GMAT vs. GRE: The Rise of the GRE’s Popularity
Maria |
February 1, 2022
  • UPDATE MARCH 2023: The GMAC just announced a major change / update to the GMAT test: they are calling it the “GMAT Focus Edition”. So far, it looks like it might be, frankly, an easier / shorter / “liter” version of the GMAT.
    • Notice how, in this podcast which was recorded in February of 2022, my co-host Caroline and I proposed a variation of this very idea to GMAC, ha ha (note to GMAC: please feel free to send us hefty consulting fees for this idea, hahahahaha  🙂

With an ever-increasing number of MBA applicants applying to business schools, the process is becoming increasingly competitive. The GMAT has long been “the standard” for MBA admissions and was for a long time, the ONLY option for MBA applicants. But the GRE is gaining market attention and more and more students are opting to take the GRE over the GMAT.

In this episode of Poets & Quants, John, Caroline, and Maria will help you figure out which testing option is best for you while you pursue your dream of attending business school.

Discussion points include:

  • Why the GMAT is something that we all love to hate
  • Why a GMAT official is accusing ETS, the creator of the rival GRE test, of intentionally misleading people with this comparison tool that has been available on their website for years
  • The differences between the GMAT and the GRE, and how to decide which one to take 
  • Why INSEAD discontinued accepting GRE scores 
  • SHOULD applicants worry about which exam to take, the GMAT or the GRE?
  • The reasons for the decline in GMAT test takers in 2021
  • Whether or not GMAT’s long-held monopoly in MBA admissions can be reclaimed and what they might want to do instead.  

Episode Transcript

[00:00:07.510] – John

Well, hello, everyone. Welcome back. It’s Business Casual, our weekly podcast. This is John Byrne with Poets and Quants, and with my co host, Maria Wich Vila and Caroline Diarte Edwards. Carolina is of course is the former admissions head at INSEAD and a co founder of Fortuna Admissions. And Maria is the founder of Applicant Lab. Now, we’ve missed you for the past few weeks, and I want to explain why. I took a little vacation to Italy to celebrate the new Year. And it turned out that I ended up testing positive for COVID and so did all of my three travel mates. So I ended up in Quarantine in Italy for an additional 15 days. Now, it wasn’t hard duty. It was quite pleasant, and my symptoms were mild, but it meant that I was in a seaside village right next to the Adrianic Sea. It was beautiful, but I was pretty much isolated and couldn’t do a whole lot. But now I’m back, and so is Maria from a snowstorm in Tahoe. Caroline narrowly escaped a snowstorm in Tahoe. And we’re all here back to think about business education and what’s going on and to help you navigate this journey to business school.

[00:01:26.550] – John

The big news really, this past week involves the GMAT, and we know this is the test we all love to hate because it’s one of the major hurdles of getting into a really good MBA program. Some people have the opportunity and luxury of studying for months on end, which gives them tremendous advantage over people who don’t have all that time. Some people can avail themselves of highly expensive tutors and classes and prepare for the test. Others can’t. There are issues about the fairness of it and the use of it by business schools. But what’s going on right now is fascinating. An official at GMAT, which is the organization that administers the GMAT test, is accusing ETS, the maker of the rival GRE test, of deliberately misleading people with this comparison tool that they have had on their website for many years now. Many people in the business admission officials, admission consultants, applicants themselves rely on this comparison tool to plug in their verbal and quant scores on the GRE to basically get a predictive GMAT score, to give you a sense of your odds of whether you can get into a program or not. And this GMAT official is saying that the test that comparison tool is bunk.

[00:02:54.990] – John

He says it can be off by as many as 200 GMAT points. That is nonsense, that it’s a disservice to both applicants and business schools. And yet for years we’ve all relied on it. I wonder, Caroline, what do you think of this?

[00:03:11.790] – Caroline

Well, it is a different test, right? So I understand that you can’t necessarily say there’s an exact equivalent. I have always paid more attention to the percentiles rather than those conversion charts. So if I’m evaluating a GRE score, I always look at where they stand in the GRE percentiles. Having said that, I mean, it’s very strongly worded. Right. Their statement. And given their situation with the downturn application or the a downturn in GMAT testing volume, it does smack of desperation because ETS is eating their lunch.

[00:03:50.350] – Maria

Right.

[00:03:50.960] – Caroline

And this goes back years.

[00:03:53.690] – Maria

From what I remember.

[00:03:54.610] – Caroline

ETS had the contract for administering the GMAT. Right. And then GMAT took it away from ETS and gave it to Pearson View. And therefore to get back into the market, ETS started pushing the GRE as an alternative to GMAT. So that’s how all this sort of started back a few years ago. And GRE has been successful in winning significant market share in this market. And I think that’s perfectly legitimate. Right. I welcome that. I welcome that schools are open to candidates taking different tests. I think it broadens the pool. It increases the diversity and the applicant pool. But there may be some legitimacy in their claim that you can’t say that the tests are exactly equal. Right. I mean, GMAT did design a GMAT as a test for business schools. Right. That’s how it was designed. The GRE is not designed for business schools specifically. It has a much broader application. And therefore, yes, it’s correct to say that they are not exactly equivalent.

