MBA Admissions: Gazing into the Crystal Ball for 2009 Applicants
It's nail-biting time for a lot of people. The business climate is stormy. The news is gloomy. Uncertainty thunders over the horizon.
So why am I going to attempt to predict the future? Because I've lived through downturns before. The recession that followed the dotcom bust and 9/11 caused a precipitous decline in MBA hiring and consequently in MBA application volume. It's instructive.
If articles start to appear about b-school grads without jobs, application volume will decline. Sharply. If hiring remains reasonable and most grads find jobs, even they don't receive super-sized bonuses, application volume will level off and perhaps decline slightly, but you won't see the dizzying drop that business schools experienced in 2002 and 2003.
One "leading indicator" of MBA application volume is GMAT test-taking and registration volume. For the first two months of 2008, those numbers have headed north, but mainly because of sizzling interest overseas.
"The number of GMAT registrations in the United States during the first two months of calendar year 2008 increased 5.53% compared with registration volume during the comparable period in 2007. Outside the United States, registration volume increased 24.22% during the period."
"The number of GMAT tests taken in the United States during the first two months of calendar year 2008 increased 7.08% compared with testing volume during the same period in 2007. Outside the United States, testing volume increased 21.92% during the period."
If the US economy remains in the dumps, I expect US b-school application volume to soften, especially if MBAs can't find jobs. Barring 9/11-type events or a sudden increase in the dollar's value, international demand for top business programs around the world will remain strong, probably stronger outside the US than in.
Implications: US MBA applicants could find opportunities if they apply this fall and take the MBA plunge in Fall '09. I expect that outside the top 10-15 schools competition will ease and applicants could gain entry to schools they didn't have a chance at this year. I don't think the softening will be as marked in the top tier. Overseas, US applicants may find that top international schools are much easier to get into and much harder to pay for.
For international applicants, especially those coming from countries like India that are over-represented in the applicant pool, competition will remain intense, especially in the top tier schools.
For those of you wanting to accrue the benefits of a timely or even early start to your '09 MBA admissions attempt, Accepted has two services just for you:
- Start Smart, our new, monthly mentoring program.
- Pre-season Consulting ($20 off during April) for those of you who just want to have a one-time consultation with an MBA admissions expert.
Time will tell whether this post is genuinely prophetic or just a symptom of April Fools' Day.
Linda Abraham
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Reader Comments (12)
Btw, I have noticed that you've pretty accurately predicted application volume in the past.
Also, don't jump up and down too much. My prediction of softer application volume was really limited to the US and predicated on stories of MBAs graduating without jobs. If the class of 08 has jobs and the drumbeat of dismal news isn't quite as loud in the fall, I don't think the decline you are hoping for will happen.
I don't really need a decline in apps. All I want is for there to not be a significant increase. If that happens, then I'll be happy and I'm comfortable with my positioning. So really it was the fact that you didn't foresee a big increase in apps - even if the job news wasn't terrible. Btw, I'm only applying to US schools so that's the only app volume I care about (although I'm also applying to the Top 15 which you expected would hold up the best). I'm also domestic (which seems to be an advantage at this point as international apps grow so much faster than domestic) but also in finance... so that's not going to help me.
Anyway, thank you for your time and thank you so much for your predictions!
Headline on Business Week, "Graduating into a recession" leads to an entire section with headlines like the following:
"It's Looking Grim For New Grads"
"Bear Stearns Recinds Offers"
"Recession Grads Survival Tips"
"Job Searchers Face a New Reality"
"Surviving an Economic Slowdown"
I think these are exactly the type of stories you are talking about. Linda's prediction moves closer to fruition...
These are the kind sof stories I was talking about. Stay tuned.
Curious to know where you got your info on a drop in applications in 2002/2003. I heard that HBS had a record for applications in 2002 (~10,000). And economy had been soft for almost two years at that point...
My thesis is that there will be a dramatic increase in applicants from the finance industry. Banks hired some their largest classes ever in last couple of years; explosion in PE world has meant spike in number of pre-mba analysts...many on both PE and banking side were able to move up with out MBAs while economy was hot. This will not be the case going forward.
Given the market events of this week, do you still feel the same way? There is a lot of talk of a tidal wave of applications about to hit admissions offices.
Thanks,
Ed
Mostly "no."I think events have proven my predictions largely wrong.
1) MBA's '08 were still hired in large numbers and at good salaries. I still believe that if MBA hiring declines, application numbers will head south. But at the moment potential applicants look at last year's hiring numbers and are attracted to the higher salaries, opportunities, and seeming security provided by the MBA. B-school appears to be a safe harbor.
2) If you look at my blog post today, you will see that I am now actually predicting intensifying competition among financial types as many flee uncertain jobs or lay-offs. Please see http://blog.accepted.com/acceptedcom_blog/2008/9/18/laid-off-how-will-it-affect-your-application.html .
3) If you look at GMAT test-taking and registration figures, you will see that as of Aug. 31, the overseas numbers were sizzling and much higher than the domestic numbers. The weak dollar is probably playing a role in the attractiveness of the US MBA overseas.
4) Every adcom member I talk to is experiencing greater interest in their events and anticipating a wave of applications this year.
Guess I had a faulty crystal ball on April Fools Day.