First the international students scaled back their applications to American graduate business schools in the wake of 9/11. Then the recession took hold and the job market tightened. Fewer people wanted to give up their full-time jobs for full-time academia. At the same time, some companies began cutting back on their tuition reimbursement, a major incentive to many students. Then word of recent grads remaining unemployed longer after completing MBA degrees scared off people who might have considered business programs.
Faced with a dwindling pool of potential students over the past several years, many universities across the country and in this region began evolving their MBA programs by adding new concentrations, shortening degree programs, experimenting with online courses and accepting younger students with fewer years of work experience.
Business schools were forced to evaluate their offerings and alter their programs to meet the market’s demands. In other words, schools had to practice what they preach in the classroom and treat business education as the business that it is.
“All the business schools are looking very strategically at the product portfolio that they have, and realigning it with the needs of the customers out there,” said George Tsetsekos, dean of the LeBow College of Business at Drexel University.
In 2002, nearly a quarter of a million people took the Graduate Management Admission Test, the qualifying exam required by MBA programs. In 2005, there were only about 211,000 test takers, a decline of more than 15 percent. Only recently have the numbers improved.
Full-time MBA programs were the hardest hit, with 82 percent of the nation’s accredited schools reporting a decline in applications following 2002, according to the Association to Advance Collegiate Schools of Business, a St. Louis-based organization that accredits business administration and accounting programs.
Even the Wharton School at the University of Pennsylvania, one of the world’s elite graduate business schools, saw application numbers tumble from 8,371 in 2002 to 5,654 for last fall, a 32 percent decline.
Contributing to the drop in admissions was the lure of executive MBA programs, which experienced a lift in admissions during the same period that full-time MBA applications declined. Executive MBAs target working professionals with business experience who want to earn a degree without disrupting their careers.
Executive programs have attracted stronger candidates in recent years, according to Bob Ludwig, director of external communications for the McLean, Va.-based Graduate Management Admission Council, which oversees GMAT testing.
Temple University’s Fox School of Business and Management, for example, reported that despite a decline in overall applications, 25 percent of the people in this year’s entering executive and professional MBA classes already hold advanced degrees and many hold terminal degrees, such as doctorates and law degrees.
Other schools began accepting less qualified students to compensate for declining enrollment, said Rich Sorensen, chairman of the AACSB and dean of the Pamplin College of Business at Virginia Tech.
“There was a quality erosion in the MBA market,” Sorensen said.
Rather than concede to a constricting market, Drexel began offering a variety of new programs to entice strong candidates. They created the LEAD MBA, an accelerated degree program that part-time students complete in two years.
Last year, they began MBA Anywhere, an online program using audio-visual lectures, video illustrations and cases, interactive exams and virtual labs. In the fall, they introduced a new concentration in entrepreneurship, an area Tsetsekos said is of growing interest to students as well as to recent graduates.
In May, Drexel will open a 7,000-square-foot site in Great Valley, Montgomery County, to better serve students who prefer not to come into the city for classes.
“The applicants are very educated consumers,” Tsetsekos said. “What we see are a lot of students looking for alternatives. They are much more educated about what they need and the options that they face.”
Tsetsekos credits the new offerings for a 38 percent increase in the number of applications last fall over the previous period. Enrollment has jumped from 680 in 2000 to 923 for the current school year. Of the 923 enrolled, 64 percent are part-time students. The Rutgers University School of Business in Camden has increased its applications and enrollment in recent years by adding locations around South Jersey, from Atlantic City to Mount Laurel to Voorhees. The school also offers classes at corporate locations for companies such as Lockheed-Martin and Virtua Health.
To attract more students, La Salle University is doubling the size of its campus in Newtown, Bucks County. Saint Joseph’s University appeals to suburban students by offering classes at Ursinus College in Collegeville.
“We are continuously re-evaluating the current curriculum and making changes in courses and deleting courses that do not seem to be as much in vogue or relevant,” said Adele Foley, associate dean of graduate programs at St. Joseph’s. For example, “we eliminated the whole area of e-business which was a big trend a few years ago.”
Next fall, Temple will launch a pharmaceutical management track within its MBA program to satisfy the growing demand of one of the region’s major industries.
“The colleges are filling these niches,” Ludwig said. “If a school is in an area where there are companies hiring those graduates because they bring a skill set that is marketable to those companies, schools are starting to look at that.”
Administrators at Temple used the period of decline in applications as a time to reconsider the value of its program. “We ratcheted up all our standards in terms of all our admission standards — GMAT scores, work experience, quality of work experience, undergraduate GPA,” said Robert Bonner, assistant dean of MBA programs. “We’ve always had a great MBA program and great graduates, but we really wanted to make our output of our graduates even stronger.”
The average GMAT score increased to 666 for the class that entered during the current school year. In 2001, the average GMAT was 611. Temple only accepted 67 students last fall.
“Our enrollment probably could have increased during that time if we wanted, but the dean made a very strategic choice to be the part-time MBA program of Philadelphia,” Bonner said.
Villanova University’s graduate business program enrollments have remained fairly consistent at around 700 students in recent years, but their demographics have shifted. From the fall of 2001 to the fall of 2005, the percentage of women has nearly doubled from 23 percent to 43 percent. Students of color have increased from 3 percent to 14 percent and international students have increased from 3 percent to 6 percent.
GMAC’s Ludwig said that people of color and women are a growing population in business schools across the country. And students in MBA programs are getting younger and younger. The number of GMAT test takers who are under 25 years old has increased to 33 percent in 2004 from 28 percent in 2002, according to GMAC data.
“We are attracting a group of individuals very early in their career, very talented, and the average age is coming down slightly,” said Judith Silverman Hodara, senior assistant director at Wharton.
The average age of this year’s enterin
g class was 28, down from 28.9 in 2003, with current first-year students ranging from 21 to 40. The average amount of work experience is 6.4 years with a few students coming straight from the undergraduate level. “We are starting to see individuals who have been out of school two to three years as opposed to five or six,” Silverman Hodara said. Millennials, the vast group of people born in the early ’80s, are reaching an age when they will be considering graduate business schools and that has many universities anticipating good times to come.
“All of us compete for students directly or indirectly,” said Tsetsekos. “The prospective student, the consumer, is the winner in the end.”