[00:05:07.620] – John

Yes, Maria, I’m sure you’ve used that comparison tool with your candidates over the years.

[00:05:12.700] – Maria

Yeah. And it’s funny, it’s really a shame that this critique is coming from someone from GMAT themselves because then it sort of reeks of sour grapes. And I actually think that the critique is a legitimate one. So I wish it would have come from perhaps a less invested party. But I always tell people to look at the whatever, because now more and more schools are actually reporting their GRE scores, and many of them are thankfully breaking it out by the quantitative and the verbal. And so I tell people, just look at what those numbers are and how you compare against them. Because I’ve actually in the past, I’ve sort of given myself a migraine trying to figure out like, okay, I work backwards using that tool. And I’m like, well, wait a minute, this is telling me that it’s a 710. I’ll give you an example. Let me just use a concrete example. So I was looking at a top school and they said, okay, our average verbal score for people who get in is 165, and our average quant score is 164. So when you publish those or you put those into the GRE score converter, it says, oh, that’s the equivalent of a 710.

[00:06:19.180] – Maria

But that schools average GMAT is over 730. And so it’s like, well, first of all, wait a minute. Just based on that alone, it sounds like it’s kind of easier to get in using the GRE. But then I take it one step further. And the Ets’own tool not only said, well, look, this is the equivalent of a 710, but your verbal score like a 165 on the Verbal and GRE is equivalent to a 41 on the GMAT, and the 164 in quant is equivalent to a 45 in the GMAT. But when I reverse engineer that and I plug that verbal score and that quantum score into a GMAT chart, I come back with a 690. So basically, to sort of summarize it like even the ETS’s own tool, they say this is the same as a 710, and this is what it would have been verbal, and this is what it would have been quant. But then when I plug those same verbal and quantum scores back into another chart, it comes out as a lower GMAT score. So I get the sense that it sort of over inflates. Now, the one thing I will say that I think the reason I don’t immediately just think like, oh, ETS is evil.

[00:07:27.950] – Maria

This is some sort of scam is that the quantitative percentiles for the GRE are lower than they are for the GMAT. By that I mean it’s because so many people take the GRE, right? Even people applying to philosophy programs and English literature programs and creative writing programs or whatever, it makes sense that the pool would be less quantitatively driven or less quantitatively. You have less of a background as a result. And so it makes sense that someone who would get the 50th percentile on the GMAT might be in, like the 80th percentile on the GRE, not because they’re smarter and dumber on one test versus another, but just because there are many more poets in the GRE pool dragging that number down. And so I think that there are some definitely some shenanigans. I’ve always questioned how that will work. I don’t think that it should be taken into consideration honestly. And that’s why I tell people, just look at whatever those published averages are for the admitted students and compare your scores against that, because otherwise it’s totally wacky, and I can’t make the numbers tie together, and so I don’t trust it well.

[00:08:50.590] – John

It’S a good point because I think it’s led to the belief that schools are willing to accept lower standardized test scores on a GRE than they are on the GMAT. And that’s because every time a school reports both results and you input these numbers in the comparison tool, the predictive GMAT score is always lower than the actual GMAT score for the class average for the incoming class. This is true at Harvard. As you point out, Harvard’s median GMAT score is 730, but the median verbal score for the GRE is 163 and the quad score is 164. You put it into the tool and it comes out with a 700 score, which is 30 points below the GMAT median for the latest Harvard Business School entering class. And this has been historically true across all the schools, which has led to this belief that, hey, if you can’t do well on the GMAT, you should take the GRE because schools seem more willing to accept lower numbers. And some of that belief occurred because in the beginning, US News did not measure GRE scores. They only measured GMAT scores. So it also led to this thinking, that, okay, admissions officials aren’t going to be as hard on you with the GRE because US News isn’t going to factored into the ranking and it’s not going to hurt their school’s rank.

[00:10:17.810] – John

I don’t know. I mean, all this could be nothing more than crazy speculation, but it has more or less proven out over the years. And now the fact that there is this disconnect on the tool and GMAT is making a big deal of it gives you some pause and makes you think twice about this whole thing. Caroline, when you were at INSEAD, I know that you were only accepting Gmail scores back then. Is that right?

[00:10:42.620] – Caroline

Well, when I was there, we started to accept the GRE with the advice to candidates that they should target the 80% or above on both parts of the test, whereas for the GMAT the advice was 75th percent or above. So I do think that it is easier to do well on the GRE, and that’s where the school is asking for candidates to target a higher percentile. And then at one point after I left, the school stopped accepting the GRE after having had some bad experiences with candidates coming in with the GRE and floundering academically, and now they have started taking it again. But candidates with the GRE, they’re welcome candidates with the GRE, but they will really do a lot of due diligence on the academic ability and other dimensions. Candidates presenting with the GRE because of that experience with the handful of candidates where they had apparently done well on the GRE, but their academic abilities were not up to par when it came to performing on the program.

