B-School applications are counter-cyclical. When the economy is slowing, opportunity cost of an MBA goes down and people prefer to go back to school to weather the storm. Or so it was supposed to be.
For applicants in developing countries, applications are in fact pro-cyclical. In a good economic climate at home, more people can afford the cost of an MBA. In a good climate in the developed world, student loans are easier to get. In a global economic crisis, things are looking grim. Few would quit their job over an adventure that might leave them not only unemployed, but under a mountain of debt as well. This is assuming that there is a lender willing to provide said mountain.
Now, some interesting questions arise. Top schools, especially ones with an international image such as INSEAD, make a point of selecting applicants with diverse backgrounds. If the crisis continues and application volume from developing countries dries up, what happens with the diversity policy?
Developing countries aside, let’s look at the civilised world. What if, instead of just slowing, the economy melts down, or is expected to do so? Surely, there is a breaking point beyond which things are so bad that potential MBAs prefer to wait until the economy starts picking up?
Next year will be tough not only for us applicants. B-schools will need to think about their commitment to diversity (and its cost) and about the career prospects of their graduates. As a result of all that thinking, I would love to see more and larger scholarships. A decrease in tuition fees would be wonderful, but that only happens in Barbie world. One thing is certain; next year will not be boring.
Edit (Oct 14): this excellent post by TinyDancer is a must read.
P.S. Some links:
http://gmatclub.com/forum/108-t64549
http://gmatclub.com/forum/103-t71487
http://omnemba.blogspot.com/2008/10/tough-decisions.html
http://missionmba.wordpress.com/2008/10/06/darden-too-out-of-my-list/
http://musings360.blogspot.com/2008/10/citiassist-out-so-is-duke-for-me.html
http://trystwithmba.wordpress.com/2008/10/12/who-will-pay-my-fees-aka-no-loan-no-mba/
Tags: crisis
October 13, 2008 at 10:12 am
Well said and nicely put together. I expect more such posts from (going to be) affected applicants in the coming days.
October 13, 2008 at 5:52 pm
Excellent insight, something I hadn’t considered myself. I am curious to see how the numbers end up.
Also, while I agree that there is a tipping point where within developed nations MBA applicants will deicide to postpone their studies, I don’t think we are anywhere near that point. As you said however, it will certainly be an interesting year!
October 13, 2008 at 6:30 pm
@Jon: you are right in that we are not at the breaking point; but no one can pedict with any reasonable amount of certainty whether we’d get near it next year or not. My point was that the expectations for higher number of applicants should be taken with a grain of salt.