The MBA market had rebounded strongly over the past year as workers fled an economy ravaged by COVID-19. But questions are being raised over whether the historic run of growth in applications, which set fresh records at many institutions, is sustainable now that the economic recovery from coronavirus is accelerating.
As the 2021 admissions season gets underway, many prospective students will be asking the question: does it make sense to apply for an MBA now?
When economic activity contracts, the opportunity cost of not working shrinks as hiring and promotions are frozen. Many workers have endured stagnant wages or have even taken a pay cut in the pandemic.
But now, economists are revising upwards sharply their forecasts for growth. The labor market is rapidly thawing as companies switch from survival mode and relaunch projects to drive future growth. There are some indications that shortages of workers are driving up wages, undermining part of the rationale behind the recent growth spurt in MBA applications.
Nicole Tee, director of MBA programs at National University of Singapore Business School, says that making adjustments in the short-term based on individual circumstances makes complete sense.
“Some companies are doing much better during the pandemic than before, just as some individuals are finding themselves being involved in more exciting and rewarding projects now,” she says. “If taking one or two years off to do your MBA means you will be missing out on a career-defining project, then it is wise to delay your MBA.”
She cautions, however, that the impact of the pandemic and the economic recovery is uneven, so the effect on individual admissions decisions will vary accordingly. Until the end of last year, Asia led the world in the fight against coronavirus with its public health measures. But Asia has now fallen behind on vaccinations, as programs in Europe and North America accelerate.
This creates the risk of an unbalanced global economic recovery. In theory, Asian schools stand to benefit because MBA applications have historically been countercyclical. “We have seen an increase in applications, but I think that is part of a larger trend beyond COVID-19,” says Tee, citing the rising role of Asia in the global economy.
The appeal of institutions across much of Asia has been boosted by their stepping up of face-to-face teaching, much sooner than business schools in Europe and North America, regions which struggled to contain the pandemic at first.
“NUS has largely maintained in-person teaching so far, with the exception of a few weeks when Singapore was in lockdown, or when classes get too big, beyond the cap of 50,” Tee says. “There is certainly a fair amount of anxiety about teaching format, but I don’t think it has stopped most applicants from applying to our program.”
Students anxious to get back to the classroom
The uncertainty stems not just from candidates’ fears of infection and concerns over travel restrictions, but from the belief that in-person teaching is superior to the online university experience. “We know that our students are anxious to get back to the classroom,” says Joseph Milner, vice dean of MBA programs at Rotman School of Management in Toronto, Canada. “A hallmark of graduate management education is the easy exchange of ideas afforded by being together in one place.”
“While our application numbers are very strong, we know that some students are holding off because they are unsure that we will be fully in-person this fall,” he adds. “It is our intention to be as fully in-person this fall as possible, but we will adhere to provincial and city guidelines as we do so.”
Georgetown University in Washington DC has also announced a return to in-person learning in the fall, if health and safety conditions continue to improve as anticipated. “We are hopeful and excited that we are closer to getting back to normal,” says Shelly Heinrich, associate dean of MBA admissions at Georgetown University’s McDonough School of Business.
“We have seen a tremendous increase in applications this year, and I think that, given the economy is still a big uncertainty, we will continue to see this increase for the short term.”
Yet uncertainty over the teaching modality has dogged business schools throughout the COVID crisis, with administrators reluctant to forecast too far ahead. That is at odds with prospective students who will want a fair degree of certainty before committing to a full-time degree that comes with a six-figure price tag at the most elite institutions.
Thousands of MBA students at numerous leading schools signed petitions demanding tuition fee refunds last year when the pandemic lockdowns forced them to take online classes, leaving many feeling short-changed as schools, facing their own financial difficulties, largely rejected their pleas for concessions.
Is online now comparable to in-class?
Rotman’s Milner insists that through the pandemic business schools have gained great skills in remote teaching: “I believe that the knowledge and skills our students are gaining are just as strong as those gained while studying in-person,” he says.
One benefit of being online is the ease of creating breakout groups to have a quick discussion on a point, he adds. “Students have quickly adapted and learned how to work in remote teams. We think this is a skill that will be increasingly necessary in a post-pandemic world, where we expect to see less travel and more online teamwork.”
Admissions consultant Stacy Blackman in Los Angeles expresses concerns over the online format. “Online experiences lack the networking value, which is the hallmark of the MBA degree,” she says. But she adds that, in doses, the online experience can actually be a value-add and complementary to in-person education, because it allows students to access a much richer pool of guest lecturers and business leaders.
However, her clients, prospective MBA students, are more focused on their chances of securing a place at a top school than the teaching modality or the economy. “In our two decades of experience, we see that top-tier MBA applicants usually do not weigh the current economy heavily in their decision,” says Blackman.
But she does notice that applicants are more particular about MBA program brand when the opportunity costs are higher in a strong economy, suggesting a “flight to quality”.
Rotman’s Milner points out that career opportunities for students from the leading schools are considerably enhanced no matter when they complete their MBA, whether during a downturn or an expansion.
“The growth predicted for the coming year provides assurance that internships will be available as firms seek to expand,” he says, underscoring the improving jobs outlook for graduating students.
Georgetown’s Heinrich agrees, and says that an MBA is a versatile degree, granting access to multiple industries ranging from consulting to finance to real estate and consumer goods. “With an MBA, you open doors for yourself that you may have never thought possible.”
But, with an expanding array of alternatives to an MBA, it’s clear that business school is by no means the only route to getting ahead in business. Applicants today can choose from a wealth of shorter degrees in niche fields and also non-degree online courses.
“There are certainly more opportunities to pursue graduate management education now than there used to be,” says Heinrich. “But this is the case with any product or service in the world, so it should be no surprise that graduate management education is the same.”