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Until recently, Amitabh Nayak, 27, was weighing a full ride to Purdue University's B-school, with acceptances from both the Chicago Graduate School of Business and Maryland's Smith School of Business. "When I started the process, I thought that Chicago was a little bit of a stretch," he says. Nayak says he had good essays, but only a 690 Graduate Management Admissions Test (GMAT) score and a 3.1 grade-point average in chemical engineering. "I certainly didn't expect a full-tuition offer from Purdue."
Significant declines in application volume at the top management schools have made the 2003-04 MBA admissions season the year of the applicant. Demand for the degree is lower due to a slow economic recovery, fewer MBA-age workers, and fewer non-U.S. applicants. So schools dipped deeper into their applicant pools to find new MBAs -- and deeper into their coffers to help fund them.
"MORE OFFERS." Plenty of evidence, both anecdotal and statistical, shows that applicants were accepted to more B-schools than in years past. Graham Richmond, CEO of MBA-admissions consultants Clear Admit, says he saw clients get 30% more offers of admission than in the 2003 academic year. "Since we haven't totally changed our methods, and since clients are still applying to the same number of programs [on average], this indicates that the schools must be handing out more offers," he says.
Back in the more competitive years of 2000 and 2001, Richmond says even his best applicants only had a couple of options, "rarely gaining acceptance to more than one of the top three [schools]." In 2004, his clients are weighing offers from the likes of Harvard, Wharton, Stanford, and Columbia. "It's rare to see the top few schools in such direct competition [for the same students]."
Few schools avoided a significant decline in student interest in the 2004 academic year. Heavyweights such as Wharton received 21% fewer applications vs. 2003. Wake Forest University's Babcock Graduate School of Management saw a 29% dip, while the MBA programs at the Tuck School at Dartmouth and UNC's Kenan-Flagler Business School received 25% fewer applications. Washington University's Olin School of Business and UCLA Anderson School of Management saw 21% and 15.8% fewer MBA hopefuls, respectively.
HEDGING THEIR BETS. Many admissions directors learned early on that fewer people were taking the GMAT. They hedged their bets of enrolling a good class by accepting more applicants in the early season. At Kenan-Flagler, MBA admissions director Sherry Wallace admitted 50% of her class by the end of February, vs. one-third of the class in 2003, an increase of 100 students.
The 2003-04 season had no clear rules. People who applied to schools with a high yield (the number of admitted students who chose to enroll) had a better chance of being placed on a school's wait-list or offered deferred admission. If yields were lower, late applicants found themselves with offers of admission -- and the financial aid that's often reserved for the early birds. Says Rosemaria Martinelli, Wharton's director of MBA admissions and financial aid: "We knew we had to admit more people this year, because when applications are down, your yield falls."
FINANCIAL EXTRAS. To encourage enrollment, schools opened their checkbooks wider in 2004. Some schools reimbursed admitted applicants for travel expenses to spring admit weekends. Others offered lucrative financial-aid packages to more students.
Cornell University's Johnson Graduate School of Management doubled the $1 million it usually offers MBAs in loans and scholarships. However, Ann Richards, associate director of admissions and director of financial aid at the Johnson School, says, "what we offer and spend are often two wildly different numbers."
New York University's Stern School of Business reintroduced a two-year, full-tuition dean's scholarship, which was limited to a one-year scholarship in the past. "We felt it was something that would help us attract the top students," says Julia Min, assistant dean for MBA admissions. At Kenan-Flagler, 20% of the school's next class of MBAs will receive some sort of fellowship, ranging from $5,000 to full tuition and fees for two years. In 2003, the figure was 13%.
MATCHING OFFERS. Schools also tried different tactics for doling out scholarship money. Figuring that their top applicants -- those most eligible for merit-based scholarships -- would probably choose to enroll elsewhere, Indiana's B-school decided instead to award money to the people most likely to attend the school. "It's the group in the upper-middle [part of the pool] that we may end up getting," says James Holmen, director of admissions and financial aid.
With tuition starting at $65,000 for top schools, applicants are becoming more active in seeking cost relief. Some are asking schools to match offers from other programs. Wharton's Martinelli says she has heard all sorts of requests this year. "I'm being asked, 'what can you do to match that?,'" she says, adding that she refuses to offer anything more.
Ultimately, it's not about the money, but it's a "fit and educational" issue, she says. She warns that students shouldn't feel overly entitled or be overly demanding because it begins to weaken the educational experience for everyone.
TRICKY SITUATIONS. Perhaps some admissions offices are playing the game as well. Some B-schools are rumored to be offering money to applicants who have already declined their acceptance offers. BusinessWeek Online couldn't confirm these rumors, but many schools did say they've heard of such tactics from their own applicants.
"This is not a typical practice," says Linda Baldwin, head of MBA admissions at UCLA's B-School. "Trying to persuade someone to renege on a decision they've made puts the applicant in an awkward situation...with ethical dilemmas. It indicates that [reneging] is O.K." Any such practice sharply counters schools' tough policies that MBAs should never renege on job offers they've accepted from corporate recruiters.
Other schools opted to reduce their class sizes to keep quality high. With applications down 30%, Indiana's B-school eliminated one of its four cohorts of students for the class of 2006.
"BETTER TO STAY." Admissions directors aren't likely to see much of a pickup in the fall. GMAT test-taking is lower than in previous years. From Jan. 1 to Apr. 30, just 70,179 GMATs were taken worldwide, an 8.65% decrease, vs. the same period in 2003. Broken down, the decline is most pronounced outside the U.S., where volume dipped 17.5%.
Signs of an improving economy could also encourage otherwise strong MBA candidates to stick it out in the real world. With a work promotion in hand, Matthew Seim, 28, passed on his admissions offers this year, saying "it's better to stay...and to look at doing an executive MBA program in a few years."
Schools say quality hasn't changed, and that admitted MBAs in 2003-04 have the same caliber of academic, professional, and personal backgrounds as in previous classes. Linda Meehan, head of admissions for Columbia Business School's full-time MBA program, says her selectivity will be a little different from last year, but she's not accepting people she wouldn't normally take. Julia Tyler, director of the MBA program at London Business School, say there's "no way" her office has lowered its standards. "You change your application requirements at your peril, because you will get found out."
Despite his lucrative offer to study for free, Nayak chose Chicago. He'll pay about $73,000 in tuition alone over two years. While money talks, it's clear that it's not all that matters to applicants. But if a top school doesn't offer tuition aid, they might make room for a few more applicants, and that's a trend that many MBA hopefuls would like to see continue. By Mica Schneider in London