New Report Examines Changing Costs of an MBA

The cost of obtaining an MBA from a global top 20 program has increased 6.3 percent in 2022, according to the recently published Business Because Cost of MBA Report 2022. The estimated average cost now totals $189,000, including tuition, fees, living costs, healthcare, and materials. This continues the steady upward trend of the last few years; costs averaged $176,000 last year and $168,000 in 2020. 

The report’s 2022 analysis includes only the FT top 20 schools, while last year the analysis included the FT top 20 plus six other top-ranked U.S.-based schools (who had opted out of the 2021 rankings due to the covid-19 pandemic). 

Some of the key findings include:

• NYU Stern is the most expensive MBA program within the top 20 with a total cost of $246,506. It is followed by MIT Sloan ($239,990) and Wharton ($237,160). On the other end of the scale, CEIBS comes in as the least expensive in the top 20 at $84,500, followed closely by SDA Bocconi ($85,525). These are the only two schools on the list with totals falling under $100K. 

• Within the top 20, tuition for the U.S. programs average $225,605, significantly higher than the averages for Europe ($121,583) and Asia ($104,881). 

• Differences in cost between the U.S., Europe, and Asia are magnified by both the strong dollar (making it more cost effective for Americans to study abroad and increasing the expense for international students to study domestically), and differences in average program lengths. MBA programs in the U.S. typically last two years. Those in Europe and Asia run for 12 to 18 months. 

• Between 2021 and 2022, expenses increased the most at Cornell Johnson (+11.4 percent) and Berkeley Haas (+8.6 percent). The most significant decreases, which are enhanced by fluctuations in the currency markets, were reported by the London Business School (-21.1), CEIBS (-15.1), and HEC Paris (-10.5). 

• Tuition expenses, which make up the greatest proportion of costs, are the highest at Wharton ($165,748), NYU Stern ($164,652), Columbia ($160,944), and MIT Sloan ($160,800). They are the lowest at CEIBS ($68,300) and SDA Bocconi ($64,800). 

• Living costs vary considerably based on the school’s location. Within the U.S. schools, the estimated cost of living was highest for Stanford ($72,396), followed by NYU Stern ($67,792), and Harvard ($62,780). Cost of living was the lowest at Duke ($40,608). 

• Healthcare costs are considerably higher in the U.S. than in Europe or Asia. Domestically, the Yale School of Management offers the least expensive healthcare coverage at $5,512. It is important to note that some schools bundle healthcare costs with other personal student costs, making it difficult to compare schools directly. 

While the price of an MBA is significant and prospective students should carefully consider each of the underlying cost components, data shows that the degree positions students well to pay off loans. This is especially true for graduates of elite programs. Prospective students should also keep in mind that all applicants are considered for merit-based scholarships (through Round 2), which are more likely with a competitive application package.  

Business Schools Speak Out in Defense of International Students

Early last week, the Immigration and Customs Enforcement Agency announced updated guidelines for the Student and Exchange Visitor Program (SEVP), which will impact foreign-born students studying in the U.S. The updates include the following:

• Foreign students on F-1 visas who take full online course loads will not be permitted to maintain residency in the U.S.

• Students may take a hybrid course load with both in-person and online offerings. The student’s school must certify that he/she is not taking an entirely online course load.

• Students whose course loads change throughout the semester will still be subject to the rule. If a student changes her course selections or is required to switch to online-only at any point in the semester, she must notify the agency within ten days.

• Students whose schools are online-only should consider transferring to a school offering in-person instruction to lawfully remain in the country.

• Students who remain in the U.S. while taking an online-only course load may face “immigration consequences.”

The guidance, which was updated in response to the COVID-19 pandemic for the spring and summer 2020 semesters, to allow for online study, is a reversion back to the previous ruling that SEVP does not allow for a student to take an online course load and maintain U.S. residency. However, given the uncontrolled nature of the pandemic throughout much of the country, schools and students have expressed shock at the update, particularly as many universities are still seeking the safest means to proceed with classes in the fall and must now contend with decreased flexibility. The universities that have publicly responded to the guidelines have been clear in their intentions to support their international students.

• NYU announced that its fall plans would include a hybrid model with an emphasis on accommodating international students. Stanford, which had planned to provide most courses online, also pledged to support its students in finishing their degrees. Columbia University communicated its intentions to “alleviate the negative effect of these new regulations,” as well a plan to provide pop-up centers for students unable to return to campus.

• Princeton, MIT, Duke, California Institute of Technology, and Dartmouth told Forbes that they are reviewing the policy’s implications and noted the importance of international students to their communities.

• MIT and Harvard have filed a lawsuit against the administration stating that the option to offer remote courses during the pandemic is “of paramount importance to universities across the country.” Northeastern University has also joined the suit and Cornell is supporting it via amicus brief.

• The California State Attorney General has also announced a lawsuit against the new policy.

