WSJ: International MBA Applications Drop

Question

WSJ Published and article yesterday (thanks ziyuen for alerting me) about a trend of declining BSchool Applications.
This seems to be more prominent at Top 50 schools or those ranked below Top 20. However, this appears to be a trend many schools are following and confirming. I think we can expect more generous scholarships at top 20-50 school segment. I would not be optimistic about the Top 20, however. Those programs have strong enough reputations to attract very strong talent both domestically and internationally. Also, i would be careful about assuming that if applications are 16% down in a certain school, it is wide open doors. I think we will see a reduction in the general applicant volume coming since fewer "lucky shot" applicants will submit their applications.

I am also hearing from several GMAT Club 2nd Year students from both Top 20 and other schools about hardship they are facing with H1B recruiting and programs that have a significant portion of international applicants will probably see effects of such class mix when the employment numbers come in next year and rankings are adjusted. Just saw that Simon has 60% international students - that will be tough.

Thoughts?

stonecold · Answer

"Red Flag for U.S. Business Schools: Foreign Students Are Staying Away" --> This is the sort of the thing what every business school in the US was fearing after Trump got elected.

Here are a few opinions =>

Reason for this decline--> Indian and Chinese applicants are worried about the whole H1-B situation under Trump.
H1-B is in a Big Big mess.

One look at the below image is enough to understand that India and china are the two countries from where all US-B schools get the major applicants.
You cannot both scare the hell of them and expect them to apply at the same time

Major takeaways -->

1)This trend is most likely to continue in the upcoming year.
Applicants Size in the Top US-Bschools will plummet if the current scenario continues.
Eventually Educational sector in the US will take a major Hit.
Not only the MBA's. I am talking all the Master degree courses.
The only positive (and a big one) i can think of the getting an US-MBA would be the quality of education.
Nothing beats that.

2)Somebody's loss is somebody else's gain.
Top Gainers in this case ==>Rotman, Schulich, Ivey ( and maybe some Australian MBA programs)

If you are applying/thinking of applying to top notch Canadian MBA program in the upcoming season specially to the likes of Rotman,Schulich,Ivey etc. be aware that everyone else would be doing the same.As a result of which the acceptance rate could be crazy low.
Additionally,you might want to turn in that application in Round 1/2 itself instead of waiting for Round 3/4.

3)H1-B is in a Big Big Mess.

Today a National class action discrimination lawsuit has been filed against Cognizant.
Ginni Rometty is been under tremendous pressure in the past few months after she allegedly fired US -workers.

So,incase you apply to a US-Based school ==> Keep your options open.You might be able to work in the US.Be willing to work in other countries.

4))Looking into other countries to get an MBA might not be the worst option.
AGSM and Rotterdam are on top of my head.

If MBA is your dream-> Do not shy away. :twisted:

Do the necessary minor adjustments and get to it.
Location of an MBA is as important as the rankings(If not more)
Be it US, Canada,Australia,India or any other

Regards
Stone Cold

Do the necessary minor adjustments and get to it. Location of an MBA is as important as the rankings(If not more) Be it US, Canada,Australia,India or any other Regards Stone Cold

Mo2men · Answer

Hi bb,

I totally agree with your view but I doubt that the top 20-50 may increase the scholarships. The Trump's cut in funds to major projects and federal institution to finance the defense program my hurt those schools and hampered their ability to attract students.

bb · Answer

I think it will be a rankings game - schools will compete a lot more for highly qualified international applicants with high GMAT scores. GMAT Scores will likely be even more important for international applicants... which is kind of sad since there is so much more to a person than a GMAT score.

ydmuley · Answer

Thanks for the post  bb .

Considering H1B will be a challenge - Just thinking will it still be worth ($$) applying to the Top 10 B Schools? (HBS, Wharton, GSB)

Also, I have heard that some companies do hire on L1 for sometime, is that true? Are there cases or is there a possibility that this option will be explored?

