The rising cost of an elite MBA degree is causing more applicants to turn down admit decisions from the more highly selective schools if they can get a discount from another MBA program. More than 50% of business school applicants now say they would attend a “less desirable” program if awarded a scholarship, according to a new survey out today (July 14).
The somewhat surprising finding occurs at a time when the debt burden on MBA graduates has risen to record levels and the hefty cost of getting a two-year graduate degree in business is causing greater anxiety in the marketplace. Only last month, another study found that one in five candidates switched out MBA programs during last year’s application process based on cost and access to financial aid.
“It’s kind of suprrising because when someone goes to business school they expect their income to jump and a lot of students find that the cost of the loans and paying them back is not as big a burden as it first sounds,” says Stacy Blackman, founder and CEO of Stacy Blackman Consulting, which did the applicant survey. “So to go to a completely different school beyond your first choice is a pretty big deal. It’s sort of a short-term pain decision.”
‘THE SCHOLARSHIP DOLLARS HAVE REALLY GONE UP IN THE PAST FEW YEARS’
The changing mindset is also occuring at a time when a larger set of highly selective schools are aggressively competing with each other for the best and brightest by dangling scholarship offers in front of them. “There is a lot more money out there than ever before,” says Blackman. “The scholarship dollars have really gone up in the past few years, and it’s all about luring the top students.”
Blackman, who keeps tabs of the scholarship offers her clients recieve on a spreadsheet, says that the most active business schools offering scholarship support on the basis of merit include Chicago Booth, Duke Fuqua, Dartmouth Tuck, and Northwestern’s Kellogg School of Management. Harvard and Stanford, which both devote substantial funds to scholarships, tend to dole out their discounts on need rather than merit.
The money often sways candidates who have been accepted to even the schools at the very top of the rankings. “I have seen clients select Kellogg over Stanford or Booth over Wharton because of a scholarship offer,” she adds. “Both of those schools—Kellogg and Booth—have given away a lot of money and they are getting a number of applicants who have been admited to more highly ranked programs. And we’re seeing big numbers like $90,000 or more.”
MOST APPLICANTS WILL APPLY TO FIVE OR MORE SCHOOLS THIS YEAR
In general, the set of schools a candidate targets tends to be in a close orbit of quality and rank. “They are not applying to Harvard and SMU. It’s not going to be a huge discrepancy because they are not applying to the No. 1 school and the No. 50 school. They are applying to a set of schools that are more tightly around a given range.”
Only one month ago, an online survey sponsored by the Association of Independent Graduate Admissions Consultants (AIGAC) found that 41% of the respondents said their initial choice of schools was “partly influenced” by affordability and that about 20% ultimately switched MBA programs based on cost and access to financial aid last year. Those are big historical swings impacting school selection. AIGAC said that in 2009, when it started its applicant survey, financial aid and program costs were ranked the least important factors.
The Blackman survey, with responses from 751 applicants this past spring, also found that the largest number of candidates plan to apply to five or more different schools. Some 37.7% of applicants said they expect to apply to five or more schools this year, down from the 44.9% last year. This year, 13.0% planned to apply to six schools, down from 17.1% a year earlier, while 24.0% intend to apply to five schools, roughly the same as last year when it was 23.3%.
Despite the more recent downward trend, in recent years applicants have turned in applications at more schools, largely because admission officials are requiring fewer essays and shorter ones. The survey found that slightly more than half of the respondents (51.8%) cited those reductions as the reason they expect to apply to more schools, though that was down from a year-earlier when 60.5% said the lessened requirements promoted them to complete more applications.
“Even though it is down this year, it has gone up a lot over the past few years,” says Blackman. “There was a period of time when people said, ‘I am only applying to two or three schools. I think that changed dramatically because of the reduced application requirements. Besides, that first school requires a lot of the thinking and the strategy. After that it’s just not as time intensive to apply to a few more schools.”
REPUTATION AND RANK THE MOST IMPORTANT FACTOR IN SELECTING A SCHOOL
Other survey results:
- Some 49.8% said that reputation is the most important factor influencing the decision to attend a particular business school, followed by 17.4% for strength of job placement, and 12.7% for culture of program, and 8.6% for the strength of a school’s alumni network.
- Consulting remained the most favored post-MBA career choice, according to the Blackman survey. That differs from a recent study by RelishMBA (see Where MBAs Want To Work In 2017 & 2018) that found MBAs most interested in tech. The Blackman survey found that 47.9% of the respondents hoped to work in consulting, up from 39.2% last year. After consulting, finance was the most popular post-MBA career choice, according to 26.8% of respondents this year, up from 18.4% last year. Interest in entrepreneurship continued, capturing 26.5% this year compared to 24.0% a year earlier. Technology was a growing career choice, with 23.1 % planning to pursue a career in tech.
- *Career advancement continued to rank as the top reason to attend business school at 47.8% (45.0% ranking it as most important last year), followed by career change at 32.3% (compared to 34.0% of respondents last year).
- Full time, two-year programs continue to be the most popular among the respondents, with 86.0% considering those programs and 35% considering full-time, one-year programs. Some 4.5% of the applicants said they were considering a part-time option, while 4.1% were thinking about attending an online program.
- While video is becoming a more common element in the application process, it doesn’t get high marks from prospective students who completd the survey. Only 11.5% believed it represented them “extremely well,” 39.7% “well” and 33.0% indicated that “it’s limited.”