Ranking MBA Program By Return-On-Investment
Maria |
August 6, 2024

In this episode of Business Casual, hosts John Byrne and Maria Wich Vila are joined by Heidi Hillis, a Stanford MBA and expert from Fortuna Admissions. They delve into the surprising results from Bloomberg’s new ROI calculator, which places the University of Kentucky’s Gatton College of Business and Economics at the top for annual ROI among MBA programs. Heidi questions the calculator’s emphasis on financial outcomes, advocating for a broader view that includes personal career objectives. Maria highlights the need to consider not just immediate financial returns but also the long-term career enhancements and intangible benefits like networking and personal growth that an MBA offers. 

 

They discuss how, despite providing valuable insights, the calculator may not capture the full transformative value of an MBA education.

Episode Transcript

[00:00:04.370] – John

Well, hello, everyone. This is John Byrne with Poets and Quants. Welcome to business Casual, our weekly podcast. Today, I’ll be joined by a new co-host who is actually filling in for Caroline. It’s her colleague, Heidi Hillis. She’s a Stanford MBA, one-time worked for McKinsey, among up many other companies in different locations around the world. Heidi is one of the senior coaches at Fortuna Admissions. And of course, we have our reliable, solid, standby, Maria Wich Vila, Who is the founder of the applicant lab in a Harvard MBA? Now, you two aren’t going to get into a fight because one went to Harvard and one went to Stanford, are you?

 

[00:00:54.180] – Heidi

Probably not.

 

[00:00:55.210] – Maria

I mean, if we did, I could probably take Heidi down. No, that’s a joke.

 

[00:00:59.160] – Heidi

Yes, I’m in Stanford, so I’m very nice. I would never fight.

 

[00:01:03.580] – Maria

That’s a joke because I’m very small in stature. I could probably not take down anyone. So… You know…

 

[00:01:10.020] – John

This is the difference between Harvard having a force grading curve and Stanford having none. Anyway-

 

[00:01:17.970] – Maria

By the way, I just want to point out that the only reason I’m reliable is because I’m not off having amazing adventures the way Caroline is. No offense, but in a heartbeat, if I could go on safari in Africa right now, I would make the choice that she made as well.

 

[00:01:32.910] – John

Yes. And that is in fact where Caroline is at the moment and being filled in ably by Heidi. We’re going to talk about return on investment. Obviously, anyone who begins to consider a full-time MBA program, an executive MBA, even a part-time MBA, starts thinking about, Okay, how much money am I going to have to invest to have this experience, and will it ultimately be worth it? And Bloomberg just came this week with a calculator that purports to measure the ROI of 77 full-time MBA programs that it currently ranks. Now, these are only the US programs, no international programs, but there’s some shocking surprises in the results. You’ll never guess the number one school in annual ROI. It’s actually the University of Kentucky, the Gatton College of Business and Economics. Now, you’d say, Well, how can that even be? Well, according to Bloomberg’s calculations, an MBA from Gatton has a 23.8% return on investment annually. Over a 10-year period, that amounts to more than half a million dollars in additional income. Exactly, it’s 561057. Now, what’s also surprising is that most of the highly ranked schools, the schools that we typically we talk about on this podcast week after week are all below the median ROI.

 

[00:03:07.910] – John

Okay, Heidi, what do you make of this?

 

[00:03:12.400] – Heidi

Well, I think it’s a really… I’ve had a lot of fun playing around with it and just plugging in lots of different scenarios and trying to get understanding of how it’s working. I mean, obviously, the first question I ask is, where are they getting the data and what’s it based on? I think it’s important to dig But I think on the surface of it, just to have a tool where you can ask the question and think about, what is it that I want to get out of my MBA program? It does give you some tools to think about that. I think we can get into a little bit more of the details of what is an ROI in terms of what are you looking for. If you’re looking just to maximize the money that you’re going to make post-MBA, then it’s a good tool for that, I think, just to understand. But as we look at someplace like Kentucky, There’s 55 students at Kentucky getting the average salary before MBA was 25,000. The average post is $86, so that’s great for someone in Kentucky who wants to maximize a program. It’s a one-year program, and I think it shows that that actually makes a lot of sense for someone there.

