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An MBA Dream Deferred

After graduating from the University of Kentucky in 2009 with a bachelor’s degree in mechanical engineering, Nick Such accomplished the near-impossible: He somehow managed to get accepted into the MBA program at the Stanford Graduate School of Business, which accepts about 6 percent of applicants, a tiny fraction of whom are, like him, fresh out of college.

Two years later, as his two-year deferral was coming to an end, he did the near-incomprehensible: He told Stanford thanks, but no thanks. A fledgling entrepreneur, Such had hoped an MBA would be a good way to advance his career. But after forging his own path, he decided to defer his MBA indefinitely and backed out of the Stanford GBS Class of 2013 at the beginning of August.

“An MBA would be an incredible experience, open a lot of doors, and probably change me as a person for the better. There are a lot of lessons to be learned from that environment,” Such says. “But I came to the decision I’m way too excited about what I’m doing now.”

Not the Right Time

Such is one of a number of admitted students who are deciding now is not the right time to get an MBA.

At Southern Methodist University’s Cox School of Business, a growing number of students seeking deferrals are citing financial hardship, opting to stay employed rather than attend B-school. At Harvard Business School, the first class of a program that admits new college graduates after two years in the workforce has been hit with dozens of deferral requests from students who have decided that the opportunities they’re in now are too good to pass up. At the University of Virginia Darden School of Business, admitted students are voting with their feet. They’re not asking for deferrals, but turning the school down cold, in effect snubbing a top-ranked MBA program in favor of a steady paycheck.

In the countercyclical world of business school admissions, where applications rise during bad times and fall during good, deferrals are seen as a symptom of economic uncertainty. With the economy in turmoil and job growth stalled, and the experience of unemployed recession-era MBAs still fresh, many B-school applicants will opt for the sure thing over the risky proposition of two years of unemployment. Debra Stewart, president of the Council of Graduate Schools, hypothesizes that after watching friends and acquaintances struggle with unemployment, business school applicants are finding it difficult to give up hard-to-find jobs for two years.

“Empirically, a graduate degree pays off,” she says. “But believing that happens when everyone around you is losing their job is difficult to do.”

Harvard Holdouts

To see the impact of uncertainty on B-school admissions, there’s no better place than Harvard’s 2+2 Program, which is getting ready to welcome its first cohort of 106 students. Admitted in 2009, the group spent two years in the workforce before being welcomed into Harvard’s hallowed halls. When classes start on Sept. 6, only 67 students will arrive in Cambridge. The rest will remain at work. For them, business school will have to wait at least another year.

About 39 participants requested deferrals to pursue opportunities that will help them achieve personal and professional objectives, such as other degrees or continued work. To get one, 2+2 students needed to show they had a plan that made sense to delay enrollment, says Dee Leopold, managing director of MBA admissions and financial aid.

But that’s not the case at SMU Cox, where students are requesting deferrals, and getting them, based on financial hardship. This year, the school allowed 11 deferrals, up from five the year before. Of the 11, nine of the students cited a financial reason such as saving more money for school or accepting a promotion, according to Marci Armstrong, associate dean of graduate programs. She says the school doesn’t keep track of how many requests it receives, just those granted. “It’s about saving money,” she says. “That’s the reason.”

Armstrong says she thinks some students may have been spooked by the weak economy or the size of the loans needed to finance their education at Cox, where the program can easily set a student back well more than $200,000, including two years of forgone salary.

Armstrong says she worries that increasing requests for financial hardship deferrals may indicate shortsightedness on the part of applicants. A post-MBA salary—Cox’s averages about $80,000, excluding signing bonus—quickly pays off the cost of business school loans in many cases, and demand for MBA talent is still strong, an area she says she may need to emphasize more.

Outright Rejections

At the University of Virginia Darden School of Business, the decision to defer is taking on a more permanent cast. Instead of accepting an offer of admission, sending in a deposit, and requesting a deferral, admitted students at Darden are rejecting the offer outright. They’re saying no, period.

Like their counterparts at Harvard and Cox, admitted students who choose not to attend Darden are increasingly citing their jobs, rather than a competing school, as the reason, says Wendy Huber, associate director of admissions. She says the yield, or percentage of admitted students who enroll, hasn’t changed.

“It’s the ‘love or money’ decision,” Huber says. “It’s not an easy decision because it’s quality of life for a couple of years. I tell them don’t make a short-term decision based on cash because of the return on investment from an MBA. But people have to trust their gut.”

Huber speculates that companies, in an effort to retain top talent, may be offering promotions, raises, or coveted projects to their best employees when they learn they are seriously considering business school. She also suspects candidates worry that their significant others won’t be able to find new jobs.

Big Decision

Such, the entrepreneur who turned down Stanford, did so to get his company, AwesomeTouch, which develops mapping applications for large-format touchscreens, off the ground. His post-MBA goal was to start a company that would improve human transportation, but he was already doing that. B-school seemed, well, unnecessary.

Such says admitted students considering a deferment should think about the return on investment of business school vs. staying where they are now. Opportunities with a shelf life that won’t exist in a couple of years are a good reason to delay school, he says.

The question he found himself asking was the first question on Stanford’s application: “What matters to you most, and why?” He ultimately decided the answer was his startup, and achieving his goal his own way.

Join the discussion on the Bloomberg Businessweek Business School Forum and follow @BWbschools on Twitter.

Haslett is an editorial intern for Bloomberg Businessweek.

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