[00:11:52.870] – John

Yeah. And to your other point, regarding percentiles, I know that Bruce Del Monaco, the admissions head at Yale School of Management and Yale accepts a large number of GRE candidates. It’s like 28 to one third of their incoming class on a regular basis. He looks for that higher percentile on the quant. Exactly. Because of the two things that both Maria and you have mentioned earlier and evaluating. So rather than just look at a blank score doing the conversion, he’s wanting to see an extra few points higher on the percentile on the quant side, when they take someone with a GRE there, what does this all mean for an applicant? Okay, let’s say I take my GRE. Do I forget about this comparison tool because GMAT is questioning its credibility? And do I just look at how my scores compare with what the school is reporting? What should an applicant do about this?

[00:12:58.010] – Caroline

Well, I think it’s important to refer to the percentiles and it’s important to refer to the school averages or the school policies. I mean, the schools have a lot of experience with evaluating these tests themselves, and they know themselves how it correlates with how candidates do academically on the program. So I’m sure they will read with interest what GMAT is saying about this, but I don’t think it’s going to change their attitude to either test. They have their own experience.

[00:13:30.620] 

Right.

[00:13:31.230] – Caroline

And they are accepting candidates with a GRE vast majority, which are doing very well on the program. Great candidates. So I don’t see that changing. So I don’t think candidates should fear that taking the GRE is somehow for the second best. And the schools are going to change their policy because of GMAT making a big fuss about this. The schools understand how these tests work, and they have a tremendous amount of experience in evaluating the candidates with the test and understanding the threshold that they need to see. And it’s not just about these tests. Right. I mean, they’re looking at a lot of other data points to evaluate academic potential.

[00:14:14.880] – John

Exactly. Maria, your take on how applicants you deal with this, just ignore it all.

[00:14:20.230] – Caroline

Yeah.

[00:14:21.230] – Maria

I don’t think it’s one of those things where it’s like when people try to read the tea leaves of like my interview invite came out at 11 13 and yours came out at 11 15. What does it all mean? Just don’t worry about it. I don’t think it’s going to make a difference. Like Caroline said, I think at this point the GRE, maybe 15 years ago, when the GRE was relatively new in the MBA process, it would have made more of a splash or more of an impact. But like Caroline said, we now have several years worth of significant portions in some cases of the class entering with a GRE at a certain level, presumably performing up to par in the classroom. I wouldn’t necessarily use the conversion tool. I do think that the conversion tool. In some cases it underestimates, and in some cases it overestimates. And so I wouldn’t go by that and be like, oh, look, it says that I have a 710 equivalent. So therefore, that means X, I would just look at the individual percentiles and look at what the schools themselves report.

[00:15:20.210] – John

Yeah, exactly. Now, also, to your point, this attack is occurring at a time when GMAT test volume is at record lows. In fact, for the testing year of 2021, which ended in July of last year in the US, test taking fell to a new low of 38,509. Think about that. Only 38,509 tests were taken in the US on the GMAT. And remember that’s test taken. That’s not test takers, because if you actually threw in or a divider on the number of people who take a test multiple times, you’d find far fewer candidates than 38,509, which is pretty darn shocking. To put that number in perspective, in the pre pandemics testing year 2018, there were 73,556 exams taken in the US. So this is like a 48% decline since 2018, three years, which is pretty darn dramatic. And it gets even worse because if you look at the peak year of GMAT test taking, which is way back in 2012, the drop is even bigger. It’s pretty much a collapse, frankly. Back then there were like 117,500 tests taken in the US, 117 five versus 38 five in nine years. What’s going on here? What do you make of this, Maria?

[00:16:53.660] – Maria

I mean, God bless ETS for convincing the MBA admissions officers that the GRE is a legitimate equivalence for the GMAT. I mean, I think that would if I had to say off the top of my head, it would almost entirely be because the GRE is now gladly accepted. And I think the GRE is overall, for the most part, an easier test, or at least it’s certainly easier to score. Let’s say, like I said before, to score in the 80th percentile in quant on the GRE is much easier than to score the 80th percent and quant on the GMAT because of the applicant pool. So I think people are seeing it as kind of a backdoor, so to speak, a way to maybe do a little less work or in prepping or I’m just not a very good test taker. It’s a shame because I do think that the GMAT is by far a much more rigorous test. So if I were in admissions and everything was up to me, I would probably respect it more. But that’s not what’s happening.

[00:18:01.470] – John

Yeah, exactly. There are a few other things going on here, too, Caroline. Right.

[00:18:06.990] – Caroline

Well, yes, it may be that there’s a drop in test takers overall over that period. I do think that the market is weakening a bit right now, and I think that this year we won’t see the same volume of applications to business schools perhaps that we saw last year from the US, given the strength of the job market and how quickly that’s rebounded. So that might be a factor. And, of course, the Pandemic tests were less accessible. So people were concerned about taking the at home test, and there were some glitches with the at home test, particularly with the GMAT version of the at home test. The GRE seem to get that right more quickly than GMAT. So that may have driven a bigger shift towards the GRE because of those circumstances. I think some of it is no doubt pandemic related.

