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Scottish business school student Steven Renwick used to harbor what he called a "vague aspiration" to get his MBA from an American institution such as the Stanford Graduate School of Business. Then he took a closer look at the price tag. The cost of a two-year degree at a top U.S. business school would easily set him back more than $150,000, an investment of time and money he was not comfortable making. Says Renwick: "It seemed like a massive opportunity cost."
Instead, he considered schools in Europe with one-year MBA programs, such as Switzerland's IMD (IMD Full-Time MBA Profile), France's INSEAD (INSEAD Full-Time MBA Profile) and the University of Oxford's Saïd Business School (Saïd Full-Time MBA Profile). He ultimately applied to and was accepted by Saïd, a school known for its strong entrepreneurship offerings, with a more affordable tuition of about $57,000. "I was always very aware of U.S. business schools because they were so highly ranked, but they just seemed astronomically expensive to me," says Renwick, who is now at Saïd working on launching an Internet startup. "I didn't see the advantage of getting myself into that much debt before even going into business."
Renwick is part of a new generation of European MBA students who are increasingly looking to attend business schools on their home continent, rather than going abroad to the U.S. for their business school education. In the past five years, the number of Europeans who are sending their Graduate Management Admission Test (GMAT) scores to U.S. schools has declined sharply, according to a report released this month by the Graduate Management Admission Council on European application trends. In testing year 2006, 50 percent of Europeans test takers sent their GMAT score reports to business programs in the U.S., a number that slipped to 37 percent in 2010. Neighboring Canada also has not fared well. In 2006, Canada was among the top 10 countries to which European citizens sent their GMAT scores, but in 2010, Canada slipped from that list, according to GMAC. Instead, such countries as the U.K., France, and Spain have become leading destinations for European applicants.
The shift in the admissions pipelines has far-reaching implications for both American and European business schools and could result in permanent changes in the business school admissions landscape, says Nunzio Quacquarelli, managing director of QS Symonds, a London company that organizes the annual QS World MBA Tour.
"Europe's MBA market is on an upwards trajectory," Quacquarelli says. "The number of people looking at an MBA in Europe is growing, and at the same time I think European candidates are increasingly recognizing that there are world-class business schools in Europe."
In the past decade, European B-schools have grown in stature and reputation, becoming more popular due to their more affordable price tag and the shorter duration of their programs, typically one year vs. their two-year U.S. counterparts. At the same time, the MBA degree is becoming increasingly popular among students and more widely recognized as a valuable qualification by European employers, says Lisa Bevill, director of admissions at IE Business School (IE Full-Time MBA Profile) in Madrid.
"The MBA in Europe is becoming much more valuable. Many more European companies are looking to use the MBA as a filter," she says.
Another boon for European MBA programs has come from the Bologna Accord, a sweeping educational reform that has standardized the graduate and post-graduate education systems in Europe over the past decade. As a result of the change, European students are graduating from their bachelor-degree programs in a shorter period of time, accelerating their entry into the workforce and whetting their appetite for the MBA degree. According to GMAC, 41 percent of GMAT test takers in Europe were younger than 25 in testing year 2010, compared with 32 percent in 2006. That's a significant demographic shift, says Javier Munoz, director of admissions at Spain's IESE Business School (IESE Full-Time MBA Profile).
"The whole university system in Europe is changing, and this means that in two or three years, there is going to be a huge [number] of new candidates in the market thinking about master programs and MBA programs, in particular," Munoz says.
Spain is one of the countries benefiting from the recent boom of interest in European B-schools. Over the last five years, IESE has seen a 50 percent increase in Western European applications. The school recently expanded the MBA class from 215 to 290 students, largely due to the surge of interest from Europeans, Munoz said.
At IE, Western European applications increased 17 percent in 2010, and the school is projecting a 20 percent increase in applications from that group this year, says Bevill. Europeans now make up about 30 percent of the MBA class, up from 25 percent last year.
Schools in the U.K. are seeing this trend, too. At London Business School (London Full-Time MBA Profile), the overall volume of applications has nearly doubled in the past five years, with a corresponding increase in the number of Europeans considering studying in the U.K., says David Simpson, admissions director at London Business School.
Such countries as Germany and Switzerland also are quickly becoming leading destinations for European applicants, according to the GMAC report. Germany's MBA market is still relatively young, but more than 50 business schools are now in Germany competing for MBA candidates, says Quacquarelli. One well-known German program is the Mannheim Business School, established in 2005. The school has seen a steady uptick in the number of German and European students applying to the school, says Sabine Staritz, Mannheim's head of marketing, sales, and corporate relations. For example, 40 percent of this year's class is German students, up from 34 percent last year. European applicants from outside Germany make up 12 percent of the MBA class, up from 10 percent in 2010.
"In the beginning, we really thought the full-time MBA program would be interesting just for the people abroad, not so much for the Germans, but now we see that a lot of Germans are interested in a Mannheim MBA," Staritz says. "By coming here, they may not be getting the huge American brand, but they can still get a good-quality degree for a good price."
As more Europeans opt to stay at home, North American business schools are finding it increasingly difficult to attract Western European students.
A growing number of American business schools, especially state schools, have recognized that it is becoming harder to lure students across the Atlantic, so they're cutting back on recruiting of European students, says Quacquarelli. For example, five years ago, 40 or 50 U.S. MBA programs used to attend the Frankfurt, Germany, stop of the QS World MBA Tour, while in recent years only 20 or 30 U.S. schools have attended. Local German universities now fill booths that used to be occupied by American business schools, he says.
At the University of Notre Dame's Mendoza College of Business (Mendoza Full-Time MBA Profile), applications from international students have fallen over the past five years, with fewer coming from European countries, says Brian Lohr, director of admissions. In 2006, about 50 percent of the school's MBA applications came from international students, a number that has since dropped to 42 percent, Lohr says.
The school is hoping to attract more European students by offering attractive financial aid packages, such as fellowships that will cover the cost of tuition and living expenses.
"They've got a lot of fine schools in their home countries that are just as high-quality as our top-tier schools here," Lohr says. "We want to make it more appealing for them to come to the States."
Paul Pinckley, executive director of student recruitment at Pepperdine University's Graziadio School of Business and Management (Graziadio Full-Time MBA Profile) in Malibu, Calif., says his school has seen a steady decline of interest from European applicants in recent years, with applications remaining flat. For example, in 2008-09 academic year, Pinckley reports, the school received 37 applications from Europeans, the same number the school received in 2010.
The school has deployed a number of tactics to raise European students' awareness of the school in the past few years, from visiting European countries on MBA tours to having alumni in European cities help organize information sessions for applicants. This year, the school has focused more attention on Eastern European countries, such as Ukraine and Russia, but the recruiting efforts have not yet translated into applications, says Pinckley.
"Some of them are choosing not to leave because they can go to a comparatively inexpensive top school in Europe, and if they are going to spend the money in the U.S., they are looking for a more highly ranked name than Pepperdine," he says. "We're trying to get back in front of them, but honestly we haven't seen that big a difference."