 

[00:04:19.940] – Heidi

But it doesn’t really capture, I think, what you would get out of… It wouldn’t make me look at it and say, Oh, well, if I got an offer from Kentucky and one from Harvard, I’m going to go to Kentucky, necessarily. I think that you have to really dig in a little bit further.

 

[00:04:32.490] – John

Yeah, exactly. Maria, your take?

 

[00:04:35.810] – Maria

Yeah, it’s exactly the same. I mean, to the extent that ROI is a percentage number, if you start off with a lower base for something like your pre-MBA salary, then even if afterwards your post MBA salary does seem to limit off, limit or cap off at a certain level, it doesn’t really matter because you’re starting from that lower base. So as Heidi pointed out, the Kentucky folks just were looking at them just because they happened to be at the very, very end of the highest part of the ROI calculator. The post MBA expected salary is $86,000, which is less than what people entering Stanford and Harvard and some of the other top schools. That’s less than what they are making now pre-MBA. You might say, Well, if you’re just looking at the percentage change, that delta from pre-MBA to post-MBA, okay, that alone might not necessarily be the metric upon which you want to base things because it is a lower starting point and a lower ending point, frankly. That delta, that percentage looks really nice, but I think once you dig into the details, you realize that there might be more to this.

 

[00:05:45.830] – John

Generally, it’s good news, don’t you think, Maria?

 

[00:05:49.230] – Maria

I mean, overall, even the low ROI schools, which are a lot of the more fancy or more elite schools did tend to fall into the lower end of the bucket. They all still had very positive ROIs. And again, if we’re just measuring it on the metrics of only that delta, they still had a positive ROI. And a lot of folks, again, if you get into one of those schools, you’re probably already making a low six-figure salary anyway. So, yeah, even the bad news is still good news.

 

[00:06:21.860] – John

Yes. And here’s another thing to think about. Even though Bloomberg is essentially measuring the best schools by percentage gain, the truth is, if you look at the actual gain, you have a very different result. Yes. The 10-year gain for Stanford, for example, is over a million dollars. Even though It’s actual percentage gain is below the median. And that goes on and on. Mit Sloan would come in second place with a gain of over 900,000 over 10 years. You’d have with over 800, and Harvard with also over 800,000. You get a totally different result if you look at it on the basis of a 10-year gain in your income. Any other interesting aspects to this that you found, Heidi?

 

[00:07:17.320] – Heidi

Yeah, I thought… It’s also interesting how they calculate… They give you a starting salary post-MBA, and then the calculation is based on an increase I think 1%, 1.3% or something a year, which I think is… I’m not sure I agree with that assumption.

 

[00:07:38.850] – John

I think also- What MBA would be getting a 1.3% increase a year? I mean, That’s inflation adjusted. They wouldn’t last in the job for six months. They’d be jumping.

 

[00:07:48.460] – Heidi

Right. It depends, again, on probably the MBA program. Then also it caps off at 10 years, which I think it’s helpful to say, Okay, what am I going to make in 10 years? But I would argue that, and Maria, maybe you have a It’s a different opinion, but I think that this return actually, looking at it now back, I’ve been out for more than 20 years. I think that it really starts to really kick in, probably after the 10 years. I mean, you do the hard work right out of the MBA. People will go back into consulting or they’ll do banking or they’ll do a tech startup or something where they’re actually maybe not making as much as they would want or the years that you really work really hard. Then those 10 years out, that’s when it really starts to kick in where people start getting CEO roles or getting lots of board seats or things like that. I think, again, if you’re looking to really maximize just your earning potential, I do think you have to look a little bit longer than 10 years because I think the longer you go out, the really you see the effect of having that experience.

