Opening doors: a scholarship enabled Cristel Bolivar to take a place on the INSEAD MBA © Magali Delporte for FT
Without the €45,000 scholarship, Cristel Bolivar would have given up MBA places at INSEAD in France and Singapore.
“I don’t think I would be able to raise the money otherwise,” she says. As well as the €91,225 tuition fee she paid, wage inflation in a tight labor market has increased the opportunity cost of taking time out of the workforce to study.
This matters less to Bolivar than to many ambitious students, as the Filipina was working as an independent financial consultant in Asia before enrolling in INSEAD in 2022. “I have no regrets. I’m sure the MBA will bear fruit,” she says, adding that she believes it will enable a switch to a stability-linked career in Europe.
But many people who might otherwise apply for an MBA are choosing to stay in the job market rather than put their careers and earnings on hold. According to the Graduate Management Admission Council (GMAC), which runs the GMAT entrance test, global applications to business schools in 2022 declined by 3.4 percent from the pandemic high.
Despite high inflation and fears the worldwide economy is headed for recession, unemployment is low and companies are offering pay raises to attract and keep talent. This makes MBA less attractive for some. “If you’re a strong performer, no one wants to let you go,” says Benoît Banchereau, executive director of MBA marketing and admissions at HEC Paris.
Global MBA Ranking 2023, Also Free Online Events
The ranking report for 2023 is published on 13 February. Register here for Spotlight on MBA Online Programs February 22, including advice on choosing courses, applying, and trends.
He reports a rise in students dropping out of their MBA courses before the start of term, as companies are prepared to cover the cost of the €9,000 deposit to keep them in the workforce. HEC responded to the drop in demand by reducing the size of its MBA class in 2022 from 350 to 300 candidates.
Banchereau says the decrease also reflects a process of normalization after two bumper years for applications. MBA demand is countercyclical; It grows as the economy contracts and workers seek shelter and a way to upgrade credentials. This was the case in 2020, when the pandemic hit and demand grew by 2.4 per cent year-on-year. Demand was also boosted by schools extending application deadlines and waiving entrance-testing requirements.
In 2021, applications fell as economies recovered, and this trend continued in 2022. Stacey Blackman, a US-based admissions consultant, sees this as an opportunity for prospective students. “This is a more favorable time to apply, as you will be more likely to get in because of the lack of demand for MBAs,” she says.
But it is expected that the coming recession will soon accelerate the demand for MBAs. Many business schools have introduced recently laid off employees to technology companies including Meta and Twitter. Northwestern University’s Kellogg School of Management waived standardized test scores for those former employees.
“Many economists predict we’re heading into a recession,” says Greg Hanifi, Kellogg’s associate dean for degree programs and operations. “That creates more interest in going back to school and pursuing an MBA.” He says the number of people starting MBA applications has increased during the test-waiver period, which started in November and has been extended till April.
One bright spot for business schools was a surge in applications from international students in 2022, especially those applying to programs in the US, as COVID travel restrictions eased. But that hasn’t made up for the decline in US domestic demand, says Joy Jones, GMAC’s new CEO. However, she says, candidates in Asia are increasingly opting to study locally, particularly in China, where strict pandemic controls limited student mobility.
recommended
The big question for business schools is whether they may have priced some students out of the market. Over the past decade, the average fee for an MBA program as ranked by the FT has increased by about 29 percent in dollar terms, slightly higher than the average salary.
“It’s a really big issue, because the sticker price is so high that more people see it as a risky proposition,” says Illian Mihov, Dean of INSEAD. “With interest rates rising, we will see even more risk aversion and more concern about borrowing,” he says.
Despite this, INSEAD is increasing tuition fees by 6.4 percent (up to €98,500) for January 2024 because of inflation and to compete with other schools on salaries for professors. At the same time, INSEAD is raising funds for scholarships to attract a wider entry of students.
recommended
Low demand has forced some schools to discontinue their MBA programs. In August, Penn State’s Smile College of Business said it would discontinue its two-year residential MBA in 2024 and convert to a one-year program. The school’s dean, Charles Whitman, attributed the decision to declining interest in the traditional program and a growing demand for more flexible learning options.
Several other US schools, including the University of Iowa, the University of Illinois and Wake Forest University, have discontinued their MBAs in recent years. Bill Boulding, dean of Duke University’s Fuqua School of Business, points to “quality flight,” whereby students apply only to elite institutions. “That’s why you’ve seen this reduction of some of the MBA programs gradually, over time, and I expect that pattern to continue,” he says.
While he believes the skills imparted through an MBA – which Fuqua continues – remain relevant, he says there are other ways for people to acquire them, such as taking online courses. . “The reality is you don’t have to have an MBA to be in the business community,” says Boulding. “It’s not a golden ticket.”
Source: www.ft.com
