Penpisut Chaovanayan is one of a fresh cohort of MBA students who decided that the economic crisis was the time to pause their career and upgrade their credentials. In a strong economy, prospective students tend to keep working and chase promotion. In a recession, the opportunity cost of not working shrinks.
This January, Chaovanayan enrolled at Rotterdam School of Management in the Netherlands after leaving her consultant role at Deloitte in Thailand. “It is a great time to study because the consulting industry has been hit hard by coronavirus and promotions have been frozen,” she says.
The 27-year-old thinks an MBA will give her the technical and leadership skills to climb the ladder at Deloitte as the economy improves. “I plan to go back to the firm in 2022 as a much stronger candidate for promotion,” she says.
Many high-fliers are making the same choice as Chaovanayan, taking shelter from a world economy reeling from coronavirus. Two-thirds of MBA programmes reported an increase in demand in 2020, according to the Graduate Management Admission Council, which administers the GMAT entrance exam.
Business schools expect the surge in demand to continue, but is 2021 the right year to apply? If the main aim is career progress, there is encouraging evidence: a GMAC survey of employers published in September suggested that demand had largely recovered from the pandemic. (The survey predated the coronavirus variant first detected in the UK.)
The proportion of technology, banking and consulting companies planning to hire MBAs fell from 92 per cent before coronavirus to 77 per cent by July. However, 89 per cent intended to hire MBAs in 2021, although the median projected base salary for the class of 2020 fell from $115,000 in 2019 to $105,000 after the start of the pandemic.
Bain & Company, the consultancy, expects to take on more than 250 MBA interns in 2021, which would be a fresh record. “If you want to get an MBA, now is a good time because you would be graduating when the market is picking back up,” says Keith Bevans, global head of consultant recruiting. “The last thing you want to do in a strong job market is take time off to go back to school.”
The approval of coronavirus vaccines has raised hopes for a full return to campus teaching, after the pandemic forced a switch to remote instruction. “It is too early to say how soon we will restore the full richness of campus life, but with the development of vaccines, that goal is now in sight, perhaps as early as the last quarter of 2021,” says Anjani Jain, deputy dean for academic programmes at Yale School of Management. Like most schools, Yale adopted a “bricks and clicks” approach. “We expect to continue with our hybrid format at the start of 2021, and as public health conditions and university protocols permit, we will scale up the in-person component,” says Prof Jain.
Full-time students want to come to campus to learn from and network with classmates and faculty, but the pandemic has often forced them to take virtual classes. That led to a rebellion over MBA tuition fees at some schools, with students demanding refunds for online learning that did not meet their expectations.
“The quality of the MBA is diminished when students can’t interact face to face,” says Chioma Isiadinso, chief executive of Expartus, an admissions consulting firm. “One of the biggest selling points is the collegial experience and all the interactions that happen outside the classroom.”
In response, some schools trimmed tuition fees, also to reflect the economic crisis, which will have made funding more important for prospective students. Brandon Kirby, director of marketing, sales and admissions at Rotterdam, says students are struggling more than ever to finance their studies. “Banks are reviewing applications more critically than ever,” he adds. “Alternative lenders are also experiencing significant instability. Some students have lost approved loans even after enrolling. It keeps me up at night.”
Like other schools, Rotterdam has increased the provision of scholarships, but Kirby fears that with the pandemic straining business schools’ finances, the patchwork funding system for MBAs “is reaching maximum capacity”.
Another important consideration for prospective students are the travel restrictions to stem the pandemic: more MBA programmes are reporting growth in domestic rather than overseas demand. This has hit international diversity, traditionally a big draw, at some business schools.
At Duke University’s Fuqua School of Business in North Carolina, 50 mostly overseas students deferred MBA places out of 838 who were admitted in 2020. Bill Boulding, the dean, says the main issue is securing a US visa, due to the closure of embassies, though students can take classes remotely. “They still feel they are part of our community, even though they are thousands of miles away,” he says.
Yet there was a global rise, from 3 per cent to 7 per cent, in MBA students deferring their entry in 2020. “It could be an even more competitive market for MBA places as those who deferred will be starting in 2021,” says Andrew Crisp, a higher education consultant.
Meanwhile, demand for short vocational courses surged last year, and there are cheaper, more flexible alternatives to a full-time MBA, such as Jolt, an Israel-based company whose “Not An MBA” programme costs just £4,500.
Sevin Yeltekin, dean of Simon Business School at the University of Rochester, New York state, says MBAs have a different value proposition. The degrees are rooted in peer-reviewed academic research, have external oversight from accreditation agencies, and have been tested over time, she says. “That said, like every industry, business schools have to be nimble and continue innovating to maintain relevance.”