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Tuesday, August 08, 2006

BusinessWeek Article: B-School Hip Again

By Kerry Miller

B-School Is Hip Again
Applications to full-time MBA programs are on the rise after a three-year decline, according to a study by the Graduate Management Admission Council
Reversing a three-year trend, applications to the majority of full-time MBA programs are on the rise, according to new research released by the Graduate Management Admission Council (GMAC) on Aug. 7.

Applications to full-time programs have been decreasing since the all-time high seen in 2002, when the dot-com bust and September 11 had people running to B-school to weather the economic storm (see, 8/9/05, "MBA Applications: Still Skidding"). Yet this year's data show applications to full-time MBA programs returning to 1999 levels, even with more candidates opting for the increasing array of flexible MBA programs being offered. Much of the growth in application volume among full-time programs in the U.S. has come from international applicants.

"The bloom is back on the rose," says David Wilson, GMAC president and chief executive. "We're seeing people applying to all types of programs in substantially greater numbers than in the past."

BULL MARKET FOR MBAs. Admissions officers have favorable economic and demographic conditions to thank for the uptick in applications. After several rough years, it's once again a bull market for MBA job-seekers: On-campus recruiting, job placement, and post-MBA salaries are all up (see, 5/30/05, "A Heady Job Market for MBAs"). And with 25- to 29-year-olds making up an increasingly larger percentage of the population in the U.S. and in Asia, the raw numbers of students eligible to apply to B-school is set to keep application numbers up throughout the decade.

The GMAC received data from 230 programs at 147 schools, 85% of them in the U.S.

Much of the growth seen by full-time programs in the U.S. has been fueled by a rise in applications from abroad, Asia in particular. Three-quarters of U.S. full-time programs reported an increase in international application volume, with nearly a third (29%) of those reporting significant increases. This mirrors an increase in registration volume for the GMAT exam, which this year increased by 2.8% within the U.S. and 6.3% outside the U.S.

"GOLD STANDARD." Burgeoning economies in Asia have increased the demand for high-quality global managers with MBAs(see, 1/9/06, "China's B-School Boom"). A different survey conducted this year by the Council of Graduate Schools reported that international applications to graduate business programs in the U.S. were up 7% over last year. The majority of the increase came from applicants in India and China, with a significant increase from Korea as well.

While the number of local MBA programs available in countries like India has exploded in recent years—increasing the visibility of the MBA—growth hasn't yet caught up with demand (see, 9/13/05, "India's MBA Gold Rush"). And an MBA from a U.S. institution still remains "the gold standard," says Rod Garcia, director of master's admissions at Massachusetts Institute of Technology's Sloan School.

Another factor in the growth in international application volume: The visa process for foreign students has become easier and more efficient since the initial tightening of border security after September 11. The Homeland Security Dept. and the State Dept. have both undertaken policy changes to remove barriers to foreign enrollment in U.S. schools, including increasing the number of days that a student has to apply for a visa.

"The implicit message that accompanies that is that international students are being welcomed back to the U.S.," says Robert Widing, senior vice-president of academic programs for Thunderbird in Glendale, Ariz.

MORE FEMALE INTEREST. Among domestic applicants, it seems the majority of growth will continue to be in part-time and accelerated programs, rather than in the traditional full-time two-year MBA. Nearly two-thirds (62%) of part-time programs reported an increase in application volume compared to 2005, with a fifth of those reporting significant increases. About half (51%) of full-time programs in the U.S. reported an increase in domestic applications in 2006 compared to last year, but only 12% of those reported a significant increase.

Many programs have also shown gains in the number of female applicants. In a marked change, about a fifth (21%) of U.S. full-time programs reported a significant increase in application volume among females compared to last year. Part-time and executive programs have continued to see small but steady increases in applications from women over the past several years.

Increased outreach efforts are likely one factor behind the rise in applications from women. About half of all full-time programs have special outreach efforts targeted at female applicants (see, 10/30/05, "What Women MBAs Want: Role Models"). Schools with outreach programs were 25% more likely to report increases in application volume among women.

Thomas Caleel, director of MBA admissions at the Wharton School at the University of Pennsylvania, says this year's numbers are all positive signs of things to come for full-time MBA programs. "We are cautiously optimistic that the next few years should be quite good," he says.

While skeptics will no doubt continue to question the value of the MBA degree (see, 3/20/06, "Is the MBA Overrated?"), the healthy application numbers say that—for now, at least—the MBA is here to stay.


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