MBA Applications: Is the Party Over?

Posted by: Louis Lavelle on May 26, 2009

By Anne Vander Mey

For the last few years, the world couldn’t get enough of the MBA. Since 2005, the number of times the GMAT was administered has increased by more and more each year, until in the academic year 2007-2008, when it hit an all-time high . But this year, the dizzying ascent of B-school applications appears to be stalling, according to statistics from the Graduate Management Admission Council provided to BusinessWeek.

For the first four months of 2009, registration volumes for the GMAT test—a good indicator of intent to apply to B-school—were about on-par with the same time period in 2008, a break with past years’ marked increases. And while the volume seems to be leveling off at an all-time high, it forces the question of whether the tide of the MBA craze is starting to turn.

For the first time since 2006, total GMAT registration numbers from January to the end of April are mostly flat, rising just 2% from that period in 2008. That’s a minor increase compared with last year’s 11% bump during those months, or the 9% jump the year before that. In the U.S., there have been 58,261 registrations so far this year, still up by 5% from 2007, but one fewer than last year.

In many ways, it wouldn’t be surprising if MBA applications plateaued in 2009, if that is indeed what these preliminary registration numbers indicate. For one thing, it’s not tenable that such large increases could last for much longer. “At some point, it’s going to drop,” says Rod Garcia, director of MBA admissions at MIT’s Sloan School of Management (MIT Sloan Full-Time MBA Profile). There’s also plenty of precedent for a boom and bust in applications in a recession. During the 2001 dot-com bust, there was a spike in applications as people fled the job market. The spike was followed by falling GMAT test volume for the next three years. The question now is how far the numbers will fall this time.

There are several reasons to suspect that applications this year will take a particularly hard hit. The financial industry, once B-schools grads’ bread and butter, is in crisis ; many news outlets, including this one, have published articles about MBAs graduating without jobs; and the MBA brand itself has taken a beating. Although there’s no hard evidence that applications will tank or even fall, there’s a good chance 2008 represented a relative peak.

That would be bad news for schools that were considering expansion—more than half of them, according to a 2008 survey by Kaplan Inc.. Some programs could find themselves with too many faculty, or with additional seats they can’t fill with high-caliber students. On the bright side, a dip in applications could be great news for MBA hopefuls looking for respite from the break-neck competition of recent admissions cycles. Even if there’s not a precipitous decline in applications, as Sara Neher, director of MBA admissions at the University of Virginia’s Darden School of Business (Darden Full-Time MBA Profile) put it: “It shouldn’t get any harder.”

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