2020 has been a wild year — that much we can agree on. Yet even as the coronavirus pandemic threw a pall of uncertainty over graduate business eduction and the usually reliable system of metrics that gauge the health of graduate business education around the world, the biggest annual poll of application trends shows that apps were up — and up big — at B-schools around the globe.
The Graduate Management Admission Council’s 2020 Application Trends Survey, released today (November 10), shows that 67% of all business master’s programs saw application increases, up from 41% in last year’s survey. That includes 57% of Asia-Pacific B-schools, 72% of European B-schools, and 67% of B-schools in the United States. In MBA programs, 66% worldwide saw app increases, up from 40% in 2019.
The boom in interest provided further evidence to support the long-standing view that B-school popularity runs counter-cyclical to the economy, says Sangeet Chowfla, president and CEO at GMAC.
“This year is like none other when observing and analyzing trends associated with applications to business school,” Chowfla says. “While the environment has certainly been challenging for schools and candidates since the outset of Covid-19, one constant is the countercyclical nature of demand for an advanced business degree. The opportunity cost of leaving a job to pursue an MBA or business master’s lessens as economies begin to regress; as a result we are now seeing more people thinking about B-school to grow or improve their career prospects.”
Rahul Choudaha, GMAC’s director of industry insights and research communications, echoes Chowfla, telling Poets&Quants: “It’s a year which is unlike any other. Everything is a surprise in a way.”
IMPORTANT CONTEXT FOR THE APP BOOM
GMAC collected survey data between July 30 and September 14, 2020, garnering responses from 1,085 programs at 325 business schools worldwide. It found that the onset of the coronavirus and the uncertainty that resulted combined to reconfigure the “enrollment funnel,” in other words the relationship between applications received, acceptance rates, offers accepted, and deferments. B-schools responded to the health crisis with flexible admissions approaches, including extended deadlines and deferral policies, as well as flexible testing requirements — approaches that will continue into the new year as the crisis continues.
It all resulted in a widening of the pipeline of talent to graduate business education, but one that comes with caveats — chief among them that schools hedged enrollment risks by increasing acceptance rates. The median acceptance rate grew at 70% of surveyed schools, compared to growing at 65% in last year’s survey; among U.S. B-schools, three-quarters (75%) said their acceptance rate climbed. Also up: deferrals. The median deferral rate climbed from 2% last year to 6% this year.
Interestingly, yield rates — the rate at which admits actually enroll — were basically flat in the U.S. at 60%, down from 61%. However, yield was hit harder in Europe (57%, down from 62%), Canada (61%, down from 66%), and worst of all, Asia-Pacific (51%, down steeply from 62%), as grad school candidates opted to play it safe and travel less. As GMAC notes, only 35% of schools in Asia-Pacific reported allowing candidates to defer entry, compared to 61% of responding schools in the U.S. — which means U.S. schools adopted deferral policies more extensively compared to schools in Asia-Pacific.
“While more candidates applied to B-schools, deferral rates also went up due to concerns about online learning, travel, and visas, and this shift in choice pattern ultimately resulted in a lower yield for many B-schools,” Choudaha says. “While growth is present in some form across nearly all geographies and program types, the increased demand came about in a context of increased deferments due to concerns about online learning, travel, and the ability to secure visas.”
‘THE RIGHT INCUBATOR FOR MANY PEOPLE’
In MBA programs, the surge in demand reversed a years-long downward trend. In the U.S., nearly 3 of 4 full-time, two-year MBA programs reported growth in applications, with 1 of 3 reporting “significant growth” of 20% or more. The growth in the U.S. and Canada was higher than that of Asia-Pacific and Europe. Overall, among the programs that responded to both GMAC’s 2020 and 2019 surveys, the total number of applications increased for Canada (13%), Europe (24%) and the U.S. (21%), while Asia experienced an overall decline (7%).
Nearly 4 of 5 U.S. programs reported growth in domestic candidates; it was a different story for international candidates, who were three times as likely to ask for deferrals. “The yield for international candidates is quite low as compared to domestic candidates,” Choudaha says. “When we combined overall deferral rates, it may look like one number, but when we parse it, it’s no surprise: the travel restrictions and visa complications for international candidates led to lower yield.
“Clearly we can see that in Canada and Europe and the U.S., the proportion of schools reporting growth in domestic applications was very significant. And so as economic uncertainties prevailed, candidates were looking for options, for ways they can turbocharge their career, how they can bring the ability to move forward when they come out of this pandemic. So this was just the right incubator for many people, because it happened also at such a fast pace. And that confluence of uncertainty and speed is just too much for the economy to handle — and hence the talent responded to it by increasing the demand for applying to business schools.”
As Martin Boehm, chairperson of the GMAC Board of Directors and dean of IE Business School in Spain, adds, the pandemic created a recipe for flexibility and innovation that candidates for graduate business education responded to.
“This year’s Application Trends report emphasizes two very important dynamics at the center of graduate management education: a rise in global demand and the need for regional customization,” Boehm says. “More individuals, across nearly every region, are choosing to pursue an advanced business degree amid economic uncertainty and we are likewise seeing business schools adjusting to this demand by tailoring admissions policies to the needs of specific regions. This is, of course, exactly the type of innovative adaptability we’ve come to expect from the business school sector.”
See more data from the GMAC 2020 Application Trends Survey on page 2.