Even if this is not the option then which other countries are good to work for post MBA from top universities?

bb · Answer

Thank you stonecold - quite insightful and I agree with your comments #2 and #4 - Canada has already been on the uptick on GMAT Club even in the previous application season https://gmatclub.com/forum/school-ranki ... 35933.html - look at Schulich. The only helpful thing for the US BSchools is that there is no good international ranking system. That's their only saving grace. I feel Rotmand and Schulich could compete quite well with the top 20.

LBS also went up in popularity in terms of what people are considering and where they are applying.

ydmuley, it is not that much of a $$ difference between the top 10 and top 20 and even top 30. There are some regional and state schools that cost quite a bit less but in general, MBA is expensive in terms of tuition and in terms of opportunity cost of lost income. I think paying 100K+ tuition for program ranked at 50 is probably not worth it. Investing into an MBA from a Top 20 is a much better ROI. However, it is all relative - what is the other alternative? There have not been many, so we have been paying.

However, this brings up a whole different discussion - cost of education (both undergrad and post-grad) and sustainability of the cost increases which have outpaced inflation for decades now. The whole education system is due for a revision and the only question is when.... it is not sustainable to pay $200K for an undergrad degree only to graduate to become a teacher making $40-50K

MBABoss · Answer

One thing you may see if applications drop to top US programs is the amount of seats may also drop. Rather than lower admissions standards to attract students, the top programs will keep their admissions standards high, and cut seats.

Anyways, should be good news for Rotman, Ivey and Queen's

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Anyways, should be good news for Rotman, Ivey and Queen's

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bb · Answer

Very good point indeed! However, with Simon taking in 2/3 of their students from outside of the US, they will have to shrink their program quite a bit - they are getting squeezed on both sides - US economy is going hot and unemployment is low, attracting fewer applicants to non-elite programs. I am curious to see how this plays out.

One thing is right - our Canadian neighbors stand to gain quite a bit.

Edit to add: I don't think a program can just cut 20-30% of its enrollment numbers without serious financial reprecautions. My guess is there are a lot of fixed costs in running a BSchool - admissions staff, professors, building, etc and if you add/reduce the numbers, those cost stay fairly stable so the motivation is probably to always increase to capacity and never to go down.

bb · Answer

I am going to go on a limb and speculate a bit - if I were in the Adcom shoes, I would probably be worried right now and I would continue to be worried between NOW and the next set of data I can get (which is the R1 deadline in 2017 when I can compare my applicant numbers vs. last year). However, as an Adcom member, I am in luck since we are in between seasons and I can regroup and adjust my goals/strategy/expectations.

My guess is R1 numbers in 2017 from international and domestic applicants will be lower for non Top 20 but I am also guessing many schools will lower their intake numbers appropriately as  MBABoss  suggested to minimize risk. Which means they will probably overdo it out of risk aversion - schools are very conservative, so I am expecting it to be only worse for applicants. Sorry guys.... hopefully I am dead wrong.

EduSimplified · Answer

Hi All,

Observing the news and trends regarding Trump’s policy on immigrations and H-1B and specifically how it affects International students (mostly Indians), I have come to understand the following.
There are currently 4 bills pending in the senate regarding immigration and H-1B reforms. Most popular Bill was the one where salary requirement of $60,000 would be increased to $130,000. Since this bill is proposed by a Democrat it will most likely die a slow legislative death. 
Trump in his executive order has asked for reforms to  “bring in the brightest and the best” . He has put the ball in bureaucrats court to propose specific changes to the current system. Which implies two things 
1. There is no executive order till date curbing the issuance of or anything related to the process of H-1B visas 
2. This process gives time to the H-1B dependent companies to lobby congress and do damage control. Wouldn’t be surprised if US Universities join these efforts too since international students are 
 a big part of their balance sheets.

