I will teach you how to bring your life stories to essays faster with F1GMAT's essay guides. Download below or subscribe to F1GMAT's Service and work with me - Atul Jose, Author/Editor/Founding Consultant, F1GMAT(16 Years of helping applicants gain admissions to M7 and Top 30 schools) The pandemic of 2020-22, like the financial crisis of 2007-08, brought the dynamics of the MBA market to the forefront. Unlike the rush to an MBA more than a decade ago, the travel restrictions, the online format of the class and the prohibitive cost of an MBA led many to look for value instead of falling blindly for the ‘brand.’
In this in-depth analysis on American vs. European MBA programs, we cover:
• Why US MBA programs dominate
• Application Volume Decline – Influence of Consultants
• Cost and US Visa Policies
• Online Format – The Good and the Bad
• Domestic vs. International Applicants – Pre-Pandemic
• 2021 US Visa Policies – Back to Normal for Top Schools
• Return on Investment – Cheaper Loans in the US
• European School’s Value Perception vs. US MBA’s Brand Recall
• MBA Curriculum - Beyond Analytics and Accounting
• Top European Schools – Pivoting by Offering Value
• US MBA – Good Yield
• Future of MBA – Time to Be Pro-Active
Why US MBA programs dominate
UK-based MBA programs still hold a nostalgic hold among candidates in the commonwealth nations. The ‘London’ or ‘Paris’ connection brings Finance and FinTech candidates to the region. However, more than 65% of top MBA programs are in the US. Candidates who are looking to migrate or targeting to increase their salary by 130 to 180% adjusted for purchasing power parity chose US-based MBA programs. The consistent $150,000 median base salary among the top 6 US schools holds an immense appeal as at least 3 out of the 6 schools are in the ‘dream’ list of over one-fourth of the applicants.
Application Volume Decline – Influence of Consultants
International student's application volume for one-year and two-year full-time MBA programs in the US doubled (from 28% to 57%) since 2019. The top US MBA programs used to be heavily oversubscribed, but since 2018 there has been a striking decline in the number of people applying to even Harvard and Stanford. A robust consultant ecosystem plays a crucial role in recommending schools. Unlike the blind optimism of Millennials, applicants now have access to some of the best MBA admission consultants. They are deeply aware of their chances based on experiences, academic, unique backstory, and extra-curricular/volunteering experiences.
Related Service: F1GMAT’s Career Planning Service
Cost and US Visa Policies
Global inflation at its peak of 2.42% attributed to higher living costs. Combined with stringent US visa policies and an anti-immigration sentiment from 2016 to 2020, discouraged many Indian and Chinese applicants (Two of the top three markets) from applying and even began considering European MBA as a viable alternative. In 2019, application volume shrunk by 7% in the US and 3% globally due to the Covid-19 outbreak. The gap in qualified applicants was mitigated by a new breed of applicants (early 30 age group) with non-traditional backgrounds (non-profit, military, education, and government) to fill the seats.
Online Format – The Good and the Bad
Online learning has not just increased the reach of MBAs to the far corners of the world but also boosted domestic demand from women and underrepresented minorities. The format encouraged international women applicants to postpone their MBA plan, as the expensive gamble requires the support of financial institutions, employers, or generous scholarships from schools that are absent during a global crisis.
The value-conscious international applicants couldn’t keep their eyes closed to the fact that an online or even a hybrid format is lacking in-class peer-to-peer learning, global learning experiences, and travel opportunities.
Domestic vs. International Applicants – Pre-Pandemic
While domestic applicants question the pre-pandemic MBA’s inherent value proposition, even more, the international student is resilient and committed to doing an MBA despite the pandemic. The 66% growth in application volumes from international students in the top 50 full-time MBA programs ranked by the Financial Times, compared with only 45% of the domestic applicant pool, is evidence of this trend. The missing demographic are the women international applicants, clearly demonstrated in the decline of Women applicants in almost all top US schools from 2020-22.
2021 US Visa Policies – Back to Normal for Top Schools
In 2021, visa policies become international-student-friendly once again as post-pandemic travel restrictions eased, government changed, and the world opened up again, illustrated by the 4.1% increase in demand. The number of applications per seat is 6 for the US News top 50 ranked institutions compared to the US national average of 3, demonstrating concentration of application volume among the top US MBA programs.
Harvard Business School is all set to increase its class size to 1,000 for 2023 and 2024 after allowing for deferrals of applications during the pandemic and also making Summer Internships compulsory.
Return on Investment – Cheaper Loans in the US
The cost of a US MBA from the top 30 US programs ranges between $110,000 to $125,000 for a year, with the median at $120,000 while the post-MBA annual median base salary ranges between $100,000 to $156,000 with the median at $150,000.