 

[00:08:53.160] – Heidi

I guess it can be also argued that there’s a lot of these people, and we can go into some case studies maybe, but if you’re starting at a really high base, you’re going to have a lower return just because there’s only so much that you’re going to cap out. Obviously, there will be people who will do startups who will make a lot of money, but most people will cap out probably in the, I don’t know, millions at the highest. But it’s just something that I think you don’t really capture all of that in the first 10 years.

 

[00:09:21.990] – John

Yeah, for sure. In fact, there are a number of problems with the calculation. I think the assumption that an MBA is going to get less than a 2% increase in pay every year is ridiculous. But there’s even more ridiculous things about this, and let me go through them. For one thing, There are very few students who actually pay their sticker price on an MBA. In many programs, the discount rate can be as high as 50% to 70%. This is particularly true with second-tier programs that are trying to attract better students than they could naturally get, mainly because they’re focused on maintaining or improving their US news ranking. There are many of these schools, in fact, that they have a tuition number, but almost everyone is getting the full ride. That’s just the reality of it. Also, the calculation, as you point out, Heidi, assumes a 10-year window. But an MBA really often results in a lifetime’s change to one’s personal and professional development, as well as their earnings their job fulfillment. You have 35 years. If you graduate at 30 and you retire at 65, you have 35 years to basically leverage your MBA education into more income.

 

[00:10:45.720] – John

The other thing that the calculation doesn’t tend to look at is your internship money. Now, the Harvard MBA makes on their summer internship over $9,000 a month. That’s another $18,000 that goes into reducing the price of your degree and reducing your foregone earnings. Now, a good example here is Harvard, because last year, Harvard actually doled out, listen to this number, $51 million in scholarship money to MBA students alone. The average MBA student at Harvard, at least a half who received fellowship money, got $92,000 over the two-year periods. 92,000. None of that is figured in these calculations, which would dramatically change them. That’s some other issues with this thing. That said, Man, it’s fun playing with the calculator and looking at the numbers for each of these schools. Now, Maria, I bet you saw some eye-popping numbers. I certainly did in terms of how much money people are borrowing and in terms of how much money people were making before they entered the MBA program.

 

[00:12:05.000] – Maria

Right. Well, I think that another side benefit of playing with this calculator is that if these estimates of the entering or starting salaries are correct, we have long advocated here that part of getting in is already being successful at the time that you apply. So by virtue of the fact that the entering, the pre-MBA entering salary, according to this calculator, at least for Harvard and Stanford, was somewhere between 120 to $125-ish, $1,000 per year. That’s a pretty good indicator of the fact that these were already high-flying overachievers. These were not people who were stagnating in a career and not really making an impact, not really moving up in the ladder. I do think that that is pretty… I like the fact that this reveals that or puts a spotlight on it. But yeah, look, the eye-popping number is also in the loan number, but that’s because it’s expensive. You get what you pay for on some cases. I think one of my biggest critiques, I agree with Heidi, is that only looking at it from a 10-year basis and assuming that over the course of those 10 years, your salary only takes little baby steps of increments, that’s probably not accurate.

 

[00:13:22.180] – Maria

The graduate salary immediately upon graduation, probably pretty similar between a lot of these schools, the people who get jobs at McKinsey are all probably going to make the same amount of money regardless of which business school they went to. If they get the McKinsey offer, they get the offer. That salary is going to be pretty standard from school to school to school. But where things really start to branch the different directions, it is more at the 5, 10, even 20-year mark. One might argue that an elite MBA might either equip you with the skills, or honestly, it equips you with a network that you can call upon in those 20 years and start saying, Look, I’m ready for the next phase of my career. I’m ready to look at joining a board. For example, when I went to reunions a couple of months ago, it was a 20th reunion, there was an entire panel on people my age who are on public company boards, and it was like, here’s how you do it. Here’s a little roadmap for how to become a member of a public company board. So that’s the thing where that’s not going to hit your salary or your compensation level, your 10 years out of school, realistically speaking.

