MBA blog

Four Reasons Why There Are Fewer MBA Applicants In The Pipeline

In the past years, top American business schools have never experienced significant declines in their MBA app volumes, even when their less prestigious counterparts saw considerably fewer new applicants.

However, it’s not true anymore. In the previous year, many top schools are experiencing serious declines in applications – some from 4% to 5%, P&Q reports.

According to experts, there are exactly four factors to blame for it:

  1. The strength of the American economy.

  2. The growing tuition fees at most MBA programs and aversion of the younger generation towards student debt.

  3. Donald Trump’s policies that have turned many international applicants away from the U.S.

  4. Many new and emerging alternatives to traditional full-time MBA programs (like online degrees, specialty degrees, one-year and part-time programs).

During this week’s annual GMAC conference in Boston, where aspiring students are surveyed, it turned out that the biggest competitor to MBA and graduate degrees in general is actually employment. Responses were obtained from 9,471 future students who left their contact information on GMAC website (this year) and all in all 126,000 prospective students during the last 8 years.

The Biggest Competition to B-School Are Jobs

Since the financial recession that started ten years ago, the U.S. economy has experienced a significant growth (it has been one of the biggest growth spurts in history). Some analysts are predicting a new recession, but still others think it might be the longest growth period ever.

When the economy is strong, the number of applications at business schools always drops: people don’t have to necessarily obtain a graduate education to get a good job. When, however, the economy is at its weakest, people get laid off and are actively trying to make themselves more appealing to the prospective employer.

According to GMAC, nowadays, 70% of aspiring American students are thinking about an alternative to graduate education to build a successful career. That makes employment the most aggressive competitor to MBA education. Many prospective students choose either getting a new job or staying at their current one, but not enter a business school.

Steep Prices Are Also Important

When prospective MBA students see the price tags on most MBA programs, they are sure to have some doubts, as the student debt they will be in doesn’t seem like a necessary thing to do to get education. After all, traditional full-time MBA programs are not the only alternative nowadays: there are plenty of them, from the ever more popular MOOCs to one-year and part-time programs.

Schools are trying to struggle with their own price tags by offering generous scholarships, but for future applicants, the ROI on their education with a scholarship is not evident. They just know that prices are growing, so they choose jobs over student debt and a prolonged loss of any income.

Fewer International Students Enter U.S. B-Schools

According to Jeremy Shinewald, mbaMission founder and CEO, Donald Trump’s policies have been ‘scaring away’ international students, as there are currently not many ways for them to get a job in the U.S. after graduation. At mbaMission, the statistics is quite depressing: for instance, consultation requests from Indian students declined by 50% during the past year only. Advertising events for American schools in Europe draw fewer and fewer people.

It’s a first in many years, but the statistics is true: less than half of all future students who are considering a full-time MBA expressed a desire to study at a U.S. business school (all in all, only 47%, from 56% in 2016). Currently, Western European schools are becoming more popular (by 16%).

Entrepreneurship and Data Analytics Are Stealing The Spotlight

Of course, today there is a much wider range of choice for people who want to obtain a master’s degree: there are many specialized master’s degrees and various programs, full-time, part-time and online. Many prospective students of MBA programs are currently still finishing college.

A lot of attentions is drawn to a very fast-developing programs: master of data analytics. It is the degree of choice for 17% of today’s future students (the rate has doubled since 2013). Other specialized programs like entrepreneurship, management, IT and marketing are getting more and more popular over the years, threatening to overshadow the MBA.

All in all, if MBA programs wish to save the situation and recover their declining application numbers, there is only one thing that could do it: an economic crisis.

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