[00:19:03.910] – John

Yeah. And a number of schools have adopted test optional policies. Many more schools are more generously granting waivers of standardized tests. Part of this occurred at the start of the Pandemic as a way to be more compassionate to applicants. But what many admission officials say who have done this is that it didn’t affect the quality of the applicant pool at all. And they believe that there are enough other aspects of an MBA application to judge whether or not a person can do the quant work in the core curriculum. And let’s face it, GPA over four years, particularly one with the transcript of some quant courses in it should give one greater sense of confidence that someone can do the quant work than a three and a half or three hour and 15 minutes test that can be studied for and along with the interview, along with the progress and track record at work, along with what other filters a person had to go through to get into a quality undergraduate institution or to work for a high end employer with heavy duty screen processes. All of those ingredients that go into the holistic assessment of candidates in business schools should give admission officials more information than they actually need, making a standardized test less relevant to them, I would think.

[00:20:37.810] – John

Now, there’s the other argument where you’re looking at a worldwide pool of applicants, and maybe the GMAT or the GRE is something of a leveler because everyone has to take the test. But even that is not true because obviously the tests are in English, and for people who have English as a second language, that’s a disadvantage. Now, I spoke with the President CEO of GMAT this morning, and he basically attributes the decline to this fact, the fact that schools and universities are experimenting with the test optional policies. He also thinks there’s been a natural pandemic induced reduction in test taking. But he’s also seeing a shift to the executive assessment. When GMAT came out with the EA, it was largely for executive MBA programs, and it’s a much shorter, easier test. But more and more full time MBA programs are accepting the EA in lieu of the GMAT or the GRE. And his executive assessment test has had a fifth consecutive year of growth. So he’s seeing that the other thing he’s seen is that worldwide it’s a little bit different picture. It’s not as bad as just the US numbers. Let me tell you, it’s not good because testing volume in China has declined substantially, because in 2020 the government didn’t allow for any form of online testing.

[00:22:13.410] – John

And while it’s recovered a little bit this last year, in 2021, as test centers began to open, it’s still well below historical levels in China. The other issue, of course, is the tensions between the United States and China, which is making a lot of Chinese not want to come to the United States because there are also things like the zero covet policy in China and travel restrictions that make it difficult for Chinese to come to the US. India test lines also have been down. Europe is looking better, according to him, but overall these numbers are not very good and they’re kind of scary. I mean, it does represent something of a collapse in GMAT testing volume. One thing I’ll point out is because the GMAT has long been and still is the dominant test for business school admissions. Oftentimes, testing volume on the GMAT was correlated with application volume. And for the first time ever, that seems not to be the case. And it’s not the case for all the reasons that we’ve sided here, including the rise of the GRE, taking more market share, including test optional policies, and including difficulty in taking the test if you wanted it during certain parts of the time when test centers were closed and before the home test became viable.

[00:23:46.410] – John

So I think there’s now this disconnect where you can look at testing volume and not necessarily see it as an indicator of where application volume is going. Caroline, what do you think about that? Do you think that’s a permanent situation or temporary?

[00:24:02.310] – Caroline

Yeah. Time will tell.

[00:24:04.850] 

Right.

[00:24:05.110] – Caroline

Because there is a lag between customer volume and what happens on the schools. So I think we’ll have to wait and see. But it’s a very interesting point that you made about the executive assessment, I think, and how that could continue to grow.

[00:24:23.750] 

Right.

[00:24:24.010] – Caroline

Because in many ways, it’s a much easier and less intimidating test. It’s a shorter test, there’s less preparation required. So I do wonder if that will continue to be a trend that we’ll see with more and more full time programs embracing the EA.

[00:24:41.030] – John

Yeah. Including Columbia Business School and NYU Stern. We’re among.

[00:24:47.850] – Caroline

Is it really necessary to do three and a half hour test to demonstrate your academic ability, given all the other data points that schools have about you by the time that you apply to business school? Right. Perhaps a shorter form test could be just as efficient at capturing some important data for the schools, and that could be a good thing. Right. Because in some ways it lowers the hurdle for people to apply to business school, and that’s a good thing in some ways.

[00:25:23.160] 

Right.

[00:25:23.410] – Caroline

Then it can broaden the pool. It makes it more accessible to more people. The GMAT is a very intimidating process. Having gone through it myself, it’s not a fun thing to do. Right. So if there is a route that one can take where it’s a shorter test and that enables schools to bring in more candidates, then that could also be a positive evolution. So perhaps that’s something that GMAT should push. Right. Maybe the GMAT is never going to go back to having the volumes that they’ve had in the past because the market has fundamentally changed, and it’s not going to go back to the cozy monopoly that they enjoyed for so many years, where it was just such a wonderful cash cow for them. So perhaps they do need to reinvent themselves and come up with other products, and the EA seems to be something that they could develop further.

[00:26:24.510] – John

Yeah, that’s true. And as you know, there are a number of European schools that have their own tests that they’ve developed in lieu of taking a GMAT or GRE that they’re willing to allow an applicant to take. And it gives them some assurance that the quant work can be done without difficulty in the core, and you probably will see more of that going on as well. Yeah, I think Maria last words.

