Overseas applicants fall away for US business schools

Overseas applicants fall away for US business schools
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James Roe was born and bred in Michigan, the cradle of the US auto industry in the heart of the manufacturing midwest. After graduating from Western Michigan University and an internship at tyremaker Continental in Detroit, he took an executive job at Lear Corporation, the car seat and electrical distribution systems manufacturer located in the south-west corner of the state.

So this year, when Mr Roe, 28, rejected places on US MBA courses and instead emigrated to Germany to study at Mannheim Business School, friends and colleagues were taken aback.

“They could not comprehend what I had done, because to them the US has all the best business schools,” Mr Roe says. But he views the global MBA landscape differently, and he plans to remain in Germany after graduation. “They have great companies here, known for treating their employees very well.”

Mr Roe is part of an established trend. Applications to US business school courses fell 6.6 per cent in 2018, according to figures published on Monday by test administrator the Graduate Management Admission Council. The decline is now in its fifth successive year.

Nearly 60 per cent of US programmes reported a decline in applications. In previous years, the highest ranked and most prestigious US schools appeared to be immune, as they had continued to attract more applicants despite an overall drop. But as the FT reported two weeks ago, even prestigious institutions such as Harvard Business School have experienced a fall in interest in 2018.

This year, applications across 549 degree programmes worldwide covered by GMAC’s research were down slightly — by 0.02 per cent at 291,799 — with 51 per cent of schools receiving fewer applications than in 2017. But the contrast between the US market and the rest of the world is stark.

In the Asia Pacific region, for example, where rapid economic growth and a high regard for education has fuelled interest in business masters degrees, applications were up 8.8 per cent this year.

Schools in Canada and Europe reported rises of 7.7 per cent and 3.2 per cent respectively, both helped by strong interest from overseas students, who are mobile and keen to learn from other cultures.

Decline in the US market is blamed by schools on a combination of an improving jobs market at home that raises the opportunity cost of returning to college, and increased competition from cheaper overseas institutions, many of which have risen in global rankings, and from so-called “alternative providers” of business education.

Samantha Barlow quit a job in Colorado Springs to study for an MBA at ESMT Berlin. “Europe feels like a web next to America’s island,” she says, noting that she has found it easier to find people in the German capital to support her ambitions to create a social enterprise.

Many US course heads are most worried by a decline in overseas applications. Domestic applications among the 400 US schools surveyed by GMAC were down 1.8 per cent. But those from overseas fell 10.5 per cent.

Columbia Business School in New York has responded with free legal help for overseas students seeking work after graduation, to allay fears that US employers are hostile to foreign hires.

“The rules haven’t changed, but the application of those rules has changed,” says Michael Robinson, associate director of MBA admissions, noting that the political rhetoric from Washington “has not been helpful”.

“It is too soon to predict if the last year of falling MBA application volume will become a tailspin,” says Judith Hodara, a director of Fortuna Admissions, which offers guidance to business school applicants. She adds, however, that overseas candidates are turned off by “strong” political rhetoric and a toughening of visa regulations in recent years.

“They know that US companies are crying out for the skill sets that their MBA will deliver, but they are postponing plans or looking for greater certainty elsewhere,” Ms Hodara says.

It is not just the MBA — the flagship business school qualification — that is suffering. Applications to 71 per cent of masters in management courses have fallen, alongside 57 per cent to masters in finance courses and 68 per cent to masters of accounting programmes in the US this year, according to the GMAC data.

The reverse has been the case for Imperial College Business School in London, where applications for its full-time MBA course have risen 45 per cent since 2015. The 10-month degree programme is both shorter than the typical US MBA and cheaper at £52,000 (about $67,800). Fees for the two-year programme at Stanford Graduate School of Business in California are $141,180 (about £108,000).

Imperial benefits from a diverse intake, which enriches classroom debates, according to Hannah Daniels, assistant director of the MBA courses.

European schools are reliant on overseas students. Just 23 per cent of students to European schools were home grown. In both Asia and the US, the proportion is about 60 per cent.

The lack of overseas students is not a problem in Asia because domestic demand is booming. This competition for places is often what drives applicants in that region to study overseas. There are, for example, as many Chinese students as French nationals on the full-time MBA programme at Essec Business School near Paris.

The course’s specialisms in fashion and hotel management attract foreign candidates, says Jeanine Picard, one of the MBA’s programme directors. “Chinese students are particularly attracted to the luxury track,” she says. “They want to work for the companies whose clothes they wear, like Chanel.”

Demand from overseas students is compensating for a drop in local applicants at many European schools.

Applications from foreign nationals rose at 63 per cent of the European schools surveyed by GMAC. But only 39 per cent grew domestic applications.

The ultimate challenge for any business school is to remain relevant when there are more options available for potential students than ever before.

Layla Oliveira, 29, started an MBA programme in her native Brazil. But she quit the course and moved to London, where she is completing a masters degree in digital experience design with Hyper Island, a start-up provider offering business education for the creative sector.

The course has no classroom teaching, but focuses instead on “learning by doing” by working on projects with real companies. “If you want to work for a fintech, I would say try Hyper [Island],” Ms Oliveira says.



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