A Drop in MBA Applications Reduces the Competition (2024)

A new survey from GMAC, the Graduate Management Admissions Council, reported that graduate business school applications have fallen significantly for the second year in a row. This is terrific news for potential MBA applicants because it means less competition for the prized seats in classes at better business schools.

This declining applications trend is probably the most significant development in business school admissions in years; we have not witnessed such a disruption in admissions since the 2020 stock market crash and subsequent recession.

Furthermore, other important disclosures appear in GMAC’s report besides this applications decline, and they expose several recent changes in the expectations and preferences of applicants to graduate business school programs.

MBA Application Declines in the U.S. and Abroad

Collected during the summer of 2023, the data in the latest release of the annual Application Trends Survey is based on responses from almost 900 graduate management education programs at 247 business schools around the world. In short, the poll shows a continued declining global trend in the volume of applications to these schools.

The survey results show that worldwide, applications to all business school programs fell by almost 5 percent year-over-year during 2023, following a 3.4 percent decline in 2022. Previously in response to the 2020 recession, overall applications climbed slightly, by 2.4 percent, but were essentially flat during 2021.

However, the combined drops—amounting to roughly 8.3 percent during the past two years—continue an overall declining trend in business school admissions that kicked off with a 3.1 percent decrease in 2019 before the pandemic.

Focusing more specifically on MBA programs, we find that the year-over-year declines during the past five years were even more substantial. MBA applications dropped by 4.9 percent during 2023, following another 6.5 percent slide the previous year.

As with overall business school admissions, these decreases continue a declining five-year trend, following decreases of 2 percent in 2020 and almost 7 percent in 2019. The only year in which MBA applications have climbed during the past five years was 2021, when the boost amounted to 3.8 percent.

Flexibility as the Driving Force

When we take a closer look at specific program types and market segments, the results appear variable, with GMAC’s concluding from this fragmented and discordant data that “flexibility appeared to be the driving force behind programs with growing applications in 2023.”

For example, the most flexible programs and our main focus here at BSchools—online programs—showed marked gains compared to the traditional full-time, in-person programs. That was especially true when comparing the online modalities with the top-ranked, highly selective on-campus programs. About 53 percent of the full-time, on-campus configurations showed application declines, compared with an equivalent proportion of the online programs that showed growth.

However, other flexible modalities like hybrid online and part-time, on-campus configurations that meet during weekends and evenings actually witnessed even more growth in applications than online programs. Sixty percent of the evening programs grew—as did about the same percentage of the hybrids—along with 56 percent of the programs conducted on weekends.

In a prepared statement, GMAC’s CEO Joy Jones summed up these results. “Applicants to graduate business school appear to be recalculating their investment, with more candidates willing to trade traditional in-person experiences for opportunities to complete their studies according to their schedule,” Jones said.

Are Top-Ranked Schools Losing Dominance?

In this year’s version of the Application Trends Survey, an interesting trend in program rankings appears to take center stage. In arguing that the average graduate business school candidate now appears to be more willing to forego “prestige for flexibility” than ever before, GMAC cites the following trend to support its conclusion.

GMAC reports that during 2023, almost 50 percent of the lower-ranked and unranked schools experienced increasing applications. Conversely, the schools that were more likely to report declines in applications ranked among the top 100. Among the 50 top-ranked schools, that decrease amounted to 54 percent; among the next 50, the decline was about the same.

Does this drop in applications mean that the most selective, top-ranked full-time, in-person programs suddenly find themselves at risk of losing their dominance? GMAC doesn’t think so. From their 2023 Dean’s Summary, here’s a key paragraph where they comment on this trend:

Notably, the increase in applications to programs with greater flexibility is most pronounced in lower-ranked and unranked programs. . .This is not to say the growing interest in less selective programs with flexible modalities signals an end to the standing of the most selective programs offering full-time, in-person degrees. There is still a notable (albeit somewhat smaller) pool of applicants aiming for GME degrees at top-ranked business schools. However, the average GME candidate appears more open to sacrificing prestige for flexibility than before.

“Yale Was Practically Begging People to Apply”

However, recent data has emerged that fails to support GMAC’s conclusion. Insightful new reporting related to GMAC’s survey by Bloomberg Businessweek’s Robb Mandelbaum suggests that top-ranked, on-campus programs were hit much harder by the applications drop than American MBA programs overall. A summary of that data appears in Mandelbaum’s November 2023 article titled “Top-Ranked MBA Programs Struggle to Reverse Declining Applications.”

Except for two years during the pandemic, survey data collected by the publication indicates that applications to most of those prestigious full-time programs have fallen since at least 2017. Of the top 26 programs, at least 17 have experienced long-term declines in their application volumes that continued into 2023.

