Harvard Business School

Declining MBA Applications Prompt Business Schools to Change Program Delivery Models

Late last month the University of Illinois at Urbana-Champaign announced its decision to shut down its two-year MBA program and reallocate funds to its online MBA. Just prior to this announcement, earlier in May, the last two-year MBA class graduated from the University of Iowa Tippie School of Management.

And they’re not the only ones. Wake Forest University, Virginia Tech, and Stetson University in Florida have also cut their two-year MBA programs. According to a recent Wall Street Journal article, “Between 2014 and 2018, the number of accredited full-time M.B.A. programs in the U.S. shrank nine percent to 1,189, with schools reporting 119 fewer two-year degrees in the most recent survey by the Association to Advance Collegiate Schools of Business.”

At the University of Illinois, the numbers told a clear story: In 2015 the incoming full-time, two-year MBA program had 74 students, in 2018 it had 49, and the current matriculation for the fall of 2019 is 38 students. Applications for the online MBA program, however, have tripled since 2016. Jeffrey Brown, dean of the business school at the University of Illinois, said the full-time MBA program will lose two million dollars this year. “This was an easy business decision to make, and a relatively easy educational decision, but it was an extremely hard call to make from the emotional side of things,” said Brown.

With the documented lackluster application volume to MBA programs and amidst a strong economy, some schools are focusing on offering competitive online MBA programs, as well as more specialized master of science degrees. The Wall Street Journal noted that among the business schools included in the aforementioned AACSB survey, there were 140 new specialized master’s programs in 2018, a 16 percent jump from 2014. And the number of online MBA programs doubled to 390.

Believing that one component of the decline in applications may be due to the steadily increasing costs of the two-year MBA, Harvard Business School and University of Chicago’s Booth School of Business have both decided to hold tuition costs steady while also increasing scholarship funds.  An article in Forbes recently noted that the “decades-long steady march of escalating price increases” has been consistent across almost all business schools and has typically exceeded the cost of inflation. The article notes that last year, tuition costs increased at variable rates from 11 percent at MIT’s Sloan to 1.6 percent at UCLA’s Anderson. Chicago Booth’s decision to freeze tuition garnered praise from Dean Edward Snyder of the Yale School of Management who said, “I think that is a brilliant move… It’s not because of weakness. It’s because of strength, and it’s the first school that is stepping back and saying we are not going to keep going down this path... It doesn’t indicate how the business model is going to get redone, but it is a signal that it needs to change.”

While online models may not be able to offer the corporate recruiting and networking opportunities, or prestige that the full-time, two-year MBA provides, the programs appear to meet a need in the market for developing business skills. And they do so with added flexibility and without the high costs of tuition and time out of the workplace.

This is good news for prospective students. The online route is providing a closer substitute for educational delivery than we’ve seen in the past. And for those still interested in the full-time, two-year model, lower application volume could mean a higher likelihood of securing both a coveted spot at a top ten school, as well as scholarship money.

Application Volume Drops at Top MBA Programs in US

The Financial Times reported this week that four of the most prestigious business schools in the US saw a drop in MBA application volume for 2018 matriculation. Harvard, NYU Stern, Duke Fuqua, and Berkeley Haas each reported a decrease in applications from 2017 that ranged from 4 percent to 7.5 percent.

According to Graduate Management Admission Council (GMAC) data, in the US full-time two-year MBA programs’ application volumes have been in decline since 2014. However, this is not consistent across programs. In 2017, those with larger classes (201 or more students) accounted for 6 percent of MBA programs, but 55 percent of applications and 32 percent of enrollments. Larger schools were more likely to report application volume increases in 2017, while smaller were more likely to have experienced decreases. This decrease now appears to have expanded to the large, prestigious MBA programs.

While the decline in applications has not yet affected Harvard’s 11 percent acceptance rate or median GMAT score of 730, it was fairly significant at 4.5 percent. Similarly, NYU Stern reported a nearly 4 percent drop, while Duke Fuqua and Berkeley Haas were at about 6 percent and 7.5 percent respectively.

In contrast, MBA application numbers globally continue to increase. “When looked at internationally, graduate business education is a growth stock. Applications to Canadian, European, and Asian schools are increasing at an enormous rate,” said Bill Boulding, Dean of Duke Fuqua. Other admissions representatives who spoke with the Financial Times pointed out a multi-faceted cause for the lower application rates in the US:

  • Decreasing numbers of international applicants to US schools, due to a less welcoming political climate, as well as increasingly rigid immigration requirements.

  • Increasingly competitive European and Asian MBAs, offered in English, for those wanting a global experience. Some of these well-ranked programs also offer expedited timelines.

  • Increasing tuition and a robust economic climate in the US, which increases the cost of an MBA in both direct costs and wages-lost.

  • Increasing interest in part-time, online, and/or one-year MBA programs.

Take-aways for prospective MBA students

  • If you have dual-citizenship, don’t forget to note this on your application. It could be advantageous for you in the admissions process.

  • Be sure to highlight your international experiences and interests in your application. Admissions officers want to create a diverse student body and, with fewer international applicants, these experiences are likely to stand out more.

