In its latest annual report on the outlook of prospective business school students, the Graduate Management Admission Council added a series of questions at the request of some B-school deans, designed to answer the question that’s been on a lot of minds lately: Are specialized master’s programs cannibalizing MBA programs by getting younger students and giving them everything they need for their business careers?
GMAC’s answer: Not really. In fact, a majority of prospective graduate business school candidates who already have a master’s — business or non-business — see their degree as a springboard to an MBA, according to a new GMAC report released today (May 16).
“Schools are worried that they’re cannibalizing their MBA programs, that by getting the younger students now for a specialized master’s program, they won’t be coming back for an MBA later,” Gregg Schoenfeld, GMAC research director, tells Poets&Quants. “That’s always been the question, but the data show there are those who are going to be coming back for their MBA.”
THREE IN FOUR PROSPECTIVE APPLICANTS WITH A MASTER’S CONSIDER AN MBA
That conclusion is a welcome one for administrators who worry that the explosion of specialized master’s in everything from data analytics to innovation could further dampen the larger market for the MBA degree, often the flagship graduate program at many leading business schools.
Three in four prospective graduate business school candidates who hold a prior master’s degree are considering enrolling in MBA programs, according to GMAC’s newly released Prospective Students Survey Report. The survey finds that the MBA remains the predominant program format considered by candidates with both prior business master’s degrees (61%) and non-business master’s degrees (86%).
“These findings demonstrate that a business master’s degree is not necessarily the end of graduates’ business education,” Sangeet Chowfla, president and CEO of GMAC, said in a news release accompanying the release of the survey. “For many, their business master’s degree is a stepping stone to continued professional development that may include an MBA down the road, in either a full-time or part-time format.”
TWO DISTINCT TALENT POOLS
GMAC’s survey, conducted among 11,617 individuals who registered to gain info on the organization’s standardized test between February and December 2016, also shows that globally, 22% of prospective business school candidates have a prior master’s degree. But there is a lot of regional variation: While two in five European candidates have a master’s-level credential, just 14% of U.S. candidates do.
This could mean that at least in the U.S. market, there’s nowhere for business master’s programs to go but up. And that certainly shows in the data. According to GMAC, “Fueled by growing candidate demand, non-MBA business master’s programs continue to proliferate. Globally, the percentage of candidates considering only business master’s degrees — such as Master of Finance, Master of Accounting, and Master in Management — has increased from 15% in 2009 to 23% in 2016. This rise in interest has been particularly strong among candidates from East and Southeast Asia and Western Europe, where now more than 2 in 5 candidates report considering only these program types.”
Schoenfeld says that non-MBA master’s degrees and MBAs attract distinct talent pools. Non-MBA master’s degrees “are going to attract more women, the younger-than-24 age group those with no work experience, as well as business majors,” he says. The talent pools also are different, he says, in terms of the outcomes they seek. “So we see for the quantitative master’s, it’s really the technical skills they’re seeking from these non-MBA programs — whereas from the MBA programs they’re looking for those more general leadership, managerial skills.
“They’re utilizing the business master’s degree to hone their technical skills to get a finance, accounting, or data analytics position, and then those that are coming back into the pool for a second master’s are looking more to the MBA degree.”
MONEY: THE MOST IMPORTANT CONSIDERATION
Meanwhile, education costs and financing continue to weigh heaviest on candidates’ minds, GMAC finds. “The predominant reservation candidates have about pursuing a graduate business education revolves around costs,” the report reads. “Approximately half of surveyed candidates indicate that not having enough money available to pay for their education (52% of respondents) and potentially having to take on large debts (47%) may prevent them from pursuing a graduate business degree.”
The most important factors in deciding where to apply? No surprise here: total tuition cost and scholarship availability. And much has changed since GMAC first asked the question in 2009; back then candidates expected to cover a greater share of the cost of their education with grants, fellowships, and scholarships, and a smaller share with parental support, loans, and employer assistance.
“Candidates’ intended financial mix for paying for their graduate business degrees may pose a challenge for business schools, as candidates’ intended reliance on grants, fellowships, or scholarships to fund their education has reached its highest level since GMAC began surveying candidates on this topic in 2009” — about 27%. “Candidates who intend to pursue full-time MBA programs and those who live in developing national economies in Africa, Eastern Europe, Central and South Asia, and the Middle East are most dependent on this source of funding. … Historical trends tracked in other GMAC survey research also highlight decreased candidate reliance on loans, employer assistance, and parental support to pay for graduate business education.”
(See the next page for more GMAC charts showing information on MBA and non-MBA master’s candidates.)