BLAME TRUMP. BLAME THE ECONOMY, TOO
The strength of the U.S. economy, meantime, isn’t helping things. Strong economies depress MBA application volume. With the U.S. near full employment, professionals have plenty of job opportunities without having to pursue a graduate degree. And during economic downturns, when layoffs occur, many young professionals seek refuge in school.
GMAC’s survey of prospective students this year found that employment has become a formidable alternative to going back to school for a graduate degree in business. GMAC estimates that seven of every ten prospective students in North America are considering alternatives to business school to achieve their goals. In Asia-Pacific, it’s even worse. Some 74%, vs. the 70% in the U.S., see alternatives to business school.
“Employment is the biggest competitor to business school,” according to GMAC’s Prospective Student Report published in May. “Sixty-one percent of prospective students are considering pursuing a new job and 43% are considering remaining in their current job as an alternative to business school (see chart below). “More employers are saying you don’t need an MBA,” notes Dawna Levenson, director of MIT Sloan admissions. While that may be self-serving advice to keep strong employees in place, it has the impact of keeping them out of the applicant pool.
INTERNATIONAL SCHOOLS ARE BECOMING A MORE VIABLE OPTION
“The strong economy does account for some of the drop,” agrees Andrews at Rice. “We’ve heard from some in Korea where the economy is also doing well that they are waiting. International schools also continue to improve and the ability to get a good education and not travel to the U.S. is better than it has ever been. We heard a lot of people say they were looking at Canada instead of the U.S. and Europe as well.” At the University of Toronto’s Rotman School, MBA applications were up another 9% this year after a more sizable jump in the previous year.
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.
STICKER SHOCK CAUSING SOME TO THINK TWICE ABOUT AN MBA
“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.”
As is often the case, there also are a few schools that appear to be bucking the downward trend. At Emory University’s Goizueta School of Business, applications rose by 17.6% this past year to 1,348 from 1,146. At UCLA’s Anderson School of Management, apps were up 3.3% to 3,423 from 3,314, and at USC’s Marshall School, they inched up a single percent to 2,017 from 1,998. Those schools are clear exceptions this year when just about everyone else has seen application volume shrink.
In fact, MBA admission consultants are advising their international clients not to expect an H1B visa if they come to the U.S. “We have been actively discouraging applicants who see the MBA as a guaranteed path to U.S. work eligibility and eventually a Green Card,” says David White of Menlo Coaching, a leading MBA admissions consulting firm. ” There may be further drops coming, since some of the applicants inquiring with us would otherwise have been ready to apply to U.S. MBA programs thinking it would get them the H-1B.”
Is a prompt turnaround even possible? “There is a lot of uncertainty in the world right now,” says Mabley. “If I had a crystal ball, I would play the stock market more. So I just don’t know. But the viability of the degree is still there and students are using the MBA in a variety of ways today. I think it will maintain its value for that reason.”