A drop in MBA applications is usually a sign that times are good. What does the decline say about the current recovery?
Applications fell in 2011 for two-year, full-time MBA programs, according to a new report by the Graduate Management Admissions Council, which links the downward trend with changes in the economic environment.
Two-thirds of graduate schools of business reported a drop in applications to full-time, two-year programs, while most part-time and executive programs had level or slightly higher numbers of applicants in 2011 compared to 2010, reports the nonprofit council, which administers the GMAT exam used by business schools to assess applicants. The group has conducted its annual Application Trends Survey since 2000.
“The caution in this year’s survey for full-time MBS programs is unsurprising in the current economy as students weigh the financial and time commitments required to pursue a graduate business degree,” Dave Wilson, head of the council, said in a prepared statement. Yet, programs specializing in finance saw an increase in applications, as did programs specializing in management. More than half of part-time and executive programs saw the same or slightly higher numbers of applications. According to Wilson, the research shows that many people continue to value “graduate management degrees as investments in their career and future.”
Millionaire Corner research, which finds that the wealthiest investors are the most likely to hold an MBA, points to the link between an advanced business degree and financial success. Twenty-seven percent of investors with a net worth of $25 million or more have a master’s in business administration, compared to 3 percent of investors with a net worth between $100,000 and $1 million. The share is 12 percent for investors with $1 million to $5 million, and 17 percent for investors with $5 million to $25 million.
Historically business school applications have moved inversely to the economy so that when the economy improves, business applications go down. When the global economy slowed in 2001-2002, applications to MBA programs increased, said the council. Applications dropped off as the economy gained steam and bottomed out in 2004 and 2005. In the most current downturn, applications rose in 2008 and peaked in 2009, then began declining again, the council said.
Nearly half of MBA programs reported a growth in applications from foreign students with the greatest numbers coming from China and India. Foreign students currently make up 53 percent of full-time MBA program applicants.