European schools thrive as MBA popularity slips

BRIAN Scullin is, by his own admission, an “all-American” guy. Except he does not hold that most American of qualifications, the MBA.

Scullin, who works for New York insurance group Marsh, started studying for the two-year postgraduate degree at the Smith School of Business at the University of Maryland, a few years ago, but dropped out after one term.

Instead, he switched to the part-time master’s in management programme at the London School of Economics. “It was about becoming a more global citizen,” he recalls.

Not only was it a cheaper option, but by having to travel to London only for a few days every couple of months, Scullin could keep his day job. A few months into the course, he bagged a promotion and a salary rise — a direct result of what he had learnt, he says.

The two-year MBA remains the most popular master’s-level degree course in the US. But applications are under pressure in 2016, according to figures published last week by the Graduate Management Admission Council (GMAC).

For the first time since 2012, fewer than half of all full-time two-year MBA courses globally experienced a growth in applications. This trend was more marked in the US, where only 40% of schools reported a rise in applications, compared with 43% worldwide.

More than half of US schools reported a decline.

There is a sense of a flight to quality. Globally, applications were up in 57% of the MBA programmes with enrolment of more than 120 students, which tend to be judged as better in business school rankings; only a third of programmes with 53 or fewer places saw an increase.

The hope for US business schools is that the decline in applications is temporary. Demand for MBA places tends to bounce back when unemployment is high. The trouble is that GMAC’s data show that the rebound in MBA applications since the financial crisis has been far less pronounced than after previous recessions.

While some US business schools are struggling, many of their European counterparts, which offer 12month courses for the same qualification, are seeing more applicants.

Shorter courses mean that European qualifications tend to be cheaper than a typical American MBA — although GMAC’s data suggest this is only part of the issue, because just 43% of American business schools with one-year MBAs saw an increase in applications in 2015.

Riold Furtuna was a research scientist at Yale University when he decided to apply for a master’s course. The obvious choice would have been Yale’s School of Management, which has one of the world’s highest-ranked MBA courses. Instead, he chose the European School of Management and Technology in Berlin.

“I have two kids and being out of the workforce for two years would have been extremely costly,” he says. And with the government subsidies he and his wife receive in Germany, monthly childcare costs are $200, compared with $1,700 while at Yale.

Furtuna believes the quality of teaching is a match for the US Ivy League schools.

Javier Arias is another arrival at a European business school — Nyenrode Business Universiteit in the Netherlands.

The attraction for Arias, who is from Costa Rica, was the ease of securing a study visa compared with the US, and this also allows him to stay to work for a year after graduation. © The Financial Times