Applications were way down at some elite programs that were especially hard hit. For example, Georgetown’s McDonough School of Business experienced roughly a 12 percent decline in applications from 2022 to 2023 despite mass layoffs in the tech sector, which led to a temporary surge in applications at a few schools like Northwestern’s Kellogg School of Management.

Some schools experienced sudden, acute declines in Round Three during spring 2023. One of them was the Yale School of Management:

“Yale was practically begging people to apply,” says Barbara Coward, a B-school admissions consultant. As spring 2023 approached, Coward says, “Yale and other schools were sending messaging, emails and blogs that I’ve never seen before, saying, ‘What you’ve heard about applying in Round Three is not true!’” (“We are planning to admit more aggressively than in years past,” an assistant admissions dean at the Yale School of Management wrote in one message.) Some schools added rounds or extended deadlines.

Dean Bruce DelMonico told Businessweek by email that Yale anticipated more third-round applications than usual and adjusted admittances accordingly. “Our selectivity was as low if not lower than most years in Round Three,” he said. Still, applications to the School of Management were down about 5% this year and by a quarter since 2017.

Precisely why this collapse in applications developed at several of the full-time, on campus schools remains unclear. Mandelbaum writes that school deans and admissions officers attribute the drop to the strong economy within the United States.

However, some administrators say that online MBA programs like those we feature here at BSchools have “chipped away” at interest among potential students in traditional programs on campus.

International Student Interest in American MBA Programs

Mandelbaum’s reporting also suggests that a sudden surge in international demand starting in Fall 2022 has filled up much of the slack capacity in American business school classrooms brought about by the declining applications. As a result, students from outside the United States now make up much larger percentages of American MBA classes at traditional programs than they have in many years.

Among the full-time, on-campus programs that contributed data to GMAC’s previous 2021 edition of the Applications Trends Report, 80 percent of those programs witnessed an increase in applications from students outside the United States. Incredibly, a sample of six of those schools contacted by Businessweek all reported that international applicants to the class of 2025 ranged between 60 percent and 90 percent of their total applicants.

Non-United States citizens make up 50 percent of the fall 2023 entering class in at least six of these schools. At Cornell University’s Johnson Graduate School of Management, non-U.S. citizens account for almost two-thirds of the students, and at Georgetown McDonough, they’re three-fifths of the 2023 entering class.

Business School Admissions Directors Under Pressure

It’s also worth noting that the drop in applications appears to have contributed to turnover among the ranks of business school admissions directors at several top programs.

“In the past two years, at least eight admissions directors have left their jobs at schools ranked by Bloomberg Businessweek, including Stanford, Harvard, and Columbia,” writes Mandelbaum in a later article. He points out that all of the current and former admissions officers and observers contacted for his report acknowledged that “the pandemic and its aftermath intensified pressure on admissions teams.”

Underrepresented Candidates on the Sidelines

One particularly disconcerting finding in GMAC’s poll might be an effect of declining admissions. In short, GMAC suggests that business schools that value diversity in their student populations might not be able to attract all the underrepresented candidates they want. This is especially true of first-generation students, whose parents didn’t graduate from college.

The data shows that first-generation students comprise just under a third of prospective applicants, but only 13 percent of the candidates who actually applied to at least one business school. In other words, overall more than twice as many of the first-generation applicants demonstrated interest in graduate management education programs as those who actually filed applications.

Incidentally, demonstrated interest is one of the most important concepts in business school admissions that all potential applicants need to understand. Generally, this concept refers to substantive pre-application interactions between a potential candidate and a business school or its admissions staff, such as when the candidate attends a recruiting event, visits the campus, or sits in on classes conducted in-person or online.

Admissions departments carefully record these interactions and calculate demonstrated interest scores for each candidate, and at most of the better schools, they’re a competitive factor in admissions decisions.

Now, within GMAC’s survey, it’s important to note that out of all the various graduate management program modalities—including the full-time, part-time, and executive MBA programs along with specialized business master’s degrees in management, accounting, and finance—the greatest share of the first-generation prospective applicants demonstrated interest in the online MBA programs, at 37 percent. This finding further confirms the ability of flexible online programs to attract a diverse variety of prospective students, a trend in enrollments that we’ve consistently observed and reported on during our coverage here at BSchools during the past six years.

Yet even in this case, the proportion of prospective first-generation candidates who eventually filed at least one business school application amounted to less than a fifth, at only 17 percent. “Programs interested in building cohorts of students with diverse backgrounds and experiences are up against entrenched patterns and persistent social, macroeconomic, and geopolitical challenges,” writes GMAC.