For decades, U.S. business schools led the world in educating the best M.B.A. students. That’s why there had been a steady inflow of highly qualified international students at the likes of Harvard, Stanford and Wharton.
But for the past ten years, interest in studying in the U.S. has been declining and in the latest year, there’s been a dramatic and sharp drop in interest in coming to a U.S. business school for an M.B.A. degree. In fact, the falloff this year has been so severe that several highly ranked M.B.A. programs are likely to report double-digit declines in applications.
For applicants who have been admitted to a top business school this year, it’s pretty much a buyer’s market. Qualified candidates are getting multiple acceptances and generous scholarship grants (see For This Year’s MBA Admits, It’s A Buyer’s Market).
“To say that it is a buyer’s market would be an understatement,” says Jeremy Shinewald, founder and CEO of mbaMission, a leading admissions consulting. “We are seeing massive amounts of scholarship dollars being thrown at applicants, regardless of need and, in some cases, clearly where there is no need at all,” says Shinewald. “We also are seeing international applicants receive scholarship offers in a way that has in the past been highly unusual – an international applicant with a lower than average GMAT and no financial need received $50K per year from an M7 school, for example.” M7 schools are considered the top seven business schools in the world.
Interest in coming to the U.S. to study for a graduate business degree has fallen off a cliff over the last two years after gradually declining in the eight years before that, according to a recently published report by the Graduate Management Admission Council. After falling from 54% to 48% between 2009 and 2016, preference for the U.S. declined to 40% in 2018. Preference for Western Europe, meanwhile, grew from 31% to 40% in the last two years.
The trend, GMAC says, is “likely driven in part by the current political climate.” Anti-immigration rhetoric plus greater uncertainly over obtaining a work visa in the U.S. is causing more internationals to shy away from the U.S. But so is the rising cost of the M.B.A. degree that is causing sticker shock among would-be students. Prospective students perceived the U.S. as less likely than other destinations to be selected for safety and physical security and affordability. By comparison, Canada is more likely to be selected than other destinations because of the ease of obtaining work permits and student visas, as well as the availability of financial aid and safety and physical security. Western European schools were most likely to be selected because of the reputation of their educational systems and improved chances of an international career.
The extent of the decline in U.S. business degree programs is dramatic. Prospective students in East and South East Asia now prefer the United Kingdom over the U.S. as a study destination by a margin of nearly six to one, with 28% indicating their preference for a U.K. school and only 5% for a program in the U.S. Would-be business students in Western Europe prefer to study in Spain over the U.S. by more than a six to one margin, with 39% wanting to study in Western Europe and only 6% in the U.S. Some 25% of prospective students in Central and South Asia say they would prefer to earn their degree in France versus 6% in the U.S.
No less worrisome for U.S. deans of business schools was the finding that consideration of one-year M.B.A. programs surpassed two-year M.B.A. programs (47% vs. 45%) in 2018 for only the second time in the last decade of survey data, probably a consequence of the growth in interest for European M.B.A. options. Only 19% of the respondents preferred a two-year M.B.A., while 21% were leaning toward a one-year option.
Despite the falloff in international applicants, GMAC said that the M.B.A. remains by far the most popular choice among prospective business school applicants — and that more than ever, those prospects are looking to study outside the United States. Overall, 79% of candidates are considering an M.B.A. and 61% prefer such a program, while 36% prefer a business master’s program type, according to the two reports titled Demand for M.B.A. and Business Master’s Programs: Insights on Candidate Decision-Making. The reports — a summary report and supplemental report — are based on a sample of the registered users of GMAC’s website from the organization’s Prospective Students Survey and present findings associated with candidate decision-making and demand for business school programs and study destinations.
GMAC’s reports are based on responses from 9,617 individuals surveyed between January and December 2018, as well as responses from more than 126,000 individuals surveyed between the years 2009 and 2017. Pertaining to international trends, the reports found that the United States notably remains a more common international application target and preferred study destination among residents of East and Southeast Asia and Central and South Asia — regions that are major sources of international candidates.
In narrowing their choices for graduate management education, about half of candidates say their first consideration is the type of degree program they want to pursue (47%). Other key findings by GMAC:
- Most candidates are considering alternatives to business school to achieve their goals. Consistent with past years, employment is the most widely pondered alternative, whether it be candidates thinking about pursuing a new job (50% of candidates) or continuing in the same job (29%).
- Thirty-eight percent of candidates say their first consideration is identifying the specific school or schools they are interested in, and 15% of candidates say their first consideration is the regional location in which they want to study.
- Candidates preferring business master’s programs are the most likely to first consider the type of degree program they plan to pursue (55%), while candidates preferring full-time M.B.A. and executive M.B.A. programs are more likely to first consider specific schools (47% and 45%, respectively).
- Candidates preferring professional M.B.A. programs are more likely than those preferring other program categories to first consider the regional location (29%). Candidates most often say quality/reputation (e.g., rankings, accreditation, faculty) is the most important selection criteria they have in choosing a school.
John A. Byrne is editor-in-chief of PoetsandQuants.com, the leading website covering business schools. He is also the former executive editor of Businessweek and former EIC of Fast Company.