‘MARKET FORCES’ BLAMED FOR DOWNTURNS BUT SOME SEE A BOUNCE BACK COMING
At the University of Texas-Austin McCombs School of Business, applications totaled 1,941 this year, down just 6.6% from last year — but down a troubling 24.9% in three years from its all-time peak of 2,586 apps in 2017. (Before last year, Texas McCombs had seen five straight years of application growth.) McCombs admitted 740 MBA students for an acceptance rate of about 38%, which like Michigan is up 4 percentage points from last year. Still, domestic U.S. applications held steady (1,320 this year versus 1,325), with the app decline coming nearly all from the international side (621 this year versus 751).
At Indiana Kelley, applications nosedived from a high of more than 1,200 in the 2016-2017 cycle to just 741 this year, a 40.6% loss. The school lost 31.5% of app volume between last year and this year. In response, the school’s acceptance rate jumped a dozen points to 50.1% for this years’ entering class.
Ash Soni, executive assistant dean for academic programs, blames “market forces” and says the bounce-back is coming.
“The market forces affecting most full-time MBA programs certainly impacted the Kelley School this year,” Soni tells P&Q. “We are confident that the prospective students will respond positively to our increased investment in our already-strong professional development and career services programming. In addition to our unmatched Me, Inc. program and certified career coaches, we have hired a professional sales force to bring even more new career opportunities to our students. We are already seeing results — in the first four months the new sales team generated over 800 new job postings. The market is beginning to take notice — this year our web traffic from new users is already up over 10% versus last year.”
‘THE MBA MARKET IS IN DIRE STRAITS’
One school that saw an actual increase in full-time MBA applications this year: Chicago Booth. A year after posting an 8.2% decline in apps, Booth rebounded with a 3.4% jump, from 4,289 to 4,433. Rice University’s Jones Graduate School of Business, which saw a disastrous 27.7% downturn in 2018-2019, also began something of a recovery, with applications to its full-time MBA program up 6.5%.
Poets&Quants has been reporting on the MBA application downturn for the better part of three years. Deans attribute the decline to a confluence of factors that include a strong U.S. economy, which is keeping more people in their jobs, as well as uncertainly over work visas by international students who also have been scared off of coming to the U.S. due to anti-immigration rhetoric. Also playing a role is the rising cost of the degree and cannibalization of the full-time M.B.A. market by the success of undergraduate business degrees, online M.B.A. programs, and specialized master’s programs in such business disciplines as finance, accounting, analytics, marketing and supply chain management.
All told, this will be the fifth consecutive year of falling applications to the overall MBA market and the second year in a row that the slump has hit the most highly ranked and selective business schools. The extent of the problem has become clear — and concern is pouring from all corners. “The MBA market is in dire straits right now,” says Andrew Ainslie, dean of Rochester University’s Simon School of Business. “The joke among deans is that ‘flat is the new up.’ If we can just hold our numbers, that is an incredible achievement.” Ainslie says that when he meets with fellow deans, “half of our discussion is, ‘What are you doing about your MBA program?'”
Ainslie recently participated in an accreditation review at a leading business school and was shocked to find that its full-time MBA program now gets only three applicants for every enrolled student. “Most of us feel we need to make three offers to get one student” says Ainslie. “So once you get there that means you are making offers to just about everyone. And this is at a school that is an internationally known brand.”
10% TO 20% OF TOP 100 U.S. MBA PROGRAMS COULD CLOSE IN A FEW YEARS
Ainslie predicts that 10% to 20% of the top 100 MBA programs in the U.S. will likely close in the next few years, with even greater fallout among second- and third-tier schools. Just three months ago, University of Illinois’ Gies College of Business became the latest school to announce that it is getting out of the full-time, on-campus MBA market.
That won’t happen at Dartmouth Tuck, the No. 9 program in the U.S. according to Poets&Quants latest ranking and one of the most well-regarded in the world. Nor will Tuck overcorrect in this difficult moment, Luke Peña says.
“I believe the unnatural focus on low admission rates and high yield rates can lead some schools to do very curious things — namely, passing on candidates who clearly meet their admissions standards but they consider a long shot to yield,” he says. “We do not play these games with applicants’ candidacies at Tuck. If you strongly demonstrate our admissions criteria, we are going to admit you, and we are going to do our best to bring you to Tuck. If that increases our admission rate and lowers our yield, then that is the acceptable cost of doing this the right way. We are not going to concede the best applicants in the pool without giving ourselves the chance to bring them to the Tuck School.”
WHAT SCHOOLS ARE DOING TO COMBAT THE DECLINE
Among the many approaches at the leading schools to deal with the decline in apps, some schools — including the Simon School — are putting greater emphasis on the needs of international candidates. One way to do that is by offering STEM-designated concentrations, graduation from which helps foreign students bridge the gap between student visa and work visa.
Simon saw its application volume remain stable this past year, largely because last year it become the first U.S. business school to gain full STEM designation for its full-time MBA program, allowing international students to apply for an additional 24 months optional practical training (OPT). “We thought we would be in an incredible position with STEM. Given the news I’m hearing from everyone else, I am very happy being flat,” Ainslie says.
Schools are getting creative in dealing with the downturn. Columbia Business School and NYU’s Stern School of Business are now accepting the Executive Assessment as an alternative to the GMAT and GRE. Harvard and Chicago Booth both are holding the line on tuition increases. Several schools — Dartmouth Tuck included — are adding more scholarship dollars to entice applicants. And more schools have added deferred admit programs to get undergrads to apply.