The Economy, MBA Application Fence Sitters, And You

Recently the Graduate Management Admission Council (GMAC) released its annual report analyzing admissions trends at business schools around the world. Interestingly, while most of us tend to associate a weak economy with ever-rising applicant numbers, that trend seems to have sputtered out for the current recession.

According to the GMAC report, half of the 665 graduate management programs surveyed reported an increase in application numbers, while about 40% actually reported a decrease in applications, compared to the previous year. So, have people finally given up on the MBA as a fallback option when the economy gets soft?

That may partly be true, although a more realistic answer is that, since this particular recession has lasted longer than most, it’s tapped out as a source for additional applicants. Normally the first year after a recession hits is when schools see the largest surge in applications, when a little “pent-up demand” for advanced degrees gets released and people look for additional options as the job market gets soft. At any given time, there are thousands of applicants who are one the fence about applying. Some of them keep saying “Maybe next year” and never actually apply, while some who were about to say “Maybe next year” see their job prospects getting worse and say, “I’d better take the GMAT and start working on applying to business school.”

As these “Maybe next year” applicants come off the sidelines, they pile on top of the normal wave of applicants that passes through business school every year — the typical young professionals who are three to five years out of college and are ready to pursue an MBA. Add it all up, and you have an abnormally large applicant pool. But, this pool of “fence sitters” only runs so deep, and it essentially gets tapped out after one or two application cycles. That’s probably what we’re seeing now.

This is especially true for more general two-year management programs, which are often the most inviting for “fence sitters.” According to the GMAC report:

More two-year full-time programs (49 percent) showed a decrease than an increase (41 percent) in application volume, continuing declines seen in 2009. In both the US and Asia-Pacific region, where most full-time programs are two-year, roughly four out of 10 full-time programs saw increases. Fifty-three percent of US full-time programs reported application declines.

Meanwhile, more specialized programs, which tend to be less inviting to the more casual “Will I or won’t I?” applicant, reported a healthy rise in application numbers overall:

More than 60 percent of master-level programs in finance, accounting, and management, which traditionally draw younger students than MBA programs, reported application increases, with the average volume increasing last year by 20 percent or more.

If you’re applying to business school this year, what does this mean for you? Not a whole lot, as we wrote last month, although applicants always like to hear that they have less competition, not more. As the economy eventually (hopefully?!?) improves, application numbers will likely continue to decline, as that pool of “fence sitters” re-stocks itself for the next recession, which will come sooner or later.

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