2017 was a year of monumental change for the world’s business schools. From Trump’s election and its impact on international applications to U.S. schools to renewed concern over the viability of two-year MBA programs, the B-school market became more competitive and more roiled than ever. With the opening of new modern buildings at Northwestern Kellogg and Cornell Tech in New York City, the arm’s race for the best facilities heated up yet again. GMAT scores continued to climb. The University of Iowa killed its full-time residential MBA program, while the University of Wisconsin tried to walk away from its two-year MBA but failed, costing the dean her job.
White supremacists invalded Charlottesville and shocked a progressive community and a nation, with significant consequences for a great business school at UVA Darden. The deans of three major schools—Kellogg, Berkeley Haas and NYU Stern—decided to toss in the towel. And then there were two big surprises: Wharton’s remarkable ascenion in MBA rankings and a data breach at Stanford’s Graduate School of Management that revealed the school had been lying about its scholarship aid policies for years. Poets&Quants reviews ten stories that defined a year in transition.
When 2017 began with a new U.S. President in office, B-school deans and admission officials feared that all the anti-immigration rhetoric he spouted and inspired would drive away international applicants. That turned out to be true at many business schools, especially those in the second-tier. The most common question admission officials were getting on their tours of international locales was “Would I be welcome at your school?”
For years, growth in international applicants for U.S. MBA programs had offset a decline in domestic candidates. This year that was no longer true, causing some schools to rethink their commitments to the two-year, full-time residential MBA program. One school after another found that the international candidates in their applicant pools had fallen by double-digits. At Georgetown’s McDonough School, for example, international candidates fell to just 32% of the applicant pool from 43% a year earlier. At Cornell’s Johnson School, the international applicant pool fell to 57% of the total number of applicants, down from 61% in 2015-2016.
Many schools outside Poets&Quants’ Top 25 reported even greater declines in international applicant pools. At Arizona State University’s W. P. Carey School, international applicants fell to 49% of the pool, down from 62%. At the University of Southern California’s Marshall School, international candidates made up 46% of the past year’s pool, down from 51%.
The U.S.’ loss was Canada and Europe’s gain. Many international applicants who would otherwise have applied to U.S. MBA programs tossed their apps to what they perceived to be more welcoming campuses in Canada and Europe. Toronto’s Rotman School of Management was a major beneficiary, with MBA applications up by 27%.
By all accounts, the Graduate Management Admission Test is no easier today than it was five or 10 years ago. Yet in recent years score averages for elite business schools have been on the rise — including some dramatic examples recently reported by Poets&Quants. The puzzle has drawn enough speculation that the Graduate Management Admission Council, which administers the GMAT, released a report in June to address the issue.
In The Fallacy of Score Increases and the Impact of Score Preview, GMAC analyzed GMAT scores for citizens of eight countries that account for about 80% of GMAT exams taken each year since 2011 (the United States, Canada, France, Germany, the United Kingdom, China, India, and South Korea). Rebecca Loades, report author and director of innovation and next generation systems at GMAC, concludes that GMAT scores are actually stable, remaining consistent or growing by a statistically insignificant amount. But she added that given trends and persistent perceptions, the report — five months in the making — may be the first of an annual series.
Despite the organization’s claims to the contrary, you can’t dispute the evidence. At nearly all the leading business schools, average GMAT scores for the latest entering class broke new records. At nearly every Top 10 U.S. school is reporting higher average GMAT scores for the past year with only a couple of exceptions: Wharton which maintained its already high 730 average and 740 median, and MIT Sloan which slipped a mere two points to 722. The largest jump for a Top 10 player goes to UC-Berkeley’s Haas School of Business. At Haas, the incoming MBA class sports a record high 725 average, an eight-point rise from the previous year’s 717. At Kellogg, the school’s new 732 average allowed Kellogg to leap frog Wharton with the second highest reported GMATs of any prestige business school in the world with the sole exception of Stanford’s Graduate School of Business.
On one level, it was an agonizing decision to shut down the full-time MBA program at the University of Iowa’s Tippie College of Business. On another, it was a no-brainer.
When Dean Sarah Gardial announced her decision in August, she knew the incoming class would total just 54 students. The program had been in the red for years on a $3.5 million budget. With state appropriations falling and budgets tight, it no longer made sense to pour resources into the tiny program. Earlier this year, no less, Tippie’s U.S. News’ MBA ranking plunged 19 spots ito 64th from 45th. It was the proverbial perfect storm.
“We’re seeing clear shifts in what students and businesses need,” Tippie Dean Sarah Gardial said at the time. “Both are expressing preferences for non-career-disrupting options for the MBA, while others are increasingly drawn to the focused education provided by master’s programs in specific subjects.”
As a business school in the Big Ten, Iowa’s decision has been something of a wakeup call to many in the MBA market. In the aftermath of that decision, however, Dean Gardial has gotten a surprising reaction from some rival deans. They’ve quietly conceded they have been grappling with the same issue and that her decision may help them deal with the political consequences from alumni, students, and faculty of ending their own money-losing MBA programs.