A sagging economy and a weak job market are providing a boost to B-school programs
Applications to business schools are surging, buoyed by a shaky economy and lingering fears over job security, the organization that administers the main business-school admissions exam said Aug. 26.
The Graduate Management Admission Council (GMAC) said that 77% of business schools surveyed by the group reported an increase in application volume in 2008, up from 64% in 2007. It's the second-largest year-over-year surge in applications to full-time programs since 2002, and the highest level of increase in five years, GMAC said. And early signs are that the upcoming admissions cycle will continue to be strong.
The strong demand for business school did not surprise admissions officers, who note that applications for MBA programs typically go up when the economy slides. A similar upturn was seen following the dot-com crash earlier in this decade.
Mid-Tier Schools Benefiting
Dave Wilson, president and CEO of GMAC, said in an interview that the faltering economy only explained some of the application surge. "There are a whole lot of factors that come into play during the application process, and the economy is certainly part of it, but not the only part" Wilson said. "The whole question of the value proposition of the MBA remains strong."
While applications are up across the board, the middle-tier business schools are reporting some of the sharpest increases, ranging from 25% to nearly 40% in the number of applications in some instances. At least some of the students are heading to business schools because they have lost their jobs or are worried about the future. Admissions officers said that they expect more of those students, including those who may have waited to see how the economy fares, to apply during the coming cycle.
One of the strongest indicators of student's desire to go to business school is whether they take the GMAT, the business-school entrance exam administered by GMAC. A record number of students took the GMAT this year, with the test being administered 246,957 times during this year's testing cycle, according to GMAC. Students can take the exam more than once. It is the fourth straight year of growth for the exam, the GMAC's Wilson said.
Smeal Sees 39% Gain
Admissions officers said they were taken aback by just how intense the demand was in the last application cycle. Carrie Marcinkevage, the MBA admissions director at Penn State's Smeal College of Business, said the school saw a 39% increase in application volume for this fall's entering class, up from a 7% year-to-year increase in the 2006-07 application cycle.
"It is awfully high. We knew we were gong to be getting more, but I think that number is a lot higher than we had anticipated," said Marcinkevage, who attributes the spike to the downturn in the economy and strong interest from international candidates. The GMAC said that last year, 54% of students applying to full-time MBA programs were students from outside the school's home country. GMAC surveyed 521 graduate management programs at 273 schools in U.S., Europe, and other parts of the world. About two-thirds of the schools are U.S.-based.
Other schools are reporting similar figures for full-time MBA programs. At Babson College's F.W. Olin Graduate School of Business, applications for the one-year full-time MBA program were up 36% for the cycle recently ended, the school said. Applications for Pepperdine University's Graziadio School of Business and Management's full-time programs were up 30%, about 18% of which are full-time MBA applicants, said Mark Mallinger, Pepperdine's associate dean for full-time programs. "Some may have lost jobs or they feel that the timing is right for taking two years out," Mallinger said. "If they're not likely to get promoted and, hence could get laid, off, they're thinking, 'Why not take two years off and take advantage of the situation?'"
Carlson Sees A 'Pop'
At the University of Minnesota's Carlson School of Management, applications are up 26%, said Jeff Bieganek, director of admissions at Carlson. "The economy is playing a large role," he said. "We're seeing a real pop."
Even top-ranked business schools, like MIT's Sloan School of Management, are seeing sharp increases in application volume. Applications were up 28% in 2008, up from about a 10% increase in the previous year. At NYU's Stern School of Business, the school received its second-highest number of applications on record this year, with a 20% increase in application volume.
While the largest spike in applications is in full-time MBA programs, applications are also on the rise in the part-time and executive MBA programs. GMAC's Wilson predicts that the part-time and executive MBA programs will be the next to see a significant jump in application volume because they largely cater to applicants who want to stay in their current jobs. "As the slowdown in the economy continues, we're going to see a shift to the part-time programs because people aren't going to want to leave work if they have a good job," Wilson said.
Waiting for Another Avalanche
Meanwhile, admissions officers at the full-time MBA programs are bracing themselves for another avalanche of applications. "I anticipate that it will be competitive, but I wouldn't put a number on it," said Julie Strong, MIT's senior associate director of MBA admissions. "At this point, we're telling people to apply early."
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