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Now Even Harvard And Wharton Are Struggling To Attract International MBA Students

US MBA courses have become a harder sell, opening opportunities for schools elsewhere in the world

Thu Oct 4 2018

BusinessBecause
As dean of a respected and popular US business school, Bill Boulding need not usually hard-sell its merits. But the long-serving leader of Duke University’s Fuqua School of Business in North Carolina, has had some tough conversations with anxious prospects recently.

Travelling in India, for example, a common question posed to him was: “Will we be safe in the US?”

The question appears to be a response to the rise of anti-immigration rhetoric and nationalism in the US, Bill says. “I’ve always viewed America as welcoming of people of all kinds from all over the world. To hear people, and parents ask if their kids will be safe—that’s heart wrenching.”

The perception that internationals are less welcome, respected, and valued is one reason for a 6% drop in in applications for Fuqua’s MBA course this year, Bill believes. The problem is not confined to Fuqua. Applications to US business school programs fell by 6.6% in 2018, according to figures from the Graduate Management Admission Council, released this week. That’s the fourth straight year of declines.

Where once the elite institutions such as Fuqua were shielded from the drop, due to their prestige and brand, even the top schools are now suffering. Harvard Business School, Wharton, Stanford GSB, Chicago Booth, MIT Sloan, Kellogg and Columbia have all reported drops in applications this year. “To my knowledge, we haven’t seen this before,” says Bill (pictured below).

International MBA candidates account for the majority of the decline, with GMAC reporting a 10.5% fall in overseas applications to US schools. Put off, in part, by the country’s anti-immigration sentiment, many are instead applying to programs in Europe, Canada and Asia, where applications have risen sharply this year.  

The reputation and capacity of non-US business schools have grown in recent years. The institutions are also usually cheaper than their US peers, with the shorter 12-month courses meaning students sacrifice less in salary.

In the US, courses typically run for two years and tuition fees have risen faster than salary increases, according to FT data. At Stanford in California, the total cost of the MBA is north of $140,000.


bill-boulding-duke


Rishika Choumal says the US “was never on my radar." Rather, the Indian began the one-year MBA at Germany’s ESMT Berlin earlier this year, which costs €43,500 ($50,000). “Europe seemed a lot more welcoming with respect to the social environment and promising in terms of job opportunities,” she says. “The MBA courses here are of relatively shorter duration and [are] more cost effective.”

She plans to work in Berlin on graduation, using an 18-month extension to her student visa to find a job. “Diversity is highly revered here by employers, which is symbolic of how open they are in embracing cultural differences,” Rishika says. In comparison, the US “seems regressive.”

One problem faced by international students at US schools is that US employers seem more reluctant to hire them—because of concerns about access to visas, which are now being more closely scrutinized under the Donald Trump administration. Fewer than half of US firms plan to hire international graduates this year, down from 55% in 2017, according to GMAC.

“In terms of post-MBA roles for international students, there is definitely a feeling of lack of certainty,” says a careers advisor at a top MBA program, who did not want to be named. “While actual numbers of roles that sponsor [international students for visas] is not down significantly yet, there is a general lack of clarity on behalf of the employers.”  

It has become more difficult for US business schools to lure students out of jobs amid a strengthening US economy. “A strong economy is always inversely correlated with graduate program demand,” says Esther Magner, principal at Stacy Blackman Consulting, which advises MBA applicants. “We saw the same trend before the 2008 recession hit in the US.”

At Fuqua, Bill believes it’s important for US schools to send out a positive message: that they remain open for business. The chance to champion student mobility was one reason he accepted a GMAC board position, he says. “We need to speak with one voice on the importance of this issue,” he adds.

“And not just for business schools but for companies, too. It’s our job to supply talent that can drive growth, job creation and opportunities in the global economy. One critical issue in sustaining economic growth is the ability to hire and retain talent.”

Applications to top US business schools seem unlikely to fall dramatically lower. Most still receive thousands of applications, and the admissions rates are largely unchanged from 2017. Stanford, for example, admitted 419 people to its MBA this year among the 7,797 people who applied, compared with 417 last year.

Application quality appears to be broadly similar to last year, too, with several schools reporting increases in GMAT scores, including MIT Sloan, whose average jumped six points to 728 this year.

But US MBA courses have become a harder sell, opening opportunities for schools elsewhere in the world.

Jose Jaramillo was offered an MBA place at a school based in the US with campuses in multiple countries, but turned it down to study at NEOMA Business School in France.

Cost was a factor in the Colombian’s decision, with tuition cheaper in Paris than in Boston, he says. Plus, he wanted to learn French and also valued the Parisian lifestyle.  

He adds that discrimination against international students is not confined to the US. “Us Latin-Americans have to live with this negative immigration rhetoric from every single place we visit. I like to change people’s minds, and teach them that Colombia is not only renowned for Pablo Escobar.”

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