MBA Admissions: A Buyer’s Market or Fire Sale?

The time to apply to business school is now. It isn’t next month, it isn’t this summer, and it certainly isn’t next fall. This is a “drop what you’re doing and apply” moment, an extraordinary opportunity that most potential MBA and specialized business master’s degree applicants will probably never again experience during their lives.

But why is right now the best time to apply?

Before we answer that question, first consider a few excerpts from a remarkable March 2020 op-ed essay by Dr. Andrew Ainslie, the dean of the University of Rochester’s Simon School of Business.

Drawing conclusions based on a survey of 300 likely MBA applicants that appeared in Poets and Quants only days before, Dean Ainslie argues this moment encompasses “an extraordinary one-time opportunity for anyone considering doing an MBA.” He continues:

What does that mean to those brave enough to do an MBA? It means that they will get into a far better program than they ever could have before. If you could only get into the 100th ranked school, maybe now you can get into the 50th ranked. If 50th, perhaps now the 25th. If 25th, perhaps top 15. . .

Apply now, and apply to schools that a year ago you couldn’t dream of getting into. That means that even if you already have a few applications in place, apply to a couple more of your dream schools that were unattainable for you a year ago. This is the opportunity of a lifetime to get an extraordinary education, develop leadership skills and network with alumni in industries you’re interested in.

More Flexible Admissions: A Spotlight on the Darden School of Business

Next, let’s also take a look at the overhauled, “radically flexible” admissions policy announced a few days ago by the University of Virginia’s Darden School of Business. While reviewing this news, keep in mind that among elite business schools, Darden operates a relatively small MBA program, with a capacity that’s only a fraction of the Harvard Business School or the University of Pennsylvania’s Wharton School.

Last year, 2,192 candidates applied for a space in a Darden MBA class with only 338 available slots, meaning that a random applicant had only about a 15 percent probability of admission. In other words, for most candidates, applying to Darden last year would never have been worthwhile.

However, last year’s Darden admission statistics have nothing to do with the current situation, because the school appears to have thrown their previous years’ admission models out the window. Reported by P&Q, here are some of Darden’s astonishing changes:

Darden said it would now accept undergraduate entrance exam scores on the SAT and ACT in lieu of a GMAT or GRE, will “transition” its round three deadline of April 6 by more than three months to July 15th and even nudge writers of recommendation letters on behalf of candidates.

Given the widespread closures of test centers, the school even opened the door to consider CPA, CFA and other certifications as evidence of a candidate’s academic merit. It is also accepting LSAT, MCAT and Executive Assessment scores instead of the GMAT or GRE. The new July 15th deadline is little more than a month before the start of Darden’s first academic quarter in mid-August.

In a letter to prospective applicants, Darden’s admissions director Dawna Clarke wrote:

Applicants are encouraged to document all alternative evidence of strong academic merit. In addition to undergraduate GPA, we will take into strong consideration the following examples of academic merit: certification programs, CPA, CFA and post-baccalaureate relevant coursework, among others.

What’s Going On Here?

Darden’s bellwether announcement marks a remarkable development in the history of American higher education. And policy updates similar to Darden’s announced by several business school admissions offices within only the past few days—no doubt with many more on the way—signal revolutionary changes that potential business school applicants need to understand.

Essentially, at several prominent business schools, the market for MBA degrees appears to have suddenly collapsed. This collapse in demand owes to several factors triggered by the COVID-19 pandemic, which we first covered here on BSchools in early March 2020.

At many business schools, international applicants comprise as much as 45 percent of an MBA class. Many of those candidates may have accepted admission offers during early admission rounds. However, it’s unlikely that governments will lift COVID-19 travel restrictions anytime soon, essentially barring these students from showing up on campus this fall.

The business schools temporarily plan to operate their classes online. However, many MBA program admits may balk at the reduced value proposition the schools will offer them. Especially if the schools fail to discount tuition and fees, a large proportion of these admits may view online instruction as a poor substitute for the on-campus MBA experience they had expected. Two main reasons probably exist for that opinion.

First, unlike with specialized business master’s degrees, much of the value that drives candidates to apply to on-campus MBA programs is the opportunity to develop relationships with other future business leaders who already accumulated years of professional experience. But much of the market for the top residential MBA programs seems skeptical that they’ll experience as much of an opportunity to develop relationships like these as effectively through webcams and computer screens. That is certainly achievable, of course, but it is not the level of value this market had expected.