[00:26:50.370] – Maria

I think that if I were at GMAC, I would rebrand the executive assessment to make it clear that it’s not just for executive MBAs. And I would push that as the GRE Slayer, because I think since it would be less intimidating, I think a lot more people would flock to it. And also, I couldn’t help but notice that they actually charge more to take the EA than they do the GMAT. I think it’s $350 if I’m looking at the right chart, versus $275. Another thing that I noticed, too, is that the GRE is actually a little bit cheaper to take than the GMAT as well, which could also be I don’t think that’s the main thing driving it, but it doesn’t hurt. So if I were GMAT, I would say put the pedal to the metal on the executive assessment, rebrand it, though, so that it sounds like it’s more globally or it’s more applicable to MBA programs or MIM programs or whatever, and then go full speed ahead on that and then just educate the schools on it really is viable. (laughing)”We’ve been telling you for years it was really overkill.”

[00:27:52.960] – John

Maria, I think that’s great advice.

[00:27:57.670] – Maria

It’s almost like I’m good at business (laughing) . Yeah. Otherwise, I think they’re stuck.

[00:28:08.450] – John

A few years ago, when I looked at the numbers, I found out that the actual profit margin GMAT is a so called nonprofit organization, but the actual profit margin on a GMAT test was higher than the profit margin on an Apple iPhone. Now, I doubt that that’s true today, given the dramatic decline in volume. But if they follow your strategy and start rebranding the executive assessment and use it as a Slayer against the GRE, they might very well do better than even before their profit margins that were already better than Apple’s iPhone margins.

[00:28:49.850] – Maria

Dear GMAT, Please send consulting fee to Maria. I’ll give you my address in a private message. I charge very reasonable consulting rate.

[00:29:02.150] – John

What would you call it? Instead of the executive assessment to make sure the express assessment.

[00:29:07.630] – Maria

I had to take it right off the top of my head without thinking about it or something like that, right?

[00:29:14.600] – John

Yeah. Well expressed.

[00:29:16.370] – Maria

At least that was still the EA.

[00:29:21.110] – John

You get it over, you don’t have to study for it as much, and it will give you enough information to help make an admissions decision. I like this.

[00:29:29.300] – Caroline

It’s the antigen test versus PCR.

[00:29:32.570] – John

Exactly right. Yes, it may be less reliable, but you just don’t count on it to some degree, less. All right, everybody, there you have it all about the GMAT this time, whether or not you can trust the conversion tool, whether it even matters, and why GMAT compliance at historic lows. Well, thanks for joining us. This is John Byrne with Poets and Quants. You’ve been listening to Business Casual our weekly podcast.

GMAT | GRE | P&Q Podcast "Business Casual"
GMAT vs. GRE: The Rise of the GRE’s Popularity
Maria |
February 1, 2022

Full Episode Transcript:

John Byrne: [00:00:00] Hello everyone. This is John Byrne with Poets and Quants. Welcome to Business Casual, our weekly podcast. We want to talk about international students. Schools are now reporting that a good number of their international recruits who were admitted to programs this fall haven’t been able to show up or have changed their mind.

At the University of Illinois, the school, the Gies College of Businesses, lost about 200 international students in its Master of Finance and Master of Business Analytics programs causing a $7 million hit. To their budget at UC Davis Graduate School of Management, 40 students didn’t show up who were admitted, and that’s resulting in two and a half to $3 million hit on their budget this year.

Both of these things have occurred before the announcement of a hundred thousand dollars tax on H one B Visa. Which will make it more difficult for many employers [00:01:00] to hire international students and keep them in the US for an extended period of time. And we’re getting the new class reports of the, of the new cohorts of students who’ve arrived on campus in the fall of this year.

And Carnegie Mellon is. Down 30% for their international cohort over the past two years. UCLA Anderson School is down 25% over the past two years, and schools are preparing for the worst because of the H one B Visa decision which could affect future employment. Caroline and Maria, my cohosts are in the market helping people get into the best schools in the world.

And Caroline, what do you think?

Caroline Diarte-Edwards: Yeah, definitely seeing concern among international candidates and people holding off on applying for the US schools. So it’s really a shame. I think the international schools, particularly the schools like Inea and London Business School and the other top.[00:02:00]

International European programs will benefit, they’ll get talent that might otherwise have come to the us, which is great for those schools. And I’m very fond of those schools, but it is sad as from the US perspective for sure. On the other hand, you could also take the perspective that.

If you do have options for your career post MBA that don’t require that you absolutely have to stay in the US as an international candidate, then now could be a very good time to apply, right? Because definitely application volume will be down and schools will be perhaps. More open to candidates that might otherwise have been waitlisted or rejected in the past.

For some candidates, this is actually a fantastic opportunity to get into a top school, but from, for, at least from the school’s perspective, it is a shame because, I’ve experienced firsthand the value of a very internationally diverse classroom and the value that brings with a [00:03:00] diversity of perspectives that enriches the learning experience so much for everybody.

Enriches the debate and bring so much to the academic experience as well as the the network and the social experience. So it’s everybody’s loss, right?