The updated guidelines are thought to be part of the Trump Administration’s push for schools to re-open for in-person instruction in the fall, as well as part of continued efforts to restrict immigration. Last month, the President suspended the H-1B visa program for the remainder of 2020 via executive order. While the order kept the Optional Practical Training (OPT) program in operation, which allows international students to work in the country for one to three years, the H-1B visa is often seen as the goal for OPT participants.  As such, the executive order disappointed business schools as it may serve to discourage international students from studying in the U.S. by making it harder to find long-term employment post-graduation. Last October, the Graduate Management Admissions Council (GMAC) supported by a group of 50 business school deans, published and signed a white paper calling for an increase in H-1B visas to encourage the flow of international talent into the country.

There is a sense among U.S. business schools that the administration’s restrictions on immigration and work visas will only further harm their ability to compete internationally. According to GMAC, almost half (48 percent) of MBA programs saw a decline in applications from international students for their 2019 entering classes.

Even Elite U.S. MBA Programs Experience Application Drop as International Students Look to Study Elsewhere

Last week, the Wall Street Journal reported that even elite U.S. MBA programs experienced a steep drop in the number of applications they received in the 2018-2019 admissions cycle compared to the year before. The business schools at Dartmouth, Yale, Northwestern, and Duke each reported double-digit percentage drops in applications compared to the prior year, and even the most prestigious programs such as Harvard, MIT, Stanford, University of Pennsylvania, and Columbia were affected. The declines continue the downward trend for the MBA. The Wall Street Journal also reported new data from the Graduate Management Admission Council (GMAC), which shows application numbers falling for the fifth straight year. The admissions cycle that ended in the spring of this year garnered 135,096 applications for programs including the MBA; a total year-over-year decrease of 9.1 percent, which is larger than the previous year’s decline of 7 percent.

Though the declining applications are attributed to many factors, of primary concern is the perceived change in environment for international students and immigrants. Currently, in the U.S., 85,000 H-1B visas are issued annually to highly-skilled workers via lottery with the demand far exceeding the supply. According to the Wall Street Journal, under the Trump Administration, there have been an increasing number of requests for H-1B visa applicants to provide supplemental information and many are still being declined.  Prospective students’ concerns about the availability of work visas post-graduation are impacting their school selection. The Wall Street Journal quotes Matthew J. Slaughter, dean of the Tuck School at Dartmouth: “A lot of individuals, a lot of terrific international applicants, they’re choosing not to apply to any U.S. schools,” he said.  

This is evident in the 13.7 percent decline in international applications seen this year for U.S. programs. According to a GMAC report released last week, Early Warning Signals: Winners and Losers in the Global Race for Talent, the U.S. experienced, “a steeper decline than any other country in the world, and a drop that came amidst largely rising or stable applications everywhere else in the world.” Both Canada and Europe reported increases in the number of international applicants in 2019. And Chinese business schools reported a 5.2 percent increase in applicant numbers, though it was driven primarily by domestic demand. While China still sends the largest number of business school students abroad, Chinese applicants are increasingly opting to attend school in Asia.

The GMAC report highlights the changes in international demand for U.S. business programs as a leading indicator for international talent mobility, suggesting that while business schools may be experiencing the negative effects now, the U.S. workforce may suffer losses in talent and productivity in future years. The report states, “Indeed, immigrants play an outsized role in innovation and entrepreneurial activity. According to a Brookings Institution study, ‘…while immigrants represent about 15 percent of the general US workforce, they account for around a quarter of entrepreneurs and a quarter of inventors in the US. Moreover, over a third of new firms have at least one immigrant entrepreneur in its initial leadership team.’ For startup firms valued at $1 billion or more, in particular, immigrants have started more than half, and they play key management and product development roles in more than 80 percent of these companies.”

The GMAC report goes on to recommend policies that the U.S. can adopt to safeguard its talent pipeline in future years, while also bolstering international applicants to U.S. business schools. These include updating the visa regulations by removing “per-country” visa caps and reforming the H-1B visa program, as well as creating a “Heartland Visa,” which encourages immigration into regions of the country that could most benefit from injections of talented individuals. Fifty business school deans and 13 CEOs have signed an accompanying open letter that endorses the policy recommendations of the GMAC report and, more broadly, calls for a change in the U.S. approach to high-skilled immigration. Bill Boulding, dean of Duke University’s Fuqua School of Business, while expressing optimism about the future of U.S. business schools to the Wall Street Journal, notes that schools will need to continue to change to address the current environmental challenges. “The pipeline of talent to the U.S. is being diverted elsewhere. We see a pattern that is really alarming,” Boulding said. 

