Business school applications are up. Way up. Skyrocketing even! Though there are many reasons why (and we’ll get to all of them soon enough), the giant, 200-ton dinosaur in the room is obvious: the global economic recession sparked by the COVID-19 pandemic. It’s a question of supply and demand. A global recession means layoffs, salary freezes, and less promotion opportunities, which pushes people to consider spending the next couple of years in business school. After all, if you’re unlikely to be making much headway at work for the next couple of years, the opportunity cost of riding out the downturn in an MBA or EMBA is lower. You also get to supercharge your skillset so that you’re at the front of the line ahead of an eventual economic rebound. Better to be improving your skillset ahead of the good times than to be struggling through the bad ones, or so the thinking goes. The reality of course, is a little more nuanced and complicated.
First and foremost, there’s the obvious question of school safety in the COVID era, particularly in the United States. The U.S. public health response to the pandemic has been less than stellar. After a sluggish initial quarantine, public health recommendations rapidly became politicized with states taking a piecemeal approach. That has muddied the application waters in a number of ways. First, some international applicants may not feel safe traveling and living to the United States for business school. Second, it’s unclear what in-person schooling will look like even in 2021-2022, and some applicants may feel gun shy about spending all of that money on tuition for an experience that might go virtual if they or a classmate gets sick. Beyond the pandemic, there’s also the thorny question of student visas, which may be restricted or expanded depending on the results of the 2020 general election.
And yet, as the numbers come in, it’s clear that these obstacles aren’t dissuading MBA applicants. Or at least, the number of dissuaded applicants is much smaller than the number of new applicants rushing to safety from a brutal labor market. Let’s take a look at enrolment trends at a couple of top schools to highlight just how competitive things are getting.
Applications to Wharton’s MBA program were already up by a staggering 21% for 2019-2020, leading to the largest entering class in the history of this prestigious school. This is all despite difficulties in acquiring student visas and the shift to online learning. While you might want to hold back from extrapolating trends based on an exceptional year, a closer look hints that this boost in enrolment could very well be pandemic related. Wharton extended its deadline from April 1st to April 15th and relaxed its testing requirements. That resulted in a significant boost in round three applications, something that would allow Wharton to draw from a deeper pool of candidates without lowering its GMAT average.
Conversely, this year’s enrolling Harvard MBA cohort will be the smallest in decades at 732 students or about 200 fewer candidates than in recent years. We feel confident in stating that this isn’t a case of weaker demand, however. The shortfall almost certainly occurred because HBS gave incoming students the option of deferring their enrolment for a year or two due to COVID—and, in the interest of social distancing, chose not to draw applicants from the waitlist to make up for the deficit. This will make the incoming class the smallest since the 1950s (!!) when the Korean War and a new 15$ application fee (simpler times…) diminished the pool of potential applicants.
This smaller incoming cohort won’t really hit Harvard’s bottom line (tuition is a relatively small percentage of revenue), but the school’s recovery will depend strongly on both the public health situation – a vaccine heralding a return to some sense of normalcy – and the political landscape surrounding student visas – a more welcoming administration in the White House. One thing that hasn’t dropped, however, are HBS’ rigorous standards, with a median class GMAT score of 730. Reading the tea leaves, we can expect applications to HBS becoming even more competitive moving forward, with a backlog of deferrals taking up spots that would usually go to new applicants over the next 1-3 years. In the meantime, this small class of high-performers may help Harvard regain their top-tier position in business school rankings.
Other top schools
In the rest of the M7, things skew closer to Wharton than Harvard. Columbia reversed a two-year slide and saw a massive increase in MBA applicants, making its class of 2022 much larger than ’21 with similarly high standards. Many attribute this to Columbia’s COVID-19 related deadline extension, as the school lengthened its application period by a whopping 51 days, from April 10th to June 1st. CBS has also bucked trends by maintaining a high ratio of international students, 44%. All in all, application volume increased by 18%, nearly as much as Wharton’s.
At Berkeley Haas, the numbers point skyward as well. In 2016 and 2017, Berkeley’s acceptance numbers were the lowest in the world for a top business school, at 11% and 12% respectively, but as demand went down, Berkeley had to dig a bit deeper to fill its ranks. COVID-19 completely upended this situation, however, as both applications AND acceptances are up. Like many other schools, Berkeley extended its application deadlines this spring, moving forward with a massive 60-day extension, which led application numbers to jump by a significant 5%. What’s more, having gone virtual, Berkeley reduced enrolment limitations, increasing the class size by 48 people. This is despite cratering international enrolment. Beyond the United States, business schools like Oxford Saïd have reported a 35% jump in applications while Imperial College and Warwick report a jump of 41% and a gargantuan 56% respectively.
What does it mean for this year’s applicants?
The public health risk of COVID-19 and the disadvantage of remote learning isn’t stopping applicants from applying to top schools in droves. The economic pressure is too great, and your typical, problem-solver MBA candidate sees these challenges as just another potential hurdle to overcome. Furthermore, given that the global economy had been red hot for several years prior to this crisis, particularly for high earning, white-collar workers, there was likely already pent-up demand on the part of potential students who kept putting off that MBA given the plethora of opportunities for advancement. Now that those opportunities are off the table, everyone’s jumping off the Titanic and heading for a limited number of life boats (or B-school spots). Will this trend continue next year? Almost certainly yes. The global economy isn’t about to recover given the lack of certainty surrounding the potential COVID-19 vaccines’ effectiveness and the gargantuan task of immunizing the world’s population. By all accounts, the planet will be in this crisis for a long while yet, and so we expect more ambitious up and comers to consider the advantage of a business school education in the coming year.
The downside for potential applicants of course, is that more applicants means more competition, meaning we can expect an incredibly competitive landscape for anyone applying to top business schools for 2021. Even discounting Harvard’s decision to offer deferred admissions, practically every single business school is reporting a surge in admissions, while MBA-related websites are reaching never before seen levels of traffic. This tsunami of applicants may very well mean that already sky-high standards rise even higher and that there simply won’t be enough supply to make up for the increase in demand, unless more schools increase the number of spots available, given the potential for virtual schooling.
For most, however, the economic ramifications of the COVID-19 pandemic outweigh all other concerns, meaning all roads lead to MBA applications to ride out the downturn ahead of returning to a (hopefully) less stormy job market. Applicants will need to increase their GMAT scores and may want to consider seeking professional help from their friendly neighborhood MBA applications consultants (hint hint, nudge nudge). It’s a lot to tackle and take in, but if anyone is up to the challenge, it’s an MBA candidate.