Economy’s Impact On MBA Applications: 4 Deans, 4 Views

‘DIFFERENT PARTS OF OUR SCHOOL ARE AFFECTED IN DIFFERENT WAYS’

Stern’s Raghu Sundaram. File photo

Raghu Sundaram became dean of NYU Stern School of Business in early 2018 after more than 20 years as a finance professor at the school. He has, without exaggeration, seen it all. He says an economic slowdown, if it occurs, will hurt as many parts of the business school as it “helps,” even considering a likely boost in MBA applications.

“In general, although this is not a rigid rule, we have found that economic slowdowns generally are viewed by most people as good news for applications. But economic slowdowns hurt working professionals, which hurts our part-time MBA and our executive MBA,” Sundaram tells P&Q. “So it’s not always a rule, but the last three recessions, sometimes we found that applications overall have gone down, sometimes we found they haven’t gone down. People say ‘We are in tough times, maybe I should improve my credentials, improve my skills,’ so it works both ways.

“So it’s not a rule, but different parts of our school are affected in different ways. The undergraduate program, for example, is very little affected by these things and that’s nearly half — 40% to 45% — of our school.”

INTERNATIONAL INTEREST A BULWARK FOR B-SCHOOLS IN GOOD ECONOMIC TIMES

While the economy remains strong by the usual indicators, Sundaram, like his fellow deans, sees steady interest from international applicants making up for shortfalls on the domestic side.

“A big part of our applications, especially for graduate programs and especially the full-time MBA and master’s programs, are international students: 40% of our applications and about 25% to 30% of our class,” says Sundaram. International students made up 32% of the Stern School’s MBA students in the fall 2021 cohort, up from the previous two intakes.

“So will international applications slow down, will domestic applications slow down, to which program will they slow down? The executive and part-time MBAs are almost completely domestic students. By definition, the people who are working here who apply for the MBA part-time — that is a little tricky. Will it slow down? Yes, on the one hand, an economic slowdown makes people more cautious about undertaking new ventures. But on the other hand, it’s also a time where people feel the need to update their skills. So will it hurt us? I don’t know — it might.”

NO RECESSION SINCE 2008; U.S. IS DUE? 

Overall at Stern, applications to graduate programs are “looking very strong right now,” Sundaram says, “but there was the Covid bump that everybody received and we are back at where we were two years ago in some in the overall application levels. That temporary bump has gone, but it was very clear that it was temporary.

“It was an illusion if anyone thought it was going to last. I think when people were locked up at home, streaming services, P&Q readership, everything improved and now we are reverting back to more or less a 2019 world. So things are looking good. I mean, I have no complaints at this point.”

It has been many years since the U.S. was officially in a recession, Sundaram notes.

“We’ve not one had since 2008, which was long before I became dean,” he says. “We’ve not had any severe recession since the Great Recession. So we’ll have to wait and see how it works out. I’m pretty optimistic that the portfolio of our programs will do well. Some parts of it may be hurt more than others, but we will do well overall.”

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