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MBA Apps To U.S. Schools Down

More than half of full-time MBA programs in the U.S. received fewer applications this year, according to a global survey of business schools released today by the Graduate Management Admission Council (GMAC). In comparison, only one-third of participating U.S. full-time MBA programs reported a decline in 2009 over 2008.

GMAC attributed at least part of the overall decline to the fact that one-year MBA programs, which are much more popular in Europe and Canada, have become more attractive to students. Most participating full-time MBA programs in Europe (88%) and in Canada (62%), for example, are one-year programs, while most participating full-time MBA programs in the U.S. (72%) and more than half in Asia-Pacific (54%) are two-year programs.

The drop in U.S. applications also is attributed to a pickup in the economy. As one admissions official told GMAC, “Last year, the financial crisis brought more people to seek further education. This year, as the economy picked up, the applications are more realistic—people who really intend to and are serious about pursuing postgraduate education, such as MBA.”

The cyclical nature of interest in MBA education is hardly new to business schools. After several years of strong growth, the number of applications typically reaches a high point and trends down afterwards. GMAC said it is witnessing slight decreases in most programs and concluded that full-time MBA programs have reached this turning point.

Despite the drop, however, competition to get into a top MBA program is as tough as ever. For one thing, nearly all the reporting business schools in the GMAC report said that candidates were either more academically qualified (46%) than last year’s applicants or comparable to last year’s (45%).

For another, application volumes at many of the very best schools have been at or near record levels already. Stanford, the most selective business school in the world, only accepted 6.5 percent of its applicants for the Class of 2011. Michigan’s Ross School of Business saw a slight increase this past year, but applications there hit a record in 2008.

Moreover, a recent BusinessWeek survey of top schools discovered that more institutions are reporting increases rather than downturns. Of the top 30 full-time MBA programs in the U.S. surveyed by BusinessWeek,  10 schools reported declines in application volume averaging 6.1 percent, while 11 reported increases averaging 10.2 percent, according to BW’s survey. Nine schools declined to supply information.

For sure, some highly competitive schools experienced significant growth in applications. Harvard Business School, for example, had its second best year ever, with 9,524 people applying for one of the 910 seats in the class showing up this fall, a five percent increase over the year-earlier number. The quality of the applicant pool also was extraordinarily high, despite the number of applications. Dee Leopold, director of admissions and financial aid at Harvard, says the average GMAT for the entire applicant pool was over 700. At Harvard, the peak year was for the entering class in 2002 when more than 10,000 applications flowed into its admission offices.

At MIT’s Sloan School, applications rose 16 percent to 5,782, and are up 55 percent in the past three years. Admissions director Rod Garcia says there are now 12 applicants for every one seat available in the full-time MBA program. Garcia believes Sloan had an advantage due to a late application deadline, the latest of any top school. BusinessWeek also found that applications soared 26 percent at Washington University’s Olin School to 1,531, and rose 21 percent at Duke’s Fuqua School of Business to 3,506.

While some admission officials attributed their declines to the economic recovery, more important trends are at work. Today, there are more business schools in the world than ever before. The U.S. schools, therefore, are under increasing competition from institutions in Europe and Asia. Much of the increase in applications has in fact occurred not because of a flight to graduate school during a severe recession but rather due to soaring applications from candidates in China and India. (See our story on How the MBA Applicant Pool Is Changing).

Those who do apply are also applying to fewer schools. “Most applicants apply to 3.2 schools on average,” says Soojin Kwon Koh, director of admissions at Michigan’s Ross School of Business. “It used to be as high as five or six. I hope it’s because applicants have a better sense for how they fit into a specific school, but  I also know that the whole application process takes a long time. It’s expensive and the stakes are higher. So narrowing down the number of apps you complete assures you can do a better job on them.”

Regional MBA Trends

Meantime, more full-time MBA programs in Canada and Europe are reporting increases in application volume, even as Asia and the U.S. report declines. Applications to full-time MBA programs in Canada remained strong. Six in 10 programs (62%) received more applications this year than in 2009, said GMAC. The average number of applications per Canadian full-time MBA programs rose by four percent.

Slightly more than half of European MBA programs (53%) reported an increase in application volume over last year, compared with 72 percent of programs that reported an increase in 2009. Nearly one-third (32%) received fewer applications than in 2009. The average number of applications per European full-time MBA program also was up four percent.

