U.S. MBA pro­grams look abroad to fill their class­rooms

Re­cruit­ment ▶ With U.S. en­roll­ment down, B-schools are woo­ing for­eign­ers ▶ They’re “com­pen­sat­ing for any de­cline in do­mes­tic rev­enue”

Bloomberg Businessweek (North America) - - News -

In De­cem­ber the Univer­sity of Rochester’s Si­mon Busi­ness School in­tro­duced loans that don’t re­quire co-sign­ers for in­ter­na­tional stu­dents en­ter­ing its full-time MBA pro­gram this fall. Si­mon is also cut­ting its tu­ition by al­most 14 per­cent and strength­en­ing ca­reer ser­vices to help for­eign stu­dents land jobs. The school re­cruited in more than a dozen coun­tries last year, hold­ing events in Buenos Aires, Cairo, Taipei, and Istanbul, among other cities. The ef­forts re­flect the school’s “very strong com­mit­ment to global di­ver­sity within its stu­dent body,” says Rebekah Lewin, as­sis­tant dean of ad­mis­sions and fi­nan­cial aid at Si­mon, where about half of the 98 full-time MBA stu­dents in the class of 2017 are from over­seas.

As the U.S. ap­petite for the MBA de­gree wanes, many of the coun­try’s more than 700 B-schools are step­ping up re­cruit­ing abroad, where re­gard for this Amer­i­can in­ven­tion ap­pears undi­min­ished. (Har­vard was the first in­sti­tu­tion to of­fer an MBA, in 1908.) The num­ber of U.S. cit­i­zens tak­ing the main busi­ness school en­trance exam, the GMAT, dropped by a third from the 2010 to 2015 test­ing years, which run from July 1 to June 30, while the num­ber of for­eign na­tion­als tak­ing the test rose al­most 19 per­cent, ac­cord­ing to the Grad­u­ate Man­age­ment Ad­mis­sion Coun­cil, the or­ga­ni­za­tion that ad­min­is­ters the exam. In­ter­na­tional can­di­dates ac­counted for 58 per­cent of the ap­pli­cant pool at full-time MBA pro­grams in the U.S. in 2015, ac­cord­ing to GMAC.

Nun­zio Quacquarelli, chief ex­ec­u­tive of­fi­cer of Quacquarelli Sy­monds in Lon­don, which helps busi­ness schools re­cruit abroad, says in­ter­na­tional stu­dents make up more than 35 per­cent of the class at over 50 of the 200 U.S. busi­ness schools he tracks, comp pared with just a “hand­ful” a decade ago. For­eign­ers ar are “pro­vid­ing vi­tal tu­ition rev­enue an and com­pen­sat­ing for any de­cline in d do­mes­tic rev­enue,” he says.

En­rollme En­roll­ment in U.S. MBA pro­grams is down 11 pe per­cent since 2009, ac­cord­ing to a sur­vey of 265 B-schools by AACSB In­ter­na­tional, an ac­cred­it­ing group. Tom Robin­son, AACSB’S pres­i­dent and CEO, at­tributes the trend to a shift away from the MBA to spe­cialty masters in ar­eas such as mar­ket­ing and non­profit man­age­ment. AACSB’S data show an over­all in­crease in en­roll­ment if those are counted. “I’m not wor­ried about it, be­cause there’s al­ways go­ing to be some sub­set of the pop­u­la­tion that wants the gen­er­al­ist man­age­ment education and wants to do it full time,” he says.

This is a starkly dif­fer­ent out­look than that of­fered by Roger Martin, who led the Univer­sity of Toronto’s Rot­man School of Man­age­ment for 15 years. Martin, who stepped down as dean in 2013 and now heads a re­search in­sti­tute at the univer­sity, says U.S. MBA education is in “the de­clin­ing phase of its long and rel­a­tively il­lus­tri­ous his­tory.” He pre­dicts that half of U.S. busi­ness schools may not be op­er­at­ing in 10 to 15 years, be­cause there won’t be enough en­roll­ment to sup­port their “very bloated” cost struc­tures.

Ramp­ing up in­ter­na­tional ad­mis­sions is a tem­po­rary fix, Martin says. And help­ing for­eign grad­u­ates land well­pay­ing jobs in the U.S., which is what most of them as­pire to, may prove a big headache. A stu­dent from In­dia doesn’t want to col­lect his de­gree, he says, and “go back to In­dia to an In­dian salary.”

Fabio Berg­amo, a Brazil­ian who grad­u­ated from Columbia Busi­ness School last May, says get­ting per­mis­sion to work in the U.S. has been a “dis­ap­point­ing” strug­gle. Even though his em­ployer, a fash­ion over­stock startup in New York, is spon­sor­ing his work visa ap­pli­ca­tion, there’s no guar­an­tee the govern­ment will grant it. “You come here, you study, you want to stay here, you have a com­pany that wants you to work for them, and the lot­tery just might not pick you,” he says. “I’m in the dark if I’m go­ing to be here af­ter July.” Prodigy Fi­nance, the Lon­don-based len­der that fi­nanced Berg­amo’s de­gree, says in­ter­na­tional MBA seek­ers in the U.S. have be­come an im­por­tant part of its busi­ness. It ex­panded into the U.S. in 2014, pi­lot-test­ing loans at the Univer­sity of Michi­gan’s Ross School of Busi­ness and Columbia Busi­ness School. Last year it loaned about $100 mil­lion in to­tal, half to for­eign stu­dents at about 45 top-ranked U.S. busi­ness schools. “There’s been huge growth in the U.S.,” says Ri­cardo Fer­nan­dez, the 75-em­ployee com­pany’s head of busi­ness de­vel­op­ment. “In­ter­na­tional stu­dents are crit­i­cal to MBA pro­grams.”

“You come here, you study, you want to stay here, you have a com­pany that wants you to work for them, and the lot­tery just might not pick you” The bot­tom line In 2015 in­ter­na­tional can­di­dates ac­counted for 58 per­cent of the ap­pli­cant pool at full-time MBA pro­grams in the U.S.

Edited by Cristina Lind­blad Bloomberg.com

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