Will The Coming Recession Cause A Boom In MBA Apps? Don’t Bet On It

Any hope for a two-year MBA turnaround? Not likely.

MBA ALTERNATIVES HAVE ‘SIGNIFICANTLY LOWER PRICE POINTS’

There are many other reasons not to expect a big recession-induced bump, of course (see chart below for what admission officials blame). International students, who helped to prop up many MBA programs saw declines in their domestic applicants, have become more scarce, scared away by all the anti-immigration rhetoric in the U.S. and justified concern over getting a work visa. And there is a larger portfolio of viable alternatives, from online MBAs that allow one to continue working and a wide portfolio, accelerated one-year MBA Programs, and single-year, specialized master’s degrees in business.

“Those alternatives to the full-time MBA tend to have a significantly lower price point than the traditional two-year, on-campus MBA program that is the bread and butter of U.S. business schools,” points out Prashant Malaviya, senior associate dean of MBA programs at Georgetown University’s McDonough School of Business. In fact, prospective students can now get an online MBA from either the University of Illinois or next year from Boston University for less than $25,000. “The increasing acceptance of these other formats and degrees has dampened the demand for traditional MBAs.”

No wonder, there is a growing consensus that an economic downturn will offer little relief in the MBA market. “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,” agrees Idie Kesner, dean of Indiana University’s Kelley School of Business. “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.

‘THE LABOR MARKET IS LIKELY TO ABSORB SOME RECESSION-BASED LAYOFFS’

Dean Idalene “Idie” Kesner of the Kelley School of Business at Indiana University

“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. This may produce little growth in MBA applications and enrollments at least in the earliest stages of a recession.”

Robert Dammon, dean of Carnegie Mellon University’s Tepper School of Business, also argues against wishful thinking. “I’m not counting on MBA applications to increase by double digits, or at all, in the next recession, whenever that occurs,” he 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.”

It’s also possible that a recession won’t do much to help international application volume. McDonough’s Malaviya says there is another external factor that could prevent applications from rebounding so heavily. “International students now have reasonable MBA program options outside of the United States,” says Malaviya. “Even though most applicants agree that the best place to receive a business education is the United States, the significantly lower costs of completing a good quality MBA at an Asian or European school has become increasingly attractive.”