A Turnaround For Two-Year MBA Programs?

After several years of steady decline, applications to U.S. business schools from U.S. applicants has finally turned up, according to the Graduate Management Admissions Council. The findings from GMAC’s 16th annual application trends survey published today (Sept. 22) show what the council is calling “a positive turnaround in the domestic market for U.S.-based, full-time two-year MBA programs,” as nearly six of every ten programs (59%) report year-on-year domestic application growth — a level not attained since 2009.

INCREASED APPLICATION VOLUME FOR TWO-YEAR MBA PROGRAMS

Source: 2015 GMAC Applications Trends Survey

While U.S. schools have partially offset the five-year decline in domestic applications with booming numbers of international applicants, particularly from China and India, the rise is very good news in a report that is filled with positive trends. Domestic candidates, of course, still account for less than half of the applicant pool for these U.S. MBA programs — 45% in 2015.

In the U.S., the share of programs reporting year-on-year increases in domestic applications is up for both not only for two-year MBA programs (59% vs. 48% in 2014), but also for one-year programs (46% this year, up from 41% in 2014). International application volume is also up for the majority of full-time two-year MBA programs (51%), although last year nearly two-thirds (65%) of these programs reported increases in international applicants.

But the upturn may help put to rest fears that the market for the two-year MBA experience is tapped out. Those concerns have led several schools, including Wake Forest University, Thunderbird School of Global Management, and Simmons College, to shut down their full-time, on-campus MBA programs.

At Wake Forest the school’s full-time MBA enrollment had fallen to just 114 students last year, down from 144 in 2009 and about 240 students at its peak in the 1990s. At Simmons, which has chosen to move online in partnership with education provider 2U Inc., the size of its full-time MBA program had been shrinking for years as well. This year the School of Management had only 105 full- and part-time students enrolled in its MBA program, a 38% decrease since 2008. Thunderbird, long a pioneer in international business education, closed its MBA program after being acquired by Arizona State University last year. Applications to Thunderbird’s flagship MBA program had plunged by nearly 75% in the past 15 years.

50% MORE MBA DEGREES EARNED TODAY THAN JUST TEN YEARS AGO

It’s doubtful that the deans at Wake Forest, Thunderbird or Simmons would regret their decisions. For one thing, the GMAC-reported increases in the domestic applicant pool are year-over-year rises that are coming off a significantly lower base. Rather than a “turnaround,” the change looks more like evidence that the bottom has been reached. GMAC, after all, does not tally up the total number of applications. Instead, it merely asks schools if apps are up or down. Many admission officials believe applicants are submitting to more schools so the “turnaround” could very well be wishful thinking.

For another, the failure of the closed programs at Wake Forest and the other schools had to do with more than a decline in domestic applicants, though the falloff certainly gave one pause about the future after an extraordinary rise in the popularity of business education in the post-war period.

Source: 2015 GMAC Application Trends Survey

There are 50% more MBA degrees earned today than just ten years ago, and a master’s in business has in recent years become the most popular graduate degree in the U.S., overtaking the master’s in education.  One in four master’s students are now pursuing business degrees, and one in five undergraduates major in business. Some 60% of full-time MBA programs are receiving more applications this year when compared with ten years ago. Today’s GMAC report may well show that the party is far from over for business educators.

For the second year in a row, the vast majority of two-year programs also have seen increased application volume in 2015, the survey shows (see above table). GMAC, which administers the GMAT exam, found that 57% of business schools are reporting a higher volume of applications for their two-year MBA experiences. That increase follows last year’s report showing that 61% of the schools saw increased volume for the two-year MBA. Among those schools, 12% say applications increased significantly, while 15% called the increases moderate (see table at left).