US business schools hit by weaker demand for two-year MBA

Latest GMAC figures show smaller programmes likely to be worse hit

Applications for full-time two-year MBA courses fell in most US business schools last year, according to the latest figures from the Graduate Management Admission Council, the owner and administrator of the GMAT admission exam.

The global trend for the flagship qualification of the business education sector also remained downbeat, according to GMAC’s research.

In the US, 53 per cent of schools running full-time two-year MBA courses reported a decline in application numbers in 2016, while 40 per cent reported growth.

The drop suggests a shift in attitudes to business education due to increased job insecurity and the opportunity to study overseas or online, with prospective students opting for courses that take less time to complete and the highest-ranked schools seeing an increase in applications.

Meanwhile, the percentage of business schools worldwide reporting growth in applications declined for a third straight year, from 61 per cent in 2014 to 57 per cent in 2015 to 43 per cent this year.

Smaller courses tended to be worst hit while those with larger student intakes experienced growth.

Matt Symonds, a co-director of Fortuna Admissions, a business school admissions consultancy, described a “flight to quality”, with the US market fragmenting between a top tier of schools and the also-rans.

“There is a greater focus on the opportunity cost, and two years of full-time study needed for the typical US MBA does seem prohibitive to many,” he explained.

GMAC said Europe constituted a bright spot in its 2016 findings, with 65 per cent of European graduate business programmes reporting an increase in applications, compared with 46 per cent in the US and 41 per cent in East and Southeast Asia.

Applications for one-year MBA courses increased in 57 per cent of the schools that offer them worldwide, according to the GMAC figures, up from 51 per cent in 2015.

IESE Business School in Barcelona is one of several highly ranked European business schools to increase its MBA course size in the wake of increased admission numbers, growing its student intake this year by 22 per cent.

“We are seeing higher quality students that are better prepared,” said Iziar de Ros, IESE’s admissions director, noting that the average score on the GMAT exam applicants must take rose from 680 last year to 690 in 2016.

For the second consecutive year, a majority of online MBA courses reported growing application volumes.

However part-time MBA courses continue to struggle to raise demand, according to the GMAC figures, with just 43 per cent of these programmes reporting a rise in applications compared with half reporting a decline in volumes.

Sangeet Chowfla, GMAC’s president and chief executive, said: “Business degrees continue to be one of the most sought after educational credentials.”

But he added that the increasing number of tailored business qualifications, such as the master in data analytics degree, meant that there was a more “mixed picture” in terms of demand for specific business schools.

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