Please understand that the focus here is to discourage workers who are sent to work on site (directly from India to US) by IT services companies such as TCS, Infosis, Wipro, Cognizant, etc. These jobs when compared with the jobs that MBA grads get are less skilled. If the H-1B visa norms such as basic salary is raised from $60,000 to a reasonable $80,000 -$100,000, it will become much more difficult for IT BPO companies to hog the visa quotas and thereby making room for STEM students and MBA grads.

The Optional Training Program (OPT or F-1) is a program available to the STEM students ( Science, Technology, Engineering and Mathematics). In OPT a student can work for a total of 3 years (1 year +2 year extn) without having to worry about an employer sponsoring her H-1B. There is talk of rolling back the 2-year extension but again no clarity yet. I wouldn’t be surprised if the Congress changes the M of STEM from  Mathematics to Management.

Having said that, the perception of situation is what really matters. The far right ideology topped with misinterpretation of America First has created an environment of chaos and uncertainty. Companies in general are trying to avoid hiring international students (specially of Indian origin ) to avoid any unnecessary discomfort to them. And why wouldn’t they, it costs a lot to hire, train and induct a fresh graduate into the system.

Similarly, the perception of an international student has become even more risk averse. No student would like to spend $100,000 - $120,000 and 2 years of her life only to come back to her home country and find a job that cannot sustain the loan burden.

Canada definitely is the centre of attraction now more than ever. Not only for B-schools such as Ivey, Rotman and Schulich but also because most Fortune 500 companies have their offices in Canada. And even if they hire from American B-schools they can and are offering position in their Canadian offices. You will see the immigration rules of Canada tightening pretty soon due to the overflow from the US. Other international destinations such as UK, EU and Australia will also get the advantage of such ambiguity. 
 
I completely agree with bb that there will be no difference in application numbers of top 20 schools but the rest will suffer due to lack of clarity of policy. 
This will be a temporary (2-3 years max) setback for American Universities but eventually I think this issue will be sorted because Education is a multi billion dollar industry and they can’t afford not to take international students in.

Best,

Mo2men · Answer

Actually, there is bill filed by R-Congressman in January 2017 to reform this bill. As I understood, no major differences between the Democrats and Republicans on that issue.

I share the same view like you and bb about who will suffer more. However, I think some school in middle section (11-20) will have big variation. For example, Emory will suffer more than Ross and Cornell.

bb · Answer

Thanks @edusimplified, very thorough.

To add to the point though, there is not only the perception of the situation by the international applicants but also employers. H1B hiring seems to have slowed down and that's driving many concerns that will soon be communicated and turn into horror stories only to discourage more applicants, unless H1B position is clarified soon.

I am not sure if the 3 vs 1 year OPT matters a whole lot in this case. The question most job questionnaires ask is - are you authorized to work in the US, and while you can answer yes with 1 or 3 year OPT, it is still not the same as having a green card in their view. I am not sure a 3-year OPT helps that much. What it does, it allows for multiple H1B application attempts and risk reduction but in general employers who stay away from H1B applicants will continue staying away from them.

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stonecold · Answer

Interesting. I somewhat disagree with this.(maybe because i am keen on applying this year and i don't have a stellar test score yet :twisted:

) Usually Internationals (specially Indians and Chinese) need a bit higher GMAT then rest of the applicant group.Agreed. But we need to keep in mind that this year, the number of applicants are gonna be reduced drastically. So personally i think, the average GMAT of admitted International students for schools from Top-20 to Top 50 might actually be lower. Schools might be willing to accept International students in order to fill up the class. Specially the likes of Simon. Whatever be the case, coming November would be one hell of an application season

Regards Stone Cold

bb · Answer

Similar article has been published by FT on May 7th: https://www.ft.com/content/eba11d8a-319 ... ef563ecf9a Similar feedback: Schools with strong brands will weather it just fine but those in the 50-20 ranking group will have a much harder time with international applicants. Some good values to be had potentially if anyone is willing to take on risk.

Mo2men · Answer

I'm really curious to see the stats for incoming classes in different universities.

This is good opportunity for some people who pursue other plans rather than staying in the USA.

WSJ: International MBA Applications Drop

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