If you ever wanted an M.B.A. education from one of the world’s top business schools, this coming year may well be the best time ever for you to apply. That’s because a recession is just around the corner and M.B.A. applications have now declined at most of the best programs for the second consecutive year and will likely fall again this year until the inevitable economic downturn kicks in (see Apps To Major M.B.A. Programs Plunge Again).
Just look at how the odds have shifted in favor of applicants at some of the very best M.B.A. programs in the world. At highly prestigious Yale University’s School of Management, the acceptance rate for applicants jumped by nearly 44% in the past two years to 25% versus 17.4%. The average GMAT score for the latest entering class has fallen by six points since 2017 to 721 and the average undergraduate GPA has declined from last year’s peak of 3.71 to 3.64 (see Yale SOM Endures Another Rough Application Cycle).
Or consider Dartmouth College’s Tuck School of Business, a perennial top ten M.B.A. program. This past year, when applications to its full-time program plunged 22.5%, the school admitted more than one in three of its applicants: 34.5% versus a mere 23.3% a year earlier. That is a whopping 48% increase in acceptances in a single year.
Another stellar M.B.A. program, almost always in the top 20 of the best U.S. options, is Indiana University’s Kelley School of Business. At Indiana Kelley, applications nosedived from a high of more than 1,200 in the 2016-2017 cycle to just 741 this year, a 40.6% loss. The school lost 31.5% of app volume between last year and this year. In response, the school’s acceptance rate jumped an unprecedented dozen points to 50.1% for this years’ entering class.
At the University of Virginia’s Darden School of Business, one of the true gems in M.B.A. education with the best M.B.A. teaching faculty in the world, applications have fallen by 23.6% in the past two years. That decline was exacerbated by the violent protest in Charlottesville two years ago. In any case, the school is now accepting more than a third of everyone who applies, 36.3%, up from 24.5% only two years ago.
Truth is, the acceptance rates at Tuck, Darden and Kelley are among the highest ever reported by those schools and the same holds true for many other quality M.B.A. options. In fact, the declines at second-tier schools have been even greater and longer lasting, sending their admit rates into a territory never before seen. There is no reason, moreover, to think that applications will turn up this year given the continued strong economy and other factors that have contributed to the decline.
In other words, you can expect the already low acceptance rates at very good schools to move higher with this current M.B.A. admissions cycle. And this is at a time when schools are doling out record amounts of scholarship aid to candidates, often heavily favoring qualified young professional women, under represented minorities and males with high test scores. Amy Hillman, dean of Arizona State University’s W. P. Carey School of Business, says there has never been a better time for young smart women to apply to top business schools, all of which are also trying to reach gender parity in their incoming classes.
At this point, a recession is inevitable and it’s just around the corner. So students entering two-year M.B.A. programs next fall will very likely sit out the economic downturn and graduate into a recovery. If you beat the crowd and apply before demand for the M.B.A. swings up again you will face less competition for a coveted place in a prestige M.B.A. program. And you may very well avoid a very tough time at work or even worse, a recession-caused layoff.
“With an unprecedented decline in M.B.A. application volume at many business schools – including iconic, top-tier programs – there’s definitely a ‘perfect storm’ happening for prospective applicants,” believes Alex Min, CEO of The MBA Exchange, a top admissions consulting firm. “Deans and admissions committees are feeling strong pressure to fill available seats with qualified candidates, even if some of these individuals might not have been admitted in previous years when application volume was growing.”
In the current market there are several other factors that make the idea of heading back to business school even more compelling, notes Matt Symonds of Fortuna Admissions, a leading M.B.A admissions consulting firm. “With the Fed lowering interest rates last week the cost of borrowing to finance your studies has fallen,” he says, “and could well fall further. After many years of tuition increases that exceeded inflation, Harvard Business School and the University of Chicago’s Booth School of Business have both frozen tuition rates for 2019/20. Expect others to follow suit in the next year.” And now Columbia Business School and New York University’s Stern School of Business are both accepting the shorter and easier Executive Assessment as an alternative to the tougher and longer GMAT or GRE exams (see NYU Stern To Accept EA For Full-Time MBA Program).
Plus, some of the advantages of applying when application volume is low and a recession is on the way can be less visible to candidates. “The biggest argument for applying now is that the mere numbers don’t do the shift justice,” explains Adam Hoff, a Principal at Amerasia Consulting Group, an M.B.A. admissions consulting firm. “Rarely are the top candidates to M.B.A. programs completely unemployed, so it stands to reason that a ‘recession bump’ in application numbers comes in the pockets were an employer might be able to keep or promote a top-flight employee when times are good, but can’t afford to when things tighten up.
“This means, at least to me, that once a recession kicks in, you are going to see more PE associates unable to get a third year, more startup founders or early employees kicked back into the pool, high-flyers at companies who outrun the budgets, and even people from hedge funds and VCs who might normally stay in those worlds or go run search funds but now are willing to ‘invest’ in an M.B.A. for two years to ride out poor economic conditions. Basically, the number of people who come back into the applicant pool are disproportionately of high quality. All of which means that when apps are down – during economic high times – your advantage is even greater than it seems based on sheer numbers.”
Don’t expect this advantageous window to stay open all that long. “The M.B.A. slump, coming on the back of record application volumes in previous years, may not last very long,” adds Symonds. “Business schools are particularly prone to seeing an upswing in M.B.A. applications when the market heads south. When the dot-com bubble burst in 2001, Harvard Business School received the highest ever volume of applications the following year. With the collapse of Lehman Brothers and the worst financial crisis since The Great Depression, HBS and many other leading business schools again saw applications soar. Get your timing right, and you then graduate as the economy starts to pick up again, and companies start competing again for top talent.”
Bottom line: “There’s been no better time for M.B.A.-minded professionals to submit applications and even to expect scholarships if admitted,” adds Min. “That said, like all ‘storms,’ this one will not last indefinitely. Historically, M.B.A. application volume has ebbed and flowed based on external factors. At some point, the clouds will part and the sun will shine brightly on B-school demand. So, if attending an M.B.A. program is even a future possibility, taking action sooner rather than later in this current climate could be a smart move for many candidates.”