Four Reasons Why There Are Fewer MBA Applicants In The Pipeline

The rising cost of a two-year MBA program is causing sticker shock


To paraphrase Clinton advisor James Carville, it is the economy, stupid. But in this case it’s not sluggish or declining economic prospects, it’s the strength of the U.S. economy—and the rise of other study options, from shorter non-degree certificates to MOOCs (massive open online courses).

And when millenials do look at MBA and other business graduate degrees, the sticker prices of these programs are causing second thoughts. “The cost of a graduate business degree and the need to take on student debt have the biggest potential impact and are the most likely to divert candidates from the B-school pipeline,” GMAC found.

So while more schools are dangling more scholarship dollars in front of their their MBA candidates than ever before, those discounts are not evident to would-be applicants who only see the rising costs of MBA tuition and fees and the loss of nearly two years of income they would have to give up to attend an on-campus program.

“Overall, about one in four of prospective students say that having to take on large debts and requiring more money than is available may prevent their plans to pursue graduate management. Another big reservation is fear of what the economy may be like when candidates graduate and how it may impact their job outlook. Additionally, others have reservations about having to delay attractive job opportunities (see table below).”

Source: GMAC 2018 Student Prospectives Survey


And then there is Donald Trump. All the anti-immigrant talk in the U.S. and widespread concern about getting visas to work in the country after gaining an MBA has caused the international applicant pool to shrink. “Trump is scaring off internationals from considering an MBA in the U.S.,” says Jeremy Shinewald, founder and CEO of mbaMission, a leading MBA admissions firms.

Shinewald’s firm has seen the number of free consultations given to potential Indian applicants fall by half in the past year. One U.S. school recently held an infomation session for its MBA program in Paris and drew only three people, down from a more typical 30-person crowd, Shinewald notes. Admission directors from several schools say their international apps are down again this year, including some dramatic declines.

For the first time ever, fewer than half the prospective students for a full-time MBA program now want to study in the U.S. The GMAC report found that 47% have a preference for the U.S. now, down nine percentage points from 56% in 2016. Meantime, Western Europe has become singificantly more popular. Today, 33% of would-be, full-time MBA students prefer to study in Western Europe, up seven percentage points from last year’s 26%. In a single year, the European schools have closed the gap between them and the U.S. by an astounding 16 percentage points.


It’s also true that young professionals have a much larger portfolio of options today than at any other time, from online MBA programs to a wild proliferation of specialty master’s in business. One intriguing finding in the latest GMAC report is that students who are most likely to prefer a graduate degree in business tend to have no work experience which does not make them eligible for the better full-time MBA programs. “They begin considering business school a median of 10 months before completing their undergraduate education,” GMAC found.

In fact, 46% of prospective graduate students told GMAC that they now are considering both the MBA and business master’s degrees, more than those that merely consider an MBA which came to 34% of the total. Some 19% of the respondents are set on a graduate business program that is not an MBA (see chart below).

Source: GMAC 2018 Prospective Student Survey

The master of data analytics—the fastest growing business master’s program—is drawing substantially more attention. Today, a record 17% of prospective students are considering the degree, more than double the number only five years ago when only 7% had an analytics degree in sight.

But would-be student interest is up in a wide variety of these specialized masters in the past five years, including finance, marketing, entrepreneurship, health administration, supply chain management, project management, and information technology.

Ultimately, however, there is a bottom line to all this: If business school deans want to stem the decline and see further growth in their full-time MBA programs, they should be hoping for a good, solid recession.

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