John Byrne: Very true.

Caroline Diarte-Edwards: And I think it’s a very myopic perspective that the US government takes that. There needs to be a more of a refocus at US educational institutions on the domestic market because those international applicants bring a lot to the domestic students in enriching their learning and enriching their network.

Of course bring a huge value to the US economy when they stay. So there are very impressive statistics on the value of immigrants to the US economy. So Indian immigrants, for example, are only about one and a half percent of the US population, but they have founded to date about 8% of all the tech startups in the us.[00:04:00]

And for sure some of that top talent from India will now not come to the us. They will go to perhaps they will stay at the great schools that we’ve talked about in India, or they will go to other international schools. So for sure it will be a loss to the us learning experience and to the US economy.

John Byrne: Maria, you run applicant lab which is a platform that helps applicants get into highly selective schools. And many of the people who use your product are international students. What are you seeing?

Maria Wich-Vila: Everything Caroline is saying concern is think a delicate way to put it.

And I think it’s because as the more affordable provider in the market, I tend to get the applicants who maybe they don’t have the family business to fall back on. Maybe they don’t have, large sources of income elsewhere in their lives. And so I think the concern is very real and very merited, right?

I can’t. In good faith, tell someone, if they [00:05:00] really start, sit down and do the math and start to do, run the numbers, if they just assume that things are going to stay as is. And this is the big caveat that I’m, I want to get to in a second, but if we assume that things stay as is and if someone really is from a lower income tier from Nepal or India or some of the other countries that I work with, yeah, maybe sit down and do that math and think about, okay, if I do have to come back to Nepal afterwards, how will I pay back that loan? There, there is though some good news. Even if we assume that things stay status quo, which I hope, and I’m pretty, I’m I think it’s, I’m cautiously optimistic that they won’t.

But there are other markets as well. So I’ve had a lot of candidates, or former clients, I should say, graduate from business school, not be able to get jobs in certain in countries and then. Being able to move to Dubai. Dubai for some reason, has started attracting a ton of candidates, primarily from South Asia but from other parts of the world who might be having trouble getting some of those work permits.

You could do worse than live in, Dubai’s not perfect, but [00:06:00] you could also do worse than live in Dubai, right? The salaries are pretty high. The standard of living, if you have a white collar job there is, it’s not the worst outcome. So it’s not I can’t stay in the us. That’s it.

There’s no other it’s not a binary of, it’s either the US or it’s nothing. And then I think the second point is I, we’ve just seen. So many things, let’s take something from a different facet of policy. The tariffs, right? The tariffs were announced and the markets went crazy, and in the months that have followed, oh, actually, here’s the tariff, but this one company, their products aren’t gonna be subject to the tariff.

And then there’s this other company that maybe they’re not gonna have to pay the same tariff. And I can’t help but wonder if some of these. Some of these very large companies that are getting tariff exemptions, their ability to lobby for. The H one B, maybe lowering of the H one B fee. If they’ve been able to successfully lobby tariffs, they might be success, able to successfully lobby against these, true, these [00:07:00] visa fees.

And a lot of these big companies, these big tech companies are in fact some of the largest employers of post MBA talent in the us. So I am cautiously optimistic that. This could be, hopefully right now it’s the big, the flash and storm and the, the making, the big splash, right?

Everything’s about showmanship and making the big splash. And maybe in the aftermath of the storm, that initial PR media storm, maybe the reality will start to calm down a little bit. Yeah, the other good news is that if you’re applying now, that means you would enroll in 2026. You would, if it, if you’re talking about the US two year program, you would graduate in 2028.

At that point, who knows what might happen. I like to think that what we have seen so far in terms of the Visa policies, hopefully. Roughly the floor about as bad as it can get. I think if they start implementing a similar thing to OPT, that could be the same thing. But if we just assume that okay, right now what’s been announced is that these foreign students all have to do, you can’t stay here, you have to [00:08:00] go someplace else.

It, we assume that’s like the initial negotiating position. It’s just gonna chip, it’s just gonna get, it’s got nowhere else to go. It’s even worse. So we’ve, we now have two and a half years roughly until. People applying now would have to really implement, or be really affected by this in a.

In a pragmatic and tangible way. And so that’s why I’m hoping that the little chipping away and the chipping away things will start to get a little bit better and a little bit better and a little bit better like we’ve seen with other facets of policy. Didn’t like a bunch of the CDC employees that were all fired under Doge didn’t more than half of them I think were recently rehired.

Yes. Back again true. Whatever you think of the policy, it seems like some of the policies are. Being slowly walked back. And so I think if you. If you’ve got an adventurous spirit, I, and by the way, if you apply now, sorry. I know I keep going, but I like, if you apply now, let’s say you get accepted, you don’t have to show up until August of 2026.

So that will give you [00:09:00] time, like definitely. Apply now and see what happens between now and August of 2026 to make the decision to not apply now, because you’re rightfully scared. I’m not blaming anyone, but to not apply now, maybe by maybe six months from now he’ll be like, ha, just kidding. I’m doubling the number of H one Bs.

Yeah, we have no idea what’s gonna happen. So things are So give yourself that optionality.

