The ever escalating sticker price of the MBA degree is causing more applicants to modify their target list of business schools, according to a new survey out today (June 15).
One in five responding candidates this past year said they switched out MBA programs during the application process based on cost and access to financial aid, while 41% said their initial choice of schools was “partly influenced” by affordability. That’s according to an online open survey of applicants sponsored by Association of International Graduate Admissions Consultants (AIGAC). The trade group said that in 2009, when it started its applicant survey, financial aid and program costs were ranked the least important factors.
Just two years ago, New York University’s Stern School of Business crashed through the $200,000 barrier for the total cost of its full-time MBA program. It was the first time any business school advised incoming students to budget more than $200K for MBA tuition, fees, room and board, and other expenses. Four business schools now meet or exceed the $200,000 threshold, including Stanford, Wharton and Columbia. The cost of getting an MBA has become so high that some are sounding the alarm that the price tags on full-time, two-year MBA programs are approaching a danger zone. Elizabeth Ziegler, chief innovation officer for Northwestern University’s Kellogg School of Management, last year warned that “we are pricing ourselves out of the market” (see Full Cost of MBA Keeps Rising).
“Though applicants seem bullish about their career prospects, cost seems to be coming up more in terms of the investment,” says Scott Shrum, chief operating officer for Veritas Prep and secretary for AIGAC. “Comparing their answers back to ’09, the two least popular responses were program costs and access to financial aid. That is not what is coming back to us this year. Cost is on their minds. It’s feeding into their decisions and, in some cases, it is causing them to choose one school over another.”
DECREASING INTEREST IN TWO-YEAR, FULL-TIME MBA PROGRAMS
While cost has become a bigger factor, however, some things apparently never change. The survey found that MBA program rankings, a proxy for reputation, remained the most influential factor in school selection. Some 74% cited rankings as critical to their school choice, compared to 48% who cited the impact on their careers, 46% city/geographic location, and 38% school culture. Some 30% of the respondents considered the net cost (program cost/availability of scholarships) when evaluating specific schools.
Other influential factors in school choice included career placement stats (36%), alumni network (35%), and whether the program was perceived to be global (32%). Of less importance was the quality of the faculty (28%), the academic focus of the program (27%), or the likelihood of acceptance (22%). The advice of admission consultants in school choice was surprisingly meager—just 6% cited this factor as among the most influential.
But the rising costs of the two-year MBA experience is apparently having other effect on applicants. The survey noted that interest in two-year, full-time MBA programs is declining, while there is an increased willingness to consider options perceived as more cost-effective. This past year, for example, some 69% of the survey respondents said considerd two-year MBA programs, down from 89% in 2009. Interest in shorter MBA programs, part-time MBA offerings and online programs, in contrast, increased.
Some 3,586 responded to the survey, but most of the findings were based on the 1,114 who plan on enrolling in January of 2017 or sooner and who had applied to at least one school. Some 434 of the 1,114, or 39%, used the services of an MBA admissions consultant. AIGAC said that 61% of the responding applicants identified themselves as international, while 35% said they were U.S. citizens. The online survey—open to anyone who wanted to fill out the questionnaire—was conducted online from Feb. 15 to May 2 of this year.
TUCK LEADS ALL SCHOOLS IN GETTING TO KNOW ITS APPLICANTS WELL
Dartmouth College’s Tuck School of Business was again singled out as the business school that got to know its applicants better than any other school. Tuck was followed by Spain’s IE Business School, Northwestern University’s Kellogg School of Management, Duke University’s Fuqua School and Cornell University’s Johnson Graduate School of Management (see table below). Of the dozen schools that got to know applicants well, five were outside the U.S., including IESE in Spain, the University of Toronto’s Rotman School in Canada, INSEAD in France and Singapore, and Oxford Said in the United Kingdom.
Last year, Duke and Chicago Booth were No. 1 and No. 2, with Virginia’s Darden School of Business third. Tuck, which is almost always among the top five in this category, was fourth. A Poets&Quants survey of MBA admissions consultants last year found Tuck to have the most transparent MBA admissions process (see Most Transparent MBA Admissions: Tuck, HBS, Ross & Fuqua).