Second, lower-quality, hastily-arranged online instruction offered by business schools with neither experience offering remote education nor established online infrastructure cannot possibly compete with the educational quality of the best online MBA programs. We explored this issue in depth in our first BSchools update on the COVID-19 crisis. Here’s an excerpt:

Stanford’s GSB and business schools like it that before March 2020 didn’t offer MBA curricula online face a serious problem. Online classes desperately slapped together at the last minute—typically using off-the-shelf software like Zoom designed not for instruction but for virtual business meetings—are pathetic substitutes for the big-budget, premium-quality online educational courseware developed by all the top online MBA programs we’ve profiled here on BSchools since early 2018.

The investments required to create sophisticated courseware of this caliber for the top online MBA programs at schools like the University of North Carolina at Chapel Hill’s Kenan-Flagler Business School, Carnegie Mellon’s Tepper School of Business, and the University of Michigan’s Ross School of Business can seem staggering.

2U, an online program management (OPM) vendor whose clients include UNC, claims that it can cost as much as $10 million upfront to create and market a single online graduate-level course. And that sum doesn’t include the added licensing fees for critical software components like Instructure’s Canvas platform, which we profiled in our BSchools report on learning management systems at the best MBA programs.

Now, although Dean Ainslie asserts that “there is some chance that one semester will be online,” other experts expect that most American universities will not reopen their buildings until early 2021.

For example, Professor Scott Galloway of New York University’s Stern School of Business expects that he’ll be teaching his brand strategy course remotely this fall. He doesn’t expect on-campus classes to resume without a proven, bullet-proof medical intervention available to all students and faculty.

If that’s the case, at least 25 percent of the Class of 2022’s MBA education will take place online. And many admits will have second thoughts about whether in exchange they will want to pay as much as $200,000 in tuition. That’s especially true for foreign admits who may not be allowed to travel to the United States during 2021 if a likely second or third wave of the pandemic further interrupts international air travel.

For Those Not Bothered, A Tremendous Opportunity

However, a lot of other candidates aren’t bothered by limitations like these. For these potential applicants, the collapse in MBA applications offers a tremendous opportunity. They include applicants:

• From the United States, who won’t face restrictions on international travel.
• Who are more interested in receiving the diploma than optimizing their educational quality or in-person networking opportunities.
• Who feel comfortable learning and making connections online.
• Who care about winning admission at the best-ranked MBA program they can, despite compromises necessitated by the current public health climate. A lot of candidates may be willing to sacrifice some educational and networking benefits if in exchange they can win admission to a prestigious M7 or top-20 business school that never would have considered them during previous years.
• Who are late in starting their MBA applications “journey.” In a typical admissions cycle, by April, it would be too late to apply, and there would be no time to study for grueling admissions tests like the GMAT, GRE or EA. But during April 2020, many schools are willing to accept applications until only a couple of weeks before the scheduled start of classes this fall. And like Virginia Darden, several top business schools are eager to substitute or even waive their admission testing requirements. In fact, some business schools like MIT are even willing to grant “provisional” admissions subject to receiving acceptable scores later.
• Who were rejected. Believe it or not, some admissions consultants even recommend that “dinged” applicants request reconsideration without waiting for next year’s admissions cycle.
• Whose profiles display noncompetitive aspects likely to land them on waitlists, like low grade point averages or admissions test scores. Typically, business schools don’t accept many applicants from their waitlists, and those lucky admits rarely receive scholarship offers. However, this year isn’t typical.

For example, David White of the top-ranked admissions consulting firm Menlo Coaching has recently observed increased admissions of domestic applicants from waitlists: “At one top school, one of my candidates with a low GMAT was just admitted from the waitlist, and at another, a candidate was admitted from the waitlist with a $30,000 scholarship,” he told BSchools. White notes that it’s more common for business schools to admit applicants from waitlists without awarding them any merit-based aid.

A Coming MBA Fire Sale?

In Fall 2019, BSchools published an in-depth report on the current buyer’s market for MBA degrees. But now, only a few months later in April 2020, it’s fair to ask if that buyer’s market might be turning into a fire sale. After all, business schools are extending their deadlines, waiving admissions testing requirements, and even offering scholarships to candidates much less deserving than their usual recipients.

In this climate, one who is even remotely considering an MBA degree would be crazy not to apply. And by not doing so, after the window of opportunity had slammed shut, one would risk tremendous regrets.

The world’s wealthiest individual—Jeff Bezos—often talks about how he decided to start Amazon because later in life he wanted no regrets:

I wanted not to have regrets. I knew for a fact, I have this idea, and if I don’t try, I’m going to regret having never tried. And I know also, if I try and fail, I’ll never regret having tried and failed.

As soon as I thought about it that way, I knew I had to try.