John Byrne: Yeah. And things are so uncertain that could very well happen because, one day at tariffs are on one country the next day they’re not one day they’re pausing the ab the interviews for student visas, the.

Say they’re not there’s litigation all over the place, challenging many of the presidential actions that have been taken that have put them in limbo despite all the headlines. So it’s, it, there’s more uncertainty than there is certainty about any of these things. And as you point out, you, if you [00:10:00] did apply this year, the odds are gonna be in your favor if you’re an international student, frankly, because there is no question.

That international applicant volume will be down at all the top schools in the us, which means that to maintain some semblance of a global class. Admission directors are going to have to dig a little bit deeper into their international applicant pools to select candidates. In a way, if you play the long term and in the BA, in, in many graduate degrees or long term bet, I think you’re gonna be.

Oddly better off. And it may even be that the schools will really even go out of their way to help international students in ways that they haven’t in the past because of these actions in Washington. And what do I mean by that? Just a more welcoming reception than the already welcoming reception you would get hiring immigration lawyers and people that can help you.

If in fact there is a [00:11:00] challenge of one kind or another. I think the takeaway is not to be discouraged and throw up your hands to say, ah, I always dreamed of coming to the United States and getting an MBA or a graduate degree in business. Use this as an opportunity to actually increase your odds of getting into a better school with the understanding that when you get out there, probably most likely be an administration change and a change in these policies if they even get completely adopted as Maria points out.

Wouldn’t you think that’s the best strategy, Caroline?

Caroline Diarte-Edwards: Yes, I agree. I think that it’s good to take a longer term perspective because it is such a long timeline, right? If you’re applying to a top two year program as you say, you’re gonna be coming out of the program at the end of the Trump presidency and things may look very different.

And Maria rightly points out that. Everything is very volatile, right? So one thing gets announced and the next week it [00:12:00] gets rolled back, right? They’ve done so many things where they’ve realized, oh, actually that was a really bad idea after all. So

They’ve changed things. So things may not it might, may not turn out to be as bad as we fear.

And then I would also encourage candidates. To apply to the US schools, but why not hedge your bets and apply to an international program as well? Agreed in a time of uncertainty. As Maria said, create options for yourself. And so I would encourage candidates to apply to the top US programs, but also apply to top international programs as well and see what offers you get.

And then you can make a decision. As Maria said, it will be closer to the time when you would be starting the program and there may be more clarity about the situation in the US and what your options are in international markets as well. So I think that given the current circumstances, a good strategy is to hedge your bets and apply more widely than you might [00:13:00] have otherwise done.

John Byrne: Plan Bs are good. Let me just say business schools in the US have for years advised international students that those should have a plan B in the event that they can’t get with a US company. The other thing to, to keep in mind incidentally, in terms of MBA employment is that most of the companies.

That basically employ the lion’s share of MBAs are all global concerns. So you can be hired here and if there’s any challenge in getting you employed here in the us you can simply start in an office outside the United States with a hope of coming back when things clear up. So that is also another important thing to keep in mind.

And I’ll just say this. Despite whatever messaging you’re reading in your local newspapers or on your streaming platforms or television stations about how immigrants may not be welcome in the us that’s not true at all. Universities are diverse places. Welcoming. [00:14:00] Embracing loving the diversity of their students and particularly those from different cultures and backgrounds that enrich the educational experience.

There is no Dean that I’ve ever encountered who said they want fewer international students. It’s the exact opposite. They’re putting out message after message, telling people that they’re still welcome and wanted. Needed in the classroom. Now, Maria, in the past we’ve seen applicants who try to say, okay, can I time my application and my enrollment in a program to what I think might be the next recession?

And we know that in recessions applications go way. In part because some people lose the opportunity to gain advancement in a recession. Some people get unemployed. Some people just realize, hey, a recession is a good time to take a time out and get a new educational credential, which may allow me to do things I otherwise can’t do.[00:15:00]

But it’s almost impossible to time a recession and I’m imagining it’s impossible to time what’s going on here now.

Maria Wich-Vila: Yeah. I mean if we could all time, when everyone’s been talking about a stock market crash that to, not to bring another disparate topic in, but like everyone’s been talking about, it’s a bubble.

It’s a bubble. I’ve been hearing ’cause a bubble for a year and a half. True. Yeah, you can’t time or ask, for example, ask the people who enrolled in business school, like who got into business school in 2020. Like there’s always gonna be these external shocks. We can try to predict a recession, but who knows if it’s going to happen?

Who knows if there’s going to be some sort of virus or the opposite of a virus. Maybe there’ll be a virus that helps us all live healthily forever. Who knows? There’s so much uncertainty out there that who knows what to do. So I think. I think yeah, have that optionality. I think go ahead and apply.

Now if there is a recession though, which everyone seems to think is coming at some point, at that point, it’s going to be harder to get accepted. And as Caroline has pointed out, so rightfully, if other international, high quality international students are [00:16:00] spooked by the current H one B talk, now is your chance.