  • Consider that in strong economic climates, with low unemployment, schools are likely to receive fewer applicants. While this may not significantly change acceptance rates at all of the most prestigious programs, it can provide some benefit with regard to both admissions likelihood, as well as the possibility for substantial merit-based scholarships.

  • Choose your MBA program carefully, rather than automatically selecting a full-time, two-year program. Learn from these trends, by thinking carefully about the type of MBA that will benefit you most. International programs, one-year or expedited programs, and part-time cohort-based programs can all be worthwhile for you and your career.

MBA Interviews: When the Interview Requires More than an Interview

To get to know applicants better, some MBA programs will ask interview participants to submit additional materials or participate in supplementary activities. We have profiled a few of these exercises below to provide you with additional insight. 

1.       Harvard Business School, Post-Interview Reflections

Description: Within 24 hours of the interview, candidates are required to submit a written reflection through Harvard Business School’s online application system. The submission is not a formal essay. Rather, it should be written similarly to a post-meeting summary one would write to a colleague or supervisor at work.  

Rationale:  Shortly after instituting the Post-Interview Reflection, Harvard’s Admission Blog described the exercise as a chance to both get students’ opinions regarding their interviews, as well as a real-world practicum. Professionals routinely need to send emails summarizing meetings and offering assessments and their ability to do this well is critical for workplace success.

Your Strategy: Be genuine and think critically about the interview. What were the highlights? What could have gone better? Were there remaining “gaps” after your interview, and if so, how do you wish you could have addressed these? The post-interview reflection is an opportunity for you to demonstrate real-world critical thinking and writing skills, as well as offer any information that you feel you did not adequately explain in the interview. In other words, Harvard is not expecting your most polished product, but rather a thoughtful assessment of your interview coupled with a compelling communication. As such, this piece should not be crafted prior to the interview, adapted from another essay, or used as additional resume space. However, you may want to take some time immediately after your interview to make notes on areas that you’ll want to include in your submission. Then give yourself a bit of reflection time prior to producing your final product. You’ll want to make the most of this final opportunity to show the admissions committee who you are and how you think.

2.       MIT Sloan, Pre-Interview Essay Submission

Description: Those invited to interview at Sloan will be asked to answer the following question: The mission of the MIT Sloan School of Management is to develop principled, innovative leaders who improve the world and to generate ideas that advance management practice. We believe that a commitment to diversity, inclusion, equity, and well-being is a key component of both principled leadership and sound management practice. In 250 words or less, please describe how you, as a member of the MIT Sloan community, would work to create a campus that is welcoming, inclusive and increasingly diverse. 

Rationale: The interview process is about getting to know applicants more thoroughly. This is a chance to not only demonstrate that your values match those of MIT Sloan, but that you are willing to proactively work to put those values into action during your business school tenure.

Your Strategy: Your response to this question should go beyond what clubs and extracurricular activities you will participate in at Sloan. Rather, it should examine how you will demonstrate leadership in creating a diverse environment and promoting wellbeing among your peers. Using examples from your past leadership experiences, demonstrate your ability to cultivate a positive culture. And be sure to clearly link the perspective you gained from these experiences to what you hope to accomplish at Sloan. 

3.       Northwestern Kellogg, Video Essay

Description: In responding to several short video essay questions, Kellogg’s video essay allows you to further demonstrate what you will bring to the community in an interactive way.

Rationale: Kellogg states that the video essay questions are “designed to bring to life the person we have learned about on paper.” Student culture is a key focus in Kellogg’s admissions efforts, and they want to get to know applicants as fully as possible to ensure they construct a close-knit and collaborative class. As such, this is an opportunity to showcase your personality, values, interests, and goals rather than worrying too much about the “correct” or expected response. 

Your Strategy: While the video essay may feel uncomfortable at first, it is an excellent opportunity to allow the admissions committee to know you better. Kellogg provides practice questions that will help you to get comfortable with the format and the technology, and we recommend taking advantage of this. Prior to the video essay, review your submitted application and think through your personal goals and interests and how those align with Kellogg. While you do not want to look scripted in your responses, you do want to be prepared, which will help you to relax and show your personality.

4.       University of Michigan Ross, Team Experience 2.0

Description: Those invited to interview at Ross will also be invited to participate in the Team Experience 2.0. In this exercise, teams are tasked with developing a business challenge and solution using random words. Then, they are required to present the case to an evaluator, who will ask each group a follow-up question based on the solution they present.

Rationale: The Ross Admissions Committee says that the goal of the exercise is to assess how an applicant can contribute to and problem-solve as a team-member in real-time. This exercise will mimic the format of most business school group work and will demonstrate to the admissions committee your ability to lead, collaborate, and contribute to a group’s shared goal.  

Your Strategy: As you take part in the Team Experience 2.0, you will want to consistently show your leadership and collaboration abilities. This includes ensuring that all members of the team are participating, celebrating and enhancing good ideas, kindly but productively questioning your teammates, and ultimately encouraging the group towards a decision. Similar to the Wharton Team Based Discussion, you will succeed to the extent that your team succeeds. As such, do not become overly competitive or domineering in the discourse. Instead, look for the ways in which you can help your team to determine the best solution.