Business Schools

MBA Applications Surge


Demand for admission to U.S. graduate business schools remains strong, and the large number of applicants is entering what some say is the most competitive pool in recent years

Demand for admission to U.S. graduate business schools has risen, and the growing number of applicants is entering what some say is the most competitive pool in recent years.

The Graduate Management Admissions Council (GMAC) reported Aug. 15 that applications to business schools are being buoyed by a confident outlook on the economy and increasing demand from employers for management degrees. In turn, schools are choosing from a pool of applicants who are equally or better qualified academically than last year's class. The majority of the group's member schools are in the U.S.

Admissions officers have had a strong group of applicants to choose from this year. Nearly three in five full-time master's and MBA programs reported that their applicants are of better quality than those seen last year, according to the GMAC survey.

Better Applicants, More Programs

That doesn't surprise California admissions consultant Stacy Blackman, who helps students navigate the admissions process and work on their applications. "I think the quality of the applications that are submitted is going up," said Blackman. "People are understanding the process better and what it takes to submit a strong application."

The boom in applications mirrors an increase in registration volume for the GMAT—the B-school entrance exam—which this year jumped by 6.2% within the U.S. and 21% outside the U.S. And nearly two-thirds (64%) of full-time MBA programs reported an increase in application volume compared to 2006. Rosemaria Martinelli, director of admissions at University of Chicago's business school, said applications overall have been up "substantially" for the past two years. "It's very competitive out there. We've seen double-digit increases for all applications two years in a row," she said.

One of the key movers in the growing number of applicants is demographics, says Rachel Edgington, director of market research and analysis for GMAC. A cohort of students dubbed "millenials"—those from the generation born in or after 1982—fueled much of the growth in domestic applications this year, Edgington said. "This younger generation is a much larger pool then the past generation and they are starting to enter into the application pool," Edgington said. "Just in sheer size, they are much larger."

Degrees in Specialized Fields

Schools are responding to demand from students by creating an array of new flexible MBA programs, ranging from part-time programs to master's degrees in specialized business fields. In just the first half of 2007, 641 new graduate management programs were introduced, according to the GMAC report. That's a sharp leap from a decade ago, when only 74 new programs were created.

The GMAC survey collected data from 445 programs at 252 business schools, 70% of them in the U.S. This is the first year that the survey received data from PhD programs and master's degrees in specialized business fields, such as master's of science in management or finance.

Fifty-six percent of full-time MBA programs said application volume from domestic candidates was up this year, a significant reversal from recent years where growth was flat. At NYU's Stern School of Business, applications from domestic students outpaced those of international students this year, said Isser Gallogly, executive director of MBA admissions. "We saw a tipping of the scales because domestic was a little higher than international growth this year," he said.

That's not to say interest from international applicants is subsiding. Applications from students abroad, particularly those in India and China, remain strong.

Growth in Part-Time Programs

India is fueling most of the growth in international applications seen by full-time programs in the U.S., with 64% of B-schools reporting India as the country from which they received the greatest number of applications. "With India, the numbers were already high and for some schools, the numbers can't get much higher," Edgington said.

Another area showing considerable growth is part-time MBA programs, where applications increased "noticeably" over the past year, Edgington said. More than two in three part-time MBA programs reported that application volume increased over 2006 and the trend is expected to continue over the next few years, she said. Women and minorities are driving the increase in application volume, drawn by the more flexible schedule and time frame offered by such programs. Not surprisingly there is a larger proportion of women in part-time programs (37%) than among full-time programs (27%).

PhD Applications Decline

While the appeal of an MBA remains strong, the lure of a PhD in management education appears to be on the decline. PhD programs were the only program surveyed in the report that did not report strong application volume from applicants this year. Most PhD applicants—two out of three—are foreign citizens, many of whom are now opting to apply to MBA programs instead, Edgington said.

"What we see now is that the international prospective students see the MBA as more valuable than PhD in terms of global currency, name recognition, and employer respect," Edgington said.

The PhD decline confirms fears in the B-school world that there will be a shortage of qualified professors in coming years. With application volume expected to increase over the next three years, B-schools may find themselves overwhelmed with students and lacking professors. It's a problem the next generation of B-schoolers may want to tackle.

Damast is a reporter for BusinessWeek.com.

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