Applications to MBA Programs at many of the highest-ranked business schools are down again this year, even as scholarship awards for admits and starting salaries for MBA graduates are at record levels.
Most schools closed off their third and final application rounds earlier this month with drops in application volume ranging between 5% and double digits. The decline, moreover, is on top of last year’s plunge in applications which hit the top-ranked schools for the first time. Several admission directors are quietly expressing deep concern over the dropoff in apps.
What does it all mean for this year’s crop of MBA applicants? To put it simply, It’s a buyers’ market.
MORE ADMIT OFFERS AND BIGGER SCHOLARSHIPS FOR HIGHLY QUALIFIED MBA ADMITS
Well qualified applicants are racking up more admit offers than normal and more scholarship dollars are flowing to entice admits to take up those offers than ever before. The upshot: Admission directors at even top-ranked business schools are worried about yield, the percentage of admitted applicants who will actually enroll and show up on campus this fall.
Luke Pena, executive director for admissions and financial aid at Dartmouth College’s Tuck School of Business, says that applicants who have been offered admission to Tuck this year have twice as many offers from rival schools. That’s partly because the M7 programs—Harvard, Stanford, Wharton, Kellogg, Booth, Columbia and MIT Sloan—are dipping deeper into this year’s MBA applicant pool due to the continued decline in applications.
“When you have this many schools down and many are down for two years in a row, yield is going to be a nightmare because everyone has had to dig deeper in the pool,” says a top admissions official at a Top Ten-ranked business school. “I would not be surprised if schools had to go deep into their waitlists or have to shrink their classes. It’s the collective impact of so many schools being down that is unique.“
THIS YEAR’S DROP COMES ON TOP OF SIGNIFICANT DECLINES AT TOP SCHOOLS LAST YEAR
This year’s drop, moreover, is the second consecutive year of down numbers for even the highest ranked MBA programs. Last year, the so-called M7 schools, which include those three plus Booth, Kellogg, MIT Sloan, and Columbia, saw a combined 4.7% drop. Hardest hit for the 2017-2018 admissions cycle? Chicago Booth which saw an application falloff of 8.7%.
Schools ranked from tenth to 25th suffered twice the decline in MBA applications in 2017-2018 than those in the Top Ten. All together, the Top Ten MBA programs experienced a 4.9% fall in applications; the next 15 ranked business schools saw their applications decline by 9.7% (see Who Is Hardest Hit In The 2018 Application Slump).
In all, 70% of U.S. business schools reported declines in their MBA applications last year, according to a survey of the schools by the Graduate Management Admission Council. According to GMAC, U.S. business schools experienced a nearly 7% decline in app volume, including a 1.8% decline in domestic applications and a 10.5% drop in international volume across all program types.
‘THE DECLINE IN APPLICANT VOLUMES WILL CERTAINLY LEAD TO HIGHER ADMIT RATES AT MOST SCHOOLS’
This year, according to sources, the falloff has been more severe, though concrete numbers by school won’t be made public until later this year.
Some deans are being cautious in their outlook, in part because the yield numbers won’t be fully known until early summer. “The decline in applicant volumes will certainly lead to higher admit rates at most schools, but at least for us, the pool is deep enough that we feel reasonably confident about maintaining quality,” explains the dean of a Top Ten MBA program. “In some ways, this year looks similar to the last year, when most schools experienced an application decline. Our admit rate did go up, but our relative rank on selectivity actually moved up.”
While the declines are making it more challenging for admission officials, it’s certainly good news for MBA applicants this year. “This is an unprecedented period of ‘buying power’ for admits that won’t last forever and shouldn’t be ignored,” says Alex Min, CEO of The MBA Exchange, a leading MBA admissions consulting firm.
‘IT’S A GREAT TIME TO BE AN MBA ADMIT’
“It’s a great time to be an MBA admit, especially for those who have more than one offer of admission in hand. “As many top-tier schools experienced flat or reduced applicant volume this past year – and anticipate more of the same in the upcoming year – adcoms are under pressure to protect their yield by digging a bit deeper into their applicant pool. We are seeing some clients getting accepted or waitlisted by one or two more schools than usual.”
Min says that one of his round two clients gained admission to three top MBA programs, with two schools making scholarship offers. When she made the case for even more money, the schools increased their offers by about 15% and 20%. “Schools are being more liberal with merit-based aid,” Min adds. “In turn, savvy admits are being more assertive in requesting and negotiating financial awards before they commit to enroll.”
Jeremy Shinewald, founder and CEO of mbaMission, another leading admissions consulting firm, is seeing the same trend. “We are seeing massive amounts of scholarship dollars being thrown at applicants, regardless of need and, in some cases, clearly where there is no need at all,” says Shinewald. “We also are seeing international applicants receive scholarship offers in a way that has in the past been highly unusual – an international applicant with a lower than average GMAT and no financial need received $50K per year from an M7 school, for example.
“To say that it is a buyer’s market would be an understatement, but to me, the more interesting story is what those programs that are losing the applicant war do if they don’t have the kind of quality they expect. I imagine some schools will just accept watered-down classes, but others will wisely cut their class sizes to maintain quality. When the internationals come back, as soon as two years from now but possibly longer, we may see reordered rankings, where those who shrunk their class sizes are on top, ready to take advantage of renewed demand.”
‘IT’S A BUYER’S MARKET IF YOU HAVE ALL THE RIGHT BOXES CHECKED’
Betsy Massar, founder of Master Admissions, an MBA admissions consulting firm, also says her clients have been the beneficiary of tuition discounts. “What I am seeing is more money to lure candidates,” she says. “I’ve seen a few cases of students having their financial awards increased, without even asking pretty please. Having said that, it is mostly women who are getting financial attention.
“It is a buyer’s market if you have all the right boxes checked,” she adds. “There may be more flexibility and harder looks at candidates that aren’t obvious stars. But I don’t see any free passes any time soon.”
There are many reasons for the continued decline in applications to MBA programs, ranging from a strong economy which keeps people in their current jobs to the rising price tags on many MBA programs with little transparency over the discounts in tuition through scholarships.
SHARP DECLINE AGAIN FOR INTERNATIONAL APPLICANTS TO U.S. BUSINESS SCHOOLS
GMAC today (April 24) released a report that foretold yet another sharp fall in international students. Interest in coming to the U.S. to study for a graduate business degree has fallen off a cliff over the last two years after gradually declining in the eight years before that, according to the report. After falling from 54% to 48% between 2009 and 2016, preference for the U.S. declined to 40% in 2018 (see More B-School Prospects Shy Away From the U.S.).