Business School Applications Drop for Third Year In a Row

Now, before we draw too many conclusions, let us caution that we have seen no evidence of a concommitant rise in divinity school applications.

So we're thinking this trend is probably not evidence of a sudden change in societal ethics.

The decline in B-school applications is curious, however. In past recessions, applications to professional schools have generally increased as students wait out the attendant hiring freezes while indulging in a little resume and skill enhancement on mom and dad's dime. That the corporate titans of tomorrow are choosing to sit out the dance this time may be evidence of several factors.

First, mom and dad - broadly speaking - may well have less money to throw around after the current applicant pools' older siblings destroyed several trillion dollars of savings in 2008 with their shiny new financial engineering skills. Second, Ivy League universities have been sending as many as 70% of their graduates to Wall Street in the past five years, many of whom have made out quite well without the extra degree. So the financial field is now a tad crowded and the competition more intense. Finally, as new regulations begin to bite, government stimulus ends and banks, consulting firms, et al have to make money the old fashioned way - by earning it - financial services firms are laying off tens of thousands of slightly older MBAs. As BB King wailed, 'the thrill is gone.' JL

Melissa Korn reports in the Wall Street Journal:

Thinking of applying to business school? Now may be a good time. Applications for two-year, full-time M.B.A. programs that start this fall dropped an average of 9.9% from a year earlier, according to new data from the Graduate Management Admission Council, which administers the Graduate Management Admission Test. The decline marks the third year in a row that applications have fallen.

One-third of full-time M.B.A. programs reported drops of more than 10%, according to the survey, which included 649 M.B.A. and other business programs at 331 schools world-wide
Historically, interest in graduate school has increased when the job market soured, but the prolonged uncertainty about future growth has discouraged some prospective M.B.A. applicants. This, despite the fact that some companies that have traditionally helped students pay their way through business school haven't altered their policies. Spokespeople at Goldman Sachs Group Inc., Credit Suisse Group AG and Morgan Stanley said they aren't changing the amount they contribute to business-school tuition.

"They'll stay in their jobs until they see that there'll be a return on this investment," said Wendy Huber, associate director of admissions at the University of Virginia's Darden School of Business. "They want to know that recruiters will be waiting in line." Applications for Darden's full-time M.B.A. program fell "roughly 10%," Ms. Huber said.

Harvard Business School also wasn't immune. Applications for its full-time M.B.A. class entering this fall slid 4% to 9,134 from a year earlier, helping to boost the school's acceptance rate to 12% from 11%.

Part-time programs are struggling to attract students, too, with 46% reporting declines in application volume this year.

New York University's Stern School of Business had a 9.8% drop in applicants to its part-time program this year. "Most people who apply to that program are employed, and there are fewer working professionals these days," said Isser Gallogly, assistant dean of M.B.A. admissions. "People are not going to be applying to an M.B.A. program when they're trying to find a job," he said.

One bright spot for business education is specialized master's programs. Courses for management, accounting and finance all reported increased volume. Applications for these programs have risen in recent years as undergraduates have sought to beef up their credentials before hitting the job market.

Additional interest in the short, specialized programs comes as professional certification boards toughen entry requirements. For example, students wishing to become certified public accountants in certain states must now have 150 hours of college credit to qualify for the CPA exam, more than most get in an undergraduate program.

Applications for the Master of Finance program at MIT Sloan School of Management rose 3% for students entering this fall. Applications had already soared to more than 940 for the class entering in fall 2010, nearly eight times when the program was first introduced in 2009.

A similar spike occurred at Temple University's Fox School of Business, which introduced a new Master of Accountancy this fall.

But even though M.B.A. application volume has slumped, most schools report the quality of candidates, based on their GMAT scores, undergraduate transcripts and work experience, is getting stronger. "You're not getting applications from those who aren't serious," said Dave Wilson, chief executive of GMAC.

He also sees some improvement on the horizon. The number of people taking the GMAT this year increased through the end of July, and historically test taking has been a leading indicator of higher application volume soon after.