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Apps To Major U.S. MBA Programs Plunge Again

The Tepper Quad at the heart of Carnegie Mellon is the new home of the Tepper School of Business

WILL A RECESSION BREAK THE FEVER?

One thing that historically has meant a big boom in interest in MBA programs: a recession, which some economists say is now looming. Could this be the answer to B-schools’ biggest problem?

“Probably not” seems to be the consensus.

"Bob" Dammon is the new dean at Carnegie Mellon's Tepper School of Business.

Tepper Dean Robert Dammon

“I’m not counting on MBA applications to increase by double digits, or at all, in the next recession, whenever that occurs,” Carnegie Mellon University Tepper School of Business Dean Bob Dammon says. “There are many factors that are impacting the applications to full-time MBA programs that go well beyond the current state of the economy. I think the most important thing that would positively impact MBA applications is a change in the U.S. immigration policy to increase the number of H1-B visas for talented and well-educated international students. The U.S. business community, and the strength of the U.S. economy in general, depends upon the availability of a talented and educated workforce.”

‘I EXPECT A RECESSION TO HAVE A POSITIVE IMPACT ON APPLICATIONS’

MBAs from top business schools have traditionally represented a strong return on investment, “suggesting that taking on more student debt to obtain such a degree is often worthwhile, given the expected change in career prospects,” says Jay Hartzell, dean of Texas-Austin McCombs. “And, top programs tend to select students who have meaningful work experience and are likely to be on their way toward paying back their previous student loans.

“Consistent with our experience, I would expect a recession to have a positive impact on full-time MBA applications, all else equal — if for no other reason than the fact that the opportunity costs of lost wages are likely to be lower when the economy is less robust. I’m optimistic on the overall economy. I would be less optimistic about double-digit application growth for us in particular for two reasons. First, Texas has had a particularly robust economy over the last several years, and a national recession may not be as dire for us.  Second, demand from international students is an important part of the equation, and if the U.S. is not seen as a source of growth and strong job prospects, then a bump in domestic applications may be partially offset by a drop (or less of a rise) in international demand.”

At Indiana, Dean Idie Kesner has doubts about any salutary effects stemming from a recession.

“While recessions traditionally have led to significant increases in full-time MBA applications and enrollments, it is not certain that a recession today would do the same,” she says. “The last recession was more than a decade ago. Since that time, there has been tremendous growth in MBA degree options including online MBA programs.

‘AN UNCERTAIN TIME FOR BUSINESS SCHOOLS’

“Moreover, past periods of economic growth might have resulted in pent up demand for graduate and MBA education as candidates postponed returning to school. With significant growth in online options and greater acceptance of online degrees by employers and candidates, we may not see the same level of pent up demand. Finally, at the current  low levels of unemployment, the labor market is likely to be able to absorb some recession-based layoffs. As such, this may produce little growth in MBA applications and enrollments at least in the earliest stages of a recession.”

And Luke Peña doesn’t have a crystal ball or an economics degree, but he does know that recessions are bad for just about everyone, MBAs and MBA students included. “It’s an uncertain time for business schools but uncertainty is exciting. And these are the moments in time when we have an opportunity to define the future in graduate management education,” Peña says. “But I certainly don’t hope for a recession. My job is doing my part to enroll and educate wise and decisive leaders who better the world of and through business. That means I need our graduates and alums to have the economic conditions that will allow them to do well and to do good. A strong economy is good for our society and good for our contributions to it.

“So my highest goal is seeing our alums succeed in improving that world and I need a strong economy to do that. And so we’ll see what happens.”

DON’T MISS: MBA APPS TAKE A SHOCKING PLUNGE or U.S. SCHOOLS SEE A CONTINUAL DROP IN INTERNATIONAL APPLICANTS & STUDENTS