Are MBA Programs Dying? 4 Reasons To Worry

Are MBA Programs Dying? 4 Reasons To Worry

Last week, The Wall Street Journal reported that the University of Wisconsin is in the process of reviewing its business programs. Although the school quickly reversed course, it showed that even Top 30 programs aren’t above potentially shuttering their MBA programs.

A number of schools in the US have announced closure of their MBA programs in recent years. In August, University of Iowa announced that it would shut down the MBA program at its Tippie College of Business. Wake Forest University, Thunderbird School of Global Management, Virginia Tech, and Simmons College have all made similar moves in recent years.

Fortune recently published an article discussing four possibilities behind why American business schools are taking a hit.

1.) Non-MBA graduate business degrees are proliferating.
Increasingly, statistics show that students are now leaning towards more tailored education programs. Fortune notes that “many schools now offer part-time and specialized programs in accounting in finance, which students are increasingly choosing over a traditional MBA.”

According to a 2017 report by the Graduate Management Admissions Council (GMAC), the organization that administers the GMAT, students considering only MBA programs decreased from 52% in 2009 to 49% in 2016. In contrast, students considering only specialized business masters increased from 15% in 2009 to 23% in 2016.

The numbers highlight an important trend among students — a preference for more specialized and flexible programs. In an article published by MBA Crystal Ball, an admission consultation company, former Wake Forest dean of business Charles Iacovou cites changing student attitudes as the reason for declining interest in the MBA.

“The change is coming from the students themselves,” Iacovou tells MBA Crystal Ball. “They are choosing to receive an MBA differently than they had. Many don’t want to walk away from income or choose more specialized degrees.”

2.) Fewer international students want to study in the US

Trump’s foreign policy pronouncements, which many have interpreted as hostile to immigrants, has affected international students’ views of an education in the US. According to GMAC, the number of international students who want to study in the US has declined from 61% in 2009 to 58% in 2016.

Gregg Schoenfeld is the GMAC research director. Schoenfeld tells Poets & Quants that students are looking outside their home countries, but not necessarily looking to the US for an MBA.

“There’s actually a rising share of prospective students planning to apply outside their home countries,” Schoenfeld says. “But they are looking elsewhere, not at the U.S., for their preferred destination.”

3.) Undergraduate student debt is rising
Student loan debt has skyrocketed in recent years, another potential reason why the MBA has taken a hit. According to the Federal Reserve Bank of New York, “fewer candidates say they expect to take out loans to cover their education and are instead relying on financial aid in the form of grants, fellowships, and scholarships, as well as parental support.”

Fortune also reports that “student loan debt held by Americans has increased to more than $1.3 trillion dollars this year.” According to a 2014 report from the New American Foundation, a non-partisan think tank, an estimated 40% of loan debt was held by 14% of students seeking graduate degrees. What does that mean? Graduate students are borrowing more per year than undergraduates and the MBA isn’t getting any cheaper.

4.) Top business schools are getting more applicants

Fortune notes that while business schools are seeing a decline in applications overall, top business schools are seeing an increase.

“Yale University’s School of Management has seen a whopping 45% increase in applications since 2013. Massachusetts Institute of Technology’s Sloan School of Business has seen a 28% increase, and University of California-Berkeley’s Haas has seen a 20.7% uptick.”

Garth Saloner is former dean of Stanford University. He tells MBA Crystal Ball that economic factors have made applicants more particular about where they choose to attend business school.

“Students say that if they can get into a top school, they will go,” Saloner says. “If not, they won’t.”

Economic factors have made it more difficult to afford a graduate education. Meanwhile, MBA programs have been unable to adapt. The U.S. has seen a number of MBA programs close in recent years as students now seek not only an affordable education, but one that is more specialized to fit their needs.

Want to learn more about specialized master’s programs? Click here.

Sources: Fortune, MBA Crystal Ball, Poets & Quants, Wall Street Journal

  • Trump? Huh

    Quit your stupid leftist-appeal game of blaming this stuff on Trump. As if Europe is faring any better… No one needs you to say unsubstantiated “feel good” BS like that.

    Put your big boy pants on and prove it.

  • WhichStatsMatter

    Why are differences of 3% over a seven year period being touted as harbingers of crisis? There is no way that the difference in students considering only MBA programs from 2009-2016 (a 3% change over seven years) or the difference in international students who “want” to study in the US from 2009-2016 (another 3% change over seven years) are statistically significant YoY differences. In reality, these changes are statistically likely due to random chance, and even if t-tests were to prove otherwise the magnitude of the change, again over such a large breadth of time, is truly no cause for this alarmist clickbait.

    This article also assumes that there is a zero sum game between MBA programs and specialized Master’s programs, a claim for which there is insufficient evidence. This is especially clear given that this article seems to have compared only differences by students who “only” choose an MBA program or specialized Master’s program to create the illusion of a crisis, while completely ignoring data on students who consider both. The picture here has intentionally been left incomplete.

    What’s more is the international student section starts out with a statement about the effect of the Trump administration on students, and then doesn’t show any data supporting this claim. In fact, the only data shown is pre-Trump (unless the survey was administered in fall of 2016, which would then include one year of data during the Trump era; hardly enough to assert any causation).

    In the international student section again, the Fortune chart shows the percentage of students whose “FIRST CHOICE” of business school is in the US, as opposed to what the article claims which is “students who want to study in the US.” This article has clearly misinterpreted the Fortune data.

  • Thatsnothowstatisticswork

    Umm…what?

  • Fabian

    From the numbers, it seems that Tuck is in real risk!