The MBA Market: Just Another Cyclical Downturn Or A Major Reset?

A NEW ANALYSIS OF ENROLLMENT DATA OVER 30 YEARS SHOWS ALARMING DECLINES

Looking at the data over a longer timeframe shows more alarming declines, particularly for business schools outside the Top 20. A new analysis of application and enrollment data for the Top 100 schools over the past 30 years by Anjani Jain, deputy dean of the Yale School of Management, is perhaps the best evidence of a major reset in the MBA market. He found that for schools ranked 21st to 50th, full-time MBA enrollment is now down nearly 42% from their peak levels in 2002. For those ranked 51st through 134th, the enrollment decline is 38% below the peak in 1996. And these dramatic falloffs are for MBA programs that were ranked which afterall is a minority of existing MBA options.

“At the top 20 schools,” he says, “there are notable declines at some prominent schools. For instance, the most recent MBA classes at schools including Columbia, Northwestern (Kellogg), Michigan (Ross), NYU (Stern), and UT Austin (McCombs), are between 19% and 36% smaller than their respective peaks during the last 30 years.”

But the biggest and grimmest declines occur further down in MBA rankings. “Similarly, in the next tier, enrollment declines range between 49% and 82% from respective 30-year peaks at several schools including Minnesota (Carlson), Ohio State (Fisher), Penn State (Smeal), Rochester (Simon), Rutgers, and Wisconsin Madison. In the lowest tier, declines from respective 30-year peaks exceed 80% at several schools including CUNY Baruch (Zicklin), Pepperdine (Graziadio), Temple (Fox), and Tulane (Freeman).”

LOWEST-RANKED MBA PROGRAMS HIT THE HARDEST

[caption id="attachment_204690" align="aligncenter" width="600"] Analysis of enrollment in full-time MBA programs over the past 30 years by Anjani Jain

INTERNATIONAL STUDENTS HAVE FALLEN SHARPLY FOR SCHOOLS RANKED OUTSIDE THE TOP 20

If not for international students, these declines would have been much more severe–but more recently the tide has turned. Jain says his analysis reveals that till the early years of the 2000 decade, schools outside the Top 50 were able to stanch their enrollment decline with an influx of international students. “Now this strategy is unviable,” he concludes. “International enrollments at many schools, especially in the lowest tier, had reached proportions as high as 75%-85% of the class during the early part of the 2,000 decade. These proportions had fallen sharply even before the pandemic took hold. International enrollments have recovered to pre-pandemic levels in the top two tiers, but the decline continues unabated in the
lowest tier.

“Compared to peak levels,” adds Jain, “the proportion of international students in 2023 declined by more than 30 percentage points at schools like Bentley, Howard, Oregon State, SUNY Binghampton, Syracuse (Whitman), Tulane (Freeman), UC Riverside (Anderson), and UT Dallas. At some schools, the decline from the peak is over 60 percentage points. International enrollment growth, however, continued gradually at the Top 20 schools and was the principal source of total enrollment growth till 2017. Aggregate international enrollments have since declined somewhat at the Top 20 schools and the decline became more pronounced during the first year of the pandemic.”

It’s not all bad news, but it is mostly bad news for the majority of schools with full-time MBA programs. “Though media reports often describe short-term economic fluctuations as dire portends foreshadowing the demise of the MBA, the longer trend reveals a persistent ‘flight to quality,’ believes Jain. “Applicants have gravitated to higher-ranked schools, enabling them to maintain or steadily increase enrollment without loss of academic quality. Lower-ranked schools have experienced greater fluctuations in applicant volume and have lost enrollments as well as the academic caliber of students over time.”

HIGHEST RANKED PROGRAMS ALSO GETTING THE MOST INTERNATIONAL STUDENTS

This trend is true even when accounting for increasing numbers of MBA candidates from outside the U.S. In fact, says Jain, the flight to quality is more pronounced for international applicants to U.S. MBA programs. “After reaching a peak for the Class of 2001, the number of international students in U.S. MBA programs has generally declined, and this decline is largely confined to lower-ranked schools. Schools in the top tier now account for over 40% of international MBA students, a
fraction that has risen consistently from 25% for the Class of 2001.”

It would be easy, however, to equate the full-time, residential MBA to be the MBA market. But part-time MBA students have always outnumbered full-time students, and with the explosive growth of online education, online and hybrid MBA students alone now exceed those enrolled in full-time programs. Adding this online population, which at last count accounted for 53,231 MBA students worldwide, there are now as many or more students studying for an MBA degree than ever before: 250,389 in the 2020-2021 academic year, according to the AACSB, the primary accreditation agency for business schools.

Not surprisingly, IPEDS (Integrated Postsecondary Education Data System) data show that more than half of the institutions with MBA programs offer some form of those programs online. Institutions with online programs have grown more than those without online MBAs. Between 2019 and 2020, the AACSB recorded increases in 134 MBA programs, none of which were face-to-face. In 2020, 101 fewer face-to-face programs were offered, a result of converting those programs to either pure online or blended online/in-person formats.

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