Reduced International Demand for U.S. Business Schools and a Robust Economy Create a Beneficial Environment for Applicants

New data released this month from the General Management Admissions Council (GMAC) shows that U.S. graduate business schools are still suffering from a decrease in international applicants. Just under half, 48 percent, of U.S. programs reported in the GMAC Preliminary Application Trends Survey that they had received fewer international applications at this point compared to the same time last year. This survey, which collects mid-cycle application data from graduate business schools, includes data from over 700 graduate business programs around the world. Among full-time two-year MBA programs in the U.S., about 68 percent reported application declines from international students, while another 9 percent reported that applications were flat. Fewer than a quarter of the programs reported that applications were up. Among the 68 percent reporting declines, almost one-third of respondents reported that the applications were significantly down, 17 percent reported moderate declines, and 19 percent reported slight declines.

This report coincides with data that GMAC released last week from the Prospective Students’ Survey. While prospective students’ plans to apply to international programs have stayed relatively flat over the last few years, hovering around 58 percent, there have been changes in students’ location preferences. Among applicants who plan to apply to international programs (not within their country of residence), 62 percent plan to apply in Western Europe, with U.S. programs following at 61 percent. While the percentages are close, this is a switch from 2017 when the U.S. was the most named location at 63 percent followed by Western Europe at 58 percent. Prospective students were also asked to select their one most preferred location. Both the U.S. and Western Europe received equal proportions of respondents at 40 percent each. The longer-term trend, however, shows a gradual decline in preference for the U.S. between 2009 and 2016, with a sharper downturn in the last two years to 40 percent; the exact opposite trend occurs for Western Europe, which shows a gradual increase in preference with a more marked uptick to 40 percent since 2016.

Among all candidates, those applying domestically and internationally, the U.S. is still the most popular destination to apply for an MBA. However, the percentage of all applicants planning to apply to U.S. programs declined from 2017 to 2018 by three percentage points, from 68 to 65 percent, while interest in Western Europe increased from 37 percent to 42 percent. Interest in Canadian programs increased just one point, to 20 percent.

The decrease in international student applications, combined with the strong economy, and the rising cost of MBA programs, appears to be impacting overall application volume to U.S. business schools. Poets and Quants published an article last week declaring it a “buyer’s market” for admitted students. Though acknowledging that official numbers have yet to be released, according to admissions officers, there have been lower application volumes again this year, even among the top ten schools. This makes for the second year of decreasing applications, even amongst the highly competitive programs. Admitted students are reportedly receiving higher than normal numbers of acceptances from rival schools, as well as generous scholarship offers. The Poets and Quants article quotes an unnamed admissions officer from a top-ten ranked business school as saying, “When you have this many schools down and many are down for two years in a row, yield is going to be a nightmare because everyone has had to dig deeper in the pool. I would not be surprised if schools had to go deep into their waitlists or have to shrink their classes. It’s the collective impact of so many schools being down that is unique.“ Yield, which is the total number of admitted students who matriculate into a program, is important for balancing both the selectivity and revenue components of the program. 

QS Global MBA 2019 Rankings Place Four US Schools in the Top Five

The QS Global MBA 2019 Rankings were released this week and Stanford University’s Graduate School of Business ranked first. This is the second year that QS has released global rankings, which include over 250 MBA programs internationally. The ranking’s algorithm incorporates scores for Entrepreneurship & Alumni Outcomes, Return on Investment, Thought Leadership, Employability, and Diversity.

In both 2018 and 2019, 13 of the top 25 programs were based in the US. Also in 2019, four of the top five were based in the US, up from two in 2018. Schools in the US scored particularly well in the areas of Employability and Thought Leadership, while international programs fared better in Diversity and Return on Investment.

There was one new entrant to the top 25, CEIBS, which is based in Shanghai China.

Rankings Indicators

As with all rankings, a closer look at the underlying components, which make up the Overall Score, can provide beneficial information for prospective MBA students. Below are charts showing the top ten ranked schools and their scores for each indicator.

The Entrepreneurship & Alumni Outcomes indicator makes up 15 percent of the overall score. Stanford not only received a perfect score within this indicator but was also about eight percentage points higher than any other program. Harvard, Penn (Wharton), and Michigan (Ross) were also included among the top ten. This indicator should be of particular interest to those keen on pursuing entrepreneurial options post-MBA.

The Return on Investment indicator accounts for 20 percent of the overall score. Programs in the US did not fare as well in this category, though Carnegie Mellon (Tepper) and Michigan (Ross) are included within the top ten. International programs with shorter durations saw the highest scores, as shorter programs save students money, both in terms of tuition, as well as lost wages.

The Thought Leadership indicator makes up 15 percent of the overall score.  US schools scored well in this category with MIT (Sloan) receiving a perfect score, followed closely by Penn (Wharton).

The Employability indicator was given the heaviest weight, and accounts for 40 percent of the overall score. The top five programs, four of which are US schools, all received scores of 99 or higher.

The Diversity indicator, which includes Class and Faculty diversity, accounts for ten percent of the overall score. For the second year in a row, no schools from the US were in the top ten in this category. And this is not expected to change significantly in the coming years as international applications to US programs continue to decrease.

Find full results here: https://www.topuniversities.com/university-rankings/mba-rankings/global/2019