduate School of Business suffered a 4.6% fall, and Wharton saw a 6.7% decline. Overall, applications to MBA programmes in the US fell 6.6% in 2018. In contrast, applications rose 8.8% in Asia, 7.7% in Canada and 3.2% in Europe.
Read: The FT 2018 European Business School Rankings Are Released
For many schools, the drop in applications from international students is a longer-term concern. Nearly three quarters of business schools polled are worried that the current political environment in the US will deter applications from international students in the future. Last year, 68% of the schools expressed similar concerns.
Strong job market affects applications
Jeff Thomas, executive director of admissions programmes at Kaplan Test Prep, agrees that business schools are going through a rough patch. “There’s no question that business schools are facing some significant headwinds that are largely out of their control when it comes to recruitment, particularly among international students. While a strong job market may be great for current MBAs who are finding jobs and securing high salaries, it is also convincing potential new students to stay put, where their current jobs seem secure and their pay is good.” Thomas pointed out that MBA applications are susceptible to cyclical trends. When the economy is sputtering, applications tend to increase as business professionals are more inclined to enrol in business school to enhance their skillset and wait for the job market to recover. Conversely, when the job market is strong, as it is now, applications tend to fall. “But even if the economy does take a downturn, an American political climate that discourages international students from coming may erode any normal application increase,” he adds.
To lure more young business professionals out of the strong job market, schools in recent years have been offering cheaper, more customised Masters degrees in emerging fields such as data science and supply-chain management.
Sangeet Chowfla, GMAC's president and chief executive, said applications could rise again in the next recession as the US economy, well into its 10th year of growth, approaches its peak. However, he noted that increased competition from business schools in Europe and Asia, coupled with the Trump administration's efforts to curb overstays in the US by international students, may continue to undermine American schools.
Soojin Kwon, admissions director of the full-time MBA at the University of Michigan's Ross School of Business, told the Wall Street Journal that she expects programmes at elite schools to bounce back. These programmes "provide access to jobs with attractive companies and great salaries, with a strong alumni network. That's what students are buying," she said. She predicted that smaller schools will find it more difficult to increase applications.
When it comes to the MBA market, forecasts are not easy to make, though. Tina Mabley, assistant dean of the full-time MBA programme at McCombs School of Business (US), told BusinessBecause: “There is a lot of uncertainty in the world right now. If I had a crystal ball, I would play the stock market more. So I just don’t know. But the viability of the degree is still there and students are using the MBA in a variety of ways today. I think it will maintain its value for that reason.”