GMAC: 70% Of U.S. B-Schools See Drop In Apps

Poets&Quants has been reporting on the impact to U.S. schools of international students choosing to study outside the United States since before there was data to show the phenomenon was happening. But fluctuations in demand are nothing out of ordinary, if the situation is looked at with a long enough lens.

“In my 20-plus years in MBA admissions, I have seen demand rise and fall for the MBA,” Christie St. John says. The big changes usually come in response to economic conditions — the collapse of the Argentine and Brazilian economies, the dot.com boom, and the U.S. real estate collapse a few years ago — or because of international events like 9/11, the Afghan and Iraqi wars, and the current administration’s hostility to immigrants, including students. “So it is not too surprising to see that the number of GMAT test takers and application numbers are once again on a downward trend,” St. John says. “This is never easy to link to just one specific event, but in a general sense, I think it is partially due to fear and uncertainty — fear that the ROI is not what it once was, and uncertainty about where the economy is headed.

“What is most concerning is the marked decrease in international applicants to U.S. schools. For years, we have seen a steady stream of candidates from all over the globe, the majority of whom were headed to the U.S. Foreign national students add so much diversity of thought and experience in the classroom. This is beneficial to U.S. students and to the foreign national students, because it helps both to understand the intricacies and importance of cultural differences, not just in a business sense but in a political and economic sense, and it dissipates mistrust of ‘the other.’

“With the cost of education reaching all-time highs, young people are deservedly anxious about taking on more debt for the MBA and leaving a secure job. And another factor in the decrease in popularity of the ‘traditional’ MBA is a bit of our own doing: By trying to remain relevant and to ensure a revenue stream, B-schools are launching more and more one-year programs, which cannibalize the two-year MBA. That isn’t news to anyone, but the question is, will specialized master’s degrees end up winning the race? Will companies decide to take on employees with less experience and who also cost less?”

St. John believes the two-year MBA will survive because it remains the best choice for those interested in graduate business education, especially for those seeking to change careers. “One gains a broader and deeper understanding of business practices, one has the chance to try out a new function or industry with no detrimental effect on the resume, and one’s overall experience is much richer,” she says.

STUDENT MOBILITY REMAINS A KEY DETERMINANT

The ability to attract top international talent continues to be a critical determinant to programs’ overall application volumes. This year, 65% of Canadian programs and 63% of European programs report an increase in international applications over 2017, with the majority of applications received by Canadian and European programs this year coming from international applicants. By comparison, just 28% of U.S. programs reported growth in international application volume.

But even as most programs in the U.S. reported declining demand from non-U.S. students, application volumes from domestic candidates also were soft this year, with only 4 in 10 reporting growth in domestic application volume. One bright spot for U.S. programs: Master of Data Analytics programs, most of which report application volume growth this year — and counter to the overall trend, they report more international application growth than domestic application growth.

“Access is a critical issue facing higher education,” says Bill Boulding, dean of Duke University’s Fuqua School and chairperson of the GMAC board of directors. “Economic indicators in the U.S. are strong, but if we are to maintain such growth and productivity we need to make it possible for people from all different regions and backgrounds to study and work in the location they desire.

“If that doesn’t happen, we limit not only the possibility of an individual, but also continued economic prosperity in the U.S. and growth around the world.”

OTHER SURVEY FINDINGS

Full-time, two-year MBA programs are still the most in-demand program type overall, reporting a similar volume of applications in 2018 compared with last year. The majority of European Master in Management and Master of Finance programs report growth in demand. Meanwhile, nine in 10 participating programs report that the applicants this year are similarly or more academically qualified than candidates last year — and more programs reported application growth among women than men, with 1% growth in applications from women in Asia-Pacific, Canada, and the U.S.

GMAC conducted its 19^th annual Application Trends Survey from early June to mid-July 2018. Survey findings are based on responses from 1,087 graduate business programs at 363 universities worldwide. Participating programs are located in 44 countries, including 43 states and the District of Columbia, and include MBA, business master’s, and doctoral-level programs.