In the Asia-Pacific region, where three-fourths of full-time MBA programs reported an increase in the number of applications in 2009, only 39 percent reported an increase in this year. The average number of applications per program fell by 16 percent.

Other Key Findings

• Across all graduate management programs participating in the survey, approximately half reported an increase in application volume for the incoming 2010-2011 class, and about 40 percent reported a decline compared with 2009.

• This year, 59 percent of Executive MBA (EMBA) programs reported an increase in the number of applications, reversing a three-year decline. This was one of the highest proportions of programs reporting increases in volume among all MBA programs.

• After reaching a cyclical peak in 2008, more full-time two-year MBA programs reported a downward (49%) trend in application volume for 2010 compared to an upward (41%) trend.

• Part-time MBA programs appear to be nearing the end of their recent downward cycle in application volume. The proportion of programs reporting growth in application volume in 2010 was comparable to 2009 and about even with those reporting a decline.

• A slight decline in full-time MBA program application volume (–1.8%) compared with 2009 matched year-to-date trends in GMAT test-taking volume, which continues to be the best leading indicator for MBA program application trends.

• Continuing the positive trend seen in 2009, more than 60 percent of master-level programs in finance, accounting, and management reported increases in the number of applications in 2010, with average application numbers exceeding last year’s benchmarks by 20 percent or more.

• More than 40 percent of MBA programs reported larger marketing budgets in 2010 compared with 2009. Advertising accounted for more than half (56%) of the total marketing budget of an MBA program, on average.

As of June 30, 2010, 476 MBA programs participating in the survey had received a total of 196,032 completed applications, and many had not yet reached their application deadlines. The number of applications per program varied greatly, ranging from fewer than 10 to nearly 10,000 applications.  Consistent with previous findings, two-year full-time MBA programs received the largest number of

applications among MBA programs and EMBA programs received the smallest. For example, a typical full-time MBA program received 383 applications in 2010 while a typical EMBA program received 51.

Who’s applying? A typical 2010 full-time MBA program applicant was between 26 and 30 years of age (43%) and had three to six years of work experience (42%). A notable difference was observed in the proportion of foreign applicants to two-year (48%) and one-year (67%) programs. Nearly all programs reported that candidates were either more academically qualified (46%) than last year’s candidates or comparable to last year’s (45%).

Nearly two in five applicants to part-time MBA programs (38%) were women, 39 percent of candidates were 31 years of age or older, and 43 percent had six years or more of work experience. Half of participating part-time MBA programs reported that academically, this year’s applicants were as qualified as those in 2009, and 38 percent reported that applicants were of higher academic quality.

More than half of EMBA candidates (54%) were 35 years of age or older and 61 percent had 10 years or more of work experience. Nearly two-thirds of EMBA programs (65%) reported that 2010 applicants were as academically qualified as last year; and one-third (34%) noticed an improvement in the academic quality of the applicant pool. Similar to part-time programs, 38 percent of flexible MBA applicants were women. More than one-third of flexible MBA candidates (35%) were between the ages of 22 and 25. Most admissions professionals reported that candidates were either more qualified than in 2009 (45%) or had the

same academic quality (43%).

The online MBA program applicant pool composition by citizenship has shifted towards domestic candidates in 2010. From 2007 to 2009, approximately half the applications to online programs came from domestic candidates. In 2010, 84 percent of applications were domestic. One-third of applications received by online programs in 2010 were from women and a typical candidate belonged to the 26- to 30-year age group (30%). Although 80 percent of admissions professionals indicated that applicants’ academic quality was the same as in 2009 (53%) or better (27%), one- fifth—the largest proportion among admissions professionals reporting for MBA programs—shared that the academic quality of online program applicants decreased.

The results are from GMAC’s 11th annual Application Trends Survey which was conducted from June 2 to July 9, 2010. Some 327 graduate business schools provided data for  665 graduate management programs, including 130 full-time two-year MBA, 93 full-time one-year MBA, 111 part-time or professional MBA, 67 executive MBA (EMBA), 57 flexible MBA, and 18 online or distance-learning MBA programs. Overall, 459 programs from 210 responding schools were in the United States; 87 programs from 60 schools were in Europe; 69 programs from 28 schools were in the Asia-Pacific region; 32 programs from 18 schools were in Canada; and 18 programs from 11 responding schools were in other world regions.