New data released this month from the General Management Admissions Council (GMAC) shows that U.S. graduate business schools are still suffering from a decrease in international applicants. Just under half, 48 percent, of U.S. programs reported in the GMAC Preliminary Application Trends Survey that they had received fewer international applications at this point compared to the same time last year. This survey, which collects mid-cycle application data from graduate business schools, includes data from over 700 graduate business programs around the world. Among full-time two-year MBA programs in the U.S., about 68 percent reported application declines from international students, while another 9 percent reported that applications were flat. Fewer than a quarter of the programs reported that applications were up. Among the 68 percent reporting declines, almost one-third of respondents reported that the applications were significantly down, 17 percent reported moderate declines, and 19 percent reported slight declines.
This report coincides with data that GMAC released last week from the Prospective Students’ Survey. While prospective students’ plans to apply to international programs have stayed relatively flat over the last few years, hovering around 58 percent, there have been changes in students’ location preferences. Among applicants who plan to apply to international programs (not within their country of residence), 62 percent plan to apply in Western Europe, with U.S. programs following at 61 percent. While the percentages are close, this is a switch from 2017 when the U.S. was the most named location at 63 percent followed by Western Europe at 58 percent. Prospective students were also asked to select their one most preferred location. Both the U.S. and Western Europe received equal proportions of respondents at 40 percent each. The longer-term trend, however, shows a gradual decline in preference for the U.S. between 2009 and 2016, with a sharper downturn in the last two years to 40 percent; the exact opposite trend occurs for Western Europe, which shows a gradual increase in preference with a more marked uptick to 40 percent since 2016.
Among all candidates, those applying domestically and internationally, the U.S. is still the most popular destination to apply for an MBA. However, the percentage of all applicants planning to apply to U.S. programs declined from 2017 to 2018 by three percentage points, from 68 to 65 percent, while interest in Western Europe increased from 37 percent to 42 percent. Interest in Canadian programs increased just one point, to 20 percent.
The decrease in international student applications, combined with the strong economy, and the rising cost of MBA programs, appears to be impacting overall application volume to U.S. business schools. Poets and Quants published an article last week declaring it a “buyer’s market” for admitted students. Though acknowledging that official numbers have yet to be released, according to admissions officers, there have been lower application volumes again this year, even among the top ten schools. This makes for the second year of decreasing applications, even amongst the highly competitive programs. Admitted students are reportedly receiving higher than normal numbers of acceptances from rival schools, as well as generous scholarship offers. The Poets and Quants article quotes an unnamed admissions officer from a top-ten ranked business school as saying, “When you have this many schools down and many are down for two years in a row, yield is going to be a nightmare because everyone has had to dig deeper in the pool. I would not be surprised if schools had to go deep into their waitlists or have to shrink their classes. It’s the collective impact of so many schools being down that is unique.“ Yield, which is the total number of admitted students who matriculate into a program, is important for balancing both the selectivity and revenue components of the program.