International candidate. Jump in there, shoot your shot like you might be able to get into a school, assuming of course that you’re qualified, but. You might have a lot less competition now than you normally will, so this could be a golden opportunity for you. And one final as one thing that I wanted to point out was that I was thinking, okay, Maria, let’s say that, you just said that maybe there’s gonna be walk back of some of these and there’s gonna be, maybe he’s gonna change.

But even if there isn’t a change, right? Let’s think about this. The companies themselves are gonna have, and you started to alluded to this John, when you mentioned that a lot of them are global concerns. They’re gonna have now a two year window in which to say. Okay. We know that we’re not gonna keep these people in the states, so let’s open a huge office in Vancouver.

Let’s open a brand, an enormous new office in Toronto. Whatever that is. Because I was thinking back to over the summer when it looked like maybe a bunch of international students wouldn’t be able to get any student visa at all. And I know that some of the business schools we’re looking [00:17:00] at, do we rent out some space in Toronto and do Zoom classes?

We do a hybrid. What we did during COVID. I’ve heard that. I think Rice, I was actually having dinner last night with a dear friend who was, say he’s from Texas and he was saying that Rice has some sort of a campus in Paris and that they are leaning really heavily on their global campuses around the world to still be able to service these students who had gotten accepted.

So things like that, like if. Even if our sort of my very cautious and perhaps irrational optimism turns out to not be true, let’s say the things get, the OPT is banished and all, everyone is banished and it’s the worst case scenario. Again, there’s gonna be two and a half years for these companies. To quickly find, okay, fine, we’re gonna open up an office in Mexico City and we’re gonna pay people really well and we’re gonna what?

Whatever that is. ’cause they’re, the companies are still gonna want the talent, right? Just because the political administration doesn’t want the global talent in the country. That doesn’t mean that the country’s employers don’t want that talent. They [00:18:00] want that talent, they want that intellect, they want that energy and that drive to make their companies better and to make more money.

So they have a very strong incentive to not only be lobbying for these. Visa changes to go away, but if they don’t go away, they have a very strong incentive to come up with some way to provide, to provide those incomes and to provide those perks and some sort of a compromise type of situation.

So again I think if you’re applying now, if you’re going in with eyes wide open, shoot your shot. That’s my, I would absolutely tell people to to try that.

John Byrne: Yeah, I totally agree. And, generally this is my rule of thumb and Maria and Caroline, you may or may not agree with this, at the top MBA programs, they’re so selective that the people who apply to them generally are very self-selecting group.

So I always say that roughly 80% of the school’s applicant pool. Is qualified to actually get accepted, get in, do [00:19:00] well, and land a good job. And yet we know that at Stanford, the acceptance rate is 6%, that Harvard is 12 Wharton and Columbia is, a little under 20 or so. So there are a lot of really good candidates who aren’t getting in.

Which leads me to this, if you’re an international student who thinks okay, so these US schools just might dip a little more into the domestic pool to make up for the offset of international candidates. As it turns out, there is a little notice. Clause in the big beautiful tax bill that was passed here under Trump that places severe limits on federal loans for graduate students.

Now, the current grad plus loan program allows students to borrow up to the cost of their graduate programs. That comes to an end in July of next year. After that, grad students borrowing will literally be capped at [00:20:00] 20,500 bucks a year with a lifetime graduate school loan limit of a hundred thousand. That’s a big deal because, at the top MBA programs it’s not on typical.

For a student to borrow over a hundred thousand dollars easily. And so these caps are also going to affect domestic enrollment. So again, that, that contributes to your ability as an international candidate to get in both. The likely decline in competition not only from internationals but also from domestic students here, interestingly enough, that Bill, which passed has different limits for a professional graduate degree, but the bill basically says that only med school and law school qualify as professional degrees and not business school.

That’s another wacky thing that’s happened that will affect. Domestic enrollment as well. So I, I side with Maria and [00:21:00] Caroline to me the advice is, look long term. Don’t be affected overly affected by the change in policies in the US or the climate here. Understand that if you apply now and you matriculate next year and you graduate in two years after that you’re gonna be facing probably a very different environment.

Also understand the odds are in your in your favor, in getting into a highly selective, really good program in this coming year. And know that, while people too often calculate the value of an MBA based on short term variables, like what’s my starting salary gonna be? What is my sign-on bonus?

The truth is the MBA has enduring value over your lifetime. So it rewards you over your entire career and not just for the first or second years. And you can’t go wrong by graduating into a network of helpful and supportive people from a great school and [00:22:00] receiving a great education. So I think bottom line, we’re telling you apply.

Don’t get convinced by your colleagues or anyone else that this is a bad time to come to the us. Opportunity. Some of the best opportunity come comes when people perceive there to be significant challenges. And I think this is really true with business school. We hope we convinced you to come and try and hedge your batts too, as Caroline noted.

I think that’s really super important to have a plan B when you apply and toss a bunch of apps to the European schools which have excellent superb world class MBA programs and real international cohorts. 90% of the students not from the countries where the schools reside. Toss a bunch of them in your mix for your target schools to give you these different options at the end of the day.

This is John Byrne with Poets and Quants. Thanks for listening.

Maria

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