Applications
to American M.B.A. programs dropped for a fourth straight year, with
even elite universities starting to show signs of struggling to lure
young professionals out of the strong job market.
For the first
time in nearly a decade, waning interest in the traditional master of
business administration degree hit business schools that draw the most
applications, including Harvard and Stanford universities, according to a
survey of 360 schools by the Graduate Management Admission Council, a
nonprofit that administers the GMAT admissions exam. Those top-tier
programs were until recently thought to be immune to the shakeout plaguing less-prestigious programs.
Americans
are saddled with more college debt than ever, and they have grown
increasingly reluctant to leave behind jobs for a year or more to pursue
one of the nation’s most expensive degrees, school administrators
say—particularly as the economy has improved. In response, schools in
recent years have launched cheaper, more flexible or more customized
master’s degrees in hot areas such as data science and supply-chain
management.
In the application year ended this spring, U.S. business
schools received 140,860 applications for programs including the
traditional two-year M.B.A., down 7% from the previous year, GMAC data
shows.
Until recently, international students had been a bright spot
for U.S. business schools. Now, foreign students face steeper hurdles to
getting work visas after graduation, leading fewer to apply to U.S.
schools, university administrators say.
Overall applications fell more sharply this year than in 2017
as international students submitted 11% fewer applications this year.
Applications from U.S. candidates fell 2%.
The decline in M.B.A. applicants hadn’t affected top business
schools until now, even as smaller programs such as those at the
University of Iowa and Wake Forest University closed their flagship
two-year programs citing weak demand. A handful of large, top-tier
M.B.A. programs such as Harvard Business School and the University of
Pennsylvania’s Wharton School last year received a little more than half
of all business-school applications, according to recent GMAC data.
Harvard Business School received 9,886 applications for this
fall’s entering class, down 4.5% from last year—the biggest drop since
2005. Applications to Wharton fell 6.7% to 6,245. At Stanford’s Graduate
School of Business, they slid 4.6% to 7,797. Such top schools are still
receiving many more applications than they can accept, but the declines
mark a reversal after years of growth.
“People are thinking, ‘Oh my gosh, if the top is struggling to
find applicants, what are the rest of us going to do?’” said
George Andrews,
director of admissions at Rice University’s Jones Graduate School
of Business, which saw a 27% drop in full-time M.B.A. applications to
587 this year.
Representatives of Harvard and Wharton declined to comment. A
Stanford spokeswoman said that the number of applicants will vary from
year to year, but that an M.B.A. degree and the Stanford experience
remain valuable.
The M.B.A. was once considered a prerequisite for climbing the
management ladder at many major American corporations. But as students
have sought out shorter and more specialized degrees, applications have
been scattered across a wider array of schools and types of business
degrees, further weakening the M.B.A.’s hold on distinguishing
high-performing talent to employers.
GMAC’s survey this year included a record 1,087 business-school
programs, including 571 M.B.A. programs. In 2015, it included 641
business degrees, 426 of them M.B.A. programs.
“The growth of new M.B.A. and master’s programs across the
country has been massive,” Mr. Andrews said. “Are there really enough
students to fill all these schools?”
Sangeet Chowfla,
GMAC’s president and chief executive, said it is possible
business-school applications are bottoming out as the U.S. economy
approaches its peak and could rise again in the next recession. But more
competition from high-caliber schools in Asia and Europe, combined with
the Trump administration’s heightened scrutiny of work programs for
international students, could continue to squeeze American business
schools, he said.
World-wide, the number of M.B.A. applications was flat from
2017, partly because of an increase in students looking to pursue their
degrees in Europe and Asia, according to the GMAC survey. Applications
surged 8% to schools in Canada and 9% to schools in East and South Asia.
Soojin Kwon,
admissions director of the full-time M.B.A. at the University of
Michigan’s Ross School of Business, said that despite a 9% decline in
applications in 2018 at the school, she expects highly ranked programs
will recover from the recent dip. These M.B.A. programs “provide access
to jobs with attractive companies and great salaries, with a strong
alumni network. That’s what students are buying,” she said.
Smaller schools likely won’t be so lucky, she added. “Students
are questioning whether the value is worth it, and if they can actually
get jobs afterwards,” Ms. Kwon said.
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