 

[00:14:32.280] – Maria

But 15, 20 years, that’s when that education and the network and the connections are going to start really kicking in to give you those later in career opportunities that simply isn’t reflected here. That’s why I think year after year, we still see people giving everything they can to try to get into some of these M7 top 15, top 25 programs. It’s precisely for that reason. I think if you only look at it in the short term, of course, it doesn’t make sense. But so do a lot of other big purchases, like buying a house, for example, does not make sense if you’re only looking at it in a very short and compressed time frame. I feel the same way I feel about the rankings, which is it’s an interesting starting point. It’s probably directionally correct on some level, but it’s almost more interesting for the little subbullets of data that it gives you more so than it is taking that overall result that it spits out. It’s almost like looking at the inputs is almost more interesting than just the result of the calculator itself.

 

[00:15:33.830] – John

Yeah, that’s very true. Now, Heidi, you mentioned in our pre-talk that you have applicants who ask you, Okay, how do I determine the ROI on this investment? What do you tell them?

 

[00:15:48.430] – Heidi

Well, I think that there’s a couple of things. One is it is something that I think it’s maybe not as many think about it as they should. I think people assume that it’s going to be what they need. I think that that’s why when you work with somebody, when you go through this process, it’s really important to think about what are your goals to get out of this program. If it is just capitalizing on the experience and making as much money as possible, this is a good tool, potentially. However, I think that there are a lot of people who it’s not their main goal. I work with a lot of… I can think of a bunch of people I’m working with right now who are in banking, already making 400 grand or even more. And you think, why are they applying? And they’re not applying because they want to make more money. They want to pivot. They want to do something. They want to stop working 60-hour weeks. They want to get out of that rat race and do something. They want to do something. Obviously, a lot of them want to do something entrepreneurial, which is very unsure what your return is going to be if you have no idea how much you’re going to be making the first few years, probably making zero.

 

[00:16:54.530] – Heidi

So it doesn’t really capture those kinds of motivations for wanting to get an MBA, which I think for a lot of people is, especially when you’re looking at the top-tier programs and they’re already successful in making money, they’re at the stage where they’re actually thinking a little bit more about, What do I want to get out of my career beyond just a good salary? What impact do I want to have? Maybe a lot of them want to solve big problems, whether that’s climate tech or education or something else. At least that’s what they say. Not all of them will do that. A lot of them will actually, in the end, go and work for the big bucks, especially in the beginning. But I think longer term, it gives you certain options that allow you to have the career that you want and then have the impact that you want. That’s not really captured in a salary so much. I think it’s important to going into it thinking, what is it that I want to get out? Then making sure that it will help you to do that. When we do career visioning or something, it’s like, Okay, these are my goals, then let’s go test that.

 

[00:18:02.050] – Heidi

Can you actually do what you want to do? Are there paths that you see that people have done that exact thing? Do those salaries match with your expectations? Then you can take a calculator like this and think about it.

 

[00:18:14.760] – John

To your point there, there are a lot of intangibles that you can’t put a number on. You can’t put a number on the value of transitioning from one career to another. You can’t put a number on the additional fulfillment you may get or the more meaningful job you’ll get as a result. You can’t even put a number on the fact that, and the research shows this, if you have a graduate degree, you’re far less likely to be unemployed than if you don’t have a graduate degree, when there’s a downturn that occurs, it doesn’t put a value on the network that you graduate into. Oftentimes, that network results in jobs and opportunities that would be invisible to you. There are a lot of these intangible things that you just can’t put a number on it. But in many cases, they’re as important, if not more important, than the actual thing you can put a number on. Wouldn’t you agree, Maria?

 

[00:19:17.750] – Maria

Absolutely. Even in the case where someone is, say, already in private equity, already making a couple of $100,000 a year, and so you say, Well, my post-MBA salary will be maybe a little bit more than what I