Short on time? Here are the highlights:
- Many US business schools continue to report declining application volumes from both domestic and international students
- In contrast, graduate business programmes in Asia, Canada, and Europe are reporting increasing numbers of applications
- More broadly, student demand is increasing for more specialised, one-year graduate programmes in business
Demand for two-year MBAs, “the prize degree of US business schools” is declining in the United States. The Graduate Management Admission Council (GMAC) reports that applications to full-time MBA programmes in the US have fallen for the past four years, and that 70% of US schools with full-time MBAs experienced lower numbers of applications to their two-year courses in 2018 than in the previous year.
There are various factors driving the trend, but a new Kaplan Test Prep survey among admissions officers at more than 150 business schools across the US reveals that the current political climate in the country is thought to be a major factor behind the declining application volumes, with international students turning towards other countries and/or other types of graduate business degrees.
Strong economy also playing a part
Among the admissions officers surveyed by Kaplan, the two most-cited reasons for the lower application volumes in the US are the political climate (31%) and a strong job market that is keeping prospective students working rather than opting to enrol in a programme (30%).
Significant proportions also mentioned the cost of an MBA degree (17%) and a perception among some students that MBA degrees do not offer enough value (13%).
Of the findings, Jeff Thomas, executive director of admissions programs, Kaplan Test Prep, notes that lower applications are normal amid a strong economy, and that an increase in applications tends to happen when the economy eventually softens. But, he cautions, that cycle could be disrupted given the current political climate:
“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. Trends in MBA applications are almost always cyclical. When the job market is soft, you see an increase in applicants, as prospective students see the value in becoming more marketable and waiting out a weak economy. When the job market is robust, as it has been for the past two years, applications tend to be down. 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.”
Bill Boulding, dean of Duke University’s Fuqua School of Business, adds that another drag on application volumes is the difficulty for international students face in securing an H-1B visa; when an international student does get one, he says, it’s like “winning the lottery.” Mr Boulding told BusinessBecause that,
“We’ve seen increasing numbers of US firms say [they] no longer will explore the student markets unless [students] have US work permission. That’s what’s behind this long-term decline in applications.”
A key question now for US business schools is whether the decline in application volumes is a short-term trend or rather likely to continue. Once again, the impact of the Trump administration’s policies figure large: 74% of surveyed admissions officers said they are concerned that the current domestic political climate will have “a negative impact on international student enrolments in the years to come,” up from 68% who said the same in 2017.
While some highly ranked business schools in the US are reporting declines in MBA applications (e.g., applications to Harvard’s MBA fell by 4.5%, University of Chicago’s by 8.2%, Duke University’s Fuqua School of Business by 6.2%, and Stanford’s by 4.6% in 2018), there are also signs that elite universities are actually taking market share from less prestigious schools.
Poets & Quants reports that, “The US full-time MBA programmes ranked in the top 20 have increased their market share of MBA enrolment to 57% of the highest ranked 130 business schools for what will be the Class of 2019 this year from 41% for the Class of 1995.”
Duke University’s Bill Boulding notes that the “flight to quality” could see “more mid-tier US schools closing their two-year MBAs.”
A bounce for other countries
At the same time, business schools in other countries are recording enrolment gains. BusinessBecause reports that in 2018 applications grew by 8.9% in Asia Pacific and 7.7% in Canada.
Many European business schools are also seeing increases in MBA applications and enrolments. For example, Warwick Business School saw a 26% increase in MBA applications and London Business School has expanded its MBA intake from five to six streams in 2018. Some European schools are also noting increased interest in their programmes from American students.
Alternatives becoming more common
Another route that some schools struggling to maintain viable two-year MBA programmes is to offer one-year programmes and/or specialist programmes in an effort to appeal to candidates on features such as price, time, or niche interest (e.g., information technology or business analytics). Some of these “non-MBAs” are open to students with no work experience, further widening the potential prospect pool.
Specialist programmes are capturing the attention of students in several countries. A survey of 1,300 students in 39 countries by UK education consultancy Carrington Crisp found that slightly more students (53%) preferred specialist programmes than general MBAs (47%).
Related research from Carrington Crisp has highlighted as well the growing popularity of shorter graduate degrees in business. As we noted recently, “Business-oriented master’s degrees such as the Master’s in Management are competitive because they are less expensive, able to be completed in one year, and deliver expertise in a similar range of subjects as MBAs. Furthermore, such degrees increasingly carry the prestige students and employers are looking for.”
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