Within two to three years of working full-time, MBA candidates can recover the cost. Even a 2-5% annual increase in fees, along with global inflation at around 3%, still is favorable to students opting for education loans in the US as the interest rates have been controlled to 0.5% through quantitative easing, making 2022, the year to secure education loans at the cheapest rates.
| School Name | Total Cost (1 year) | Annual Median Base Salary | Median Sign-on Bonus |
|---|---|---|---|
| Stanford Graduate School of Business | $123,964 | $156,000 | $26,500 |
| University of Chicago Booth School of Business | $121,541 | $155,000 | $35,000 |
| NYU Stern School of Business | $121,541 | $150,000 | $30,000 |
| Columbia Business School | $118,777 | $150,000 | $30,300 |
| Dartmouth College Tuck | $118,047 | $150,000 | $30,000 |
| MIT Sloan School of Management | $117,998 | $150,000 | $34,000 |
| UCLA Anderson School of Management | $116,737 | $132,000 | $31,000 |
| University of Pennsylvania Wharton Business School | $115,464 | $150,000 | $27,500 |
| Haas School of Business | $110,595 | $140,000 | $31,330 |
| Ross School of Business | $110,000 | $135,000 | $30,000 |
| Darden School of Business | $97,630 | $143,000 | $30,000 |
European School’s Value Perception vs. US MBA’s Brand Recall
US MBA programs had to work much harder to attract and retain applicants prior to and especially during the pandemic. Desperate measures of reworking entry requirements like waiving off GMAT, reducing application fees, and increasing recruitment outreach programs had to be taken to maintain the applicant pool. Despite this, around half of the smaller than usual numbers who applied later deferred or renegotiated their offers. Some schools, like Purdue University, suspended their two-year campus-based MBA program entirely.
A small minority of business schools - just 17% - have acted fast in redesigning their MBA experience, from admissions to curricula to placements to Alumni relationships.
MBA Curriculum - Beyond Analytics and Accounting
MBA curriculums need a new approach to prepare students for a pandemic, climate-driven catastrophe, or democratized currency. If MBAs were once taught field-specific analytical techniques, the emphasis is now on the softer skills around creating dynamic communities and networks for large-scale impact.
MBAs are being tasked with applying their network-building and strategy skills to embed sustainability within and beyond uncertain industry frameworks, even as macro trends like the pandemic are dismantling and reconfiguring those very frameworks. Evidence of this can be found in the 17% of business schools that now offer Covid-specific course content, rather than just delivering the existing curriculum remotely. Though the pandemic can be easily incorporated into classroom discussions in leadership, human resources, and supply chain courses, it is much rarer to find it applied to the principles and techniques underpinning quantitative finance and accounting courses.
Top European Schools – Pivoting by Offering Value
European schools like London Business School (LBS), INSEAD, and Cambridge are dominating this transformation. For instance, LBS created a new “Economics of a Pandemic” elective, focusing on business operations amid a cash flow crunch, government policy responses, and managing staff redundancies. INSEAD now trains its MBAs in how to conduct high-stake strategic negotiations over Zoom.
These non-US schools represent just 10% of the MBA programs that were independently surveyed by the MBA Roundtable. However, data shows the non-US MBA programs are evolving and updating their curriculums faster to increase the value add and are bucking the trend by demonstrating higher demand amongst applicants.
US MBA – Good Yield
Historically, acceptance rates for US MBA programs have been comparatively higher over the past three years than European schools, which have unstable enrollment rates as the majority of applicants consider European schools as a backup.
| United States | 2021 | 2020 | 2019 |
|---|---|---|---|
| Volume | 38% | 67% | 37% |
| Acceptance Rate | 75% | 75% | 71% |
| Yield Rate | 59% | 60% | 61% |
| Europe | 2021 | 2020 | 2019 |
|---|---|---|---|
| Volume | 46% | 72% | 66% |
| Acceptance Rate | 50% | 44% | 46% |
| Yield Rate | 63% | 59% | 66% |
Future of MBA – Time to Be Pro-Active
The World Economic Forum Report on Future of Jobs had illustrated that artificial intelligence, the internet of things for connected devices, cyber security, and cloud computing as occupations with high demand until 2025. Many US schools’ last major updates on curriculum were way back in 2012. Top schools seem to adopt a reactive approach to such technologies as they become mainstream.
The most challenging aspect in the future will be finding the right balance between personalization of services that is data-intensive and privacy that restricts the information collected and how it’s stored. The curricula in top MBA schools should focus on the dynamic and complex reality of interrelated computational systems used to design and impact customer behavior.
The demand for STEM MBAs or technology-led MBA programs, like NYU Stern’s Tech MBA, is a sign of how specialized master’s programs would eat into the full-time MBA application pool. The General Management curriculum should go beyond peripheral themes in Leadership and Communication.
Without an aggressive push to revamp the curriculum and accommodate a wider cross-section of the society into the application pool, the risks of a declining application will further spread as competing jobs without an MBA in FinTech and Technology Consulting, and a new trend to recruit non-MBA candidates to CXO roles will further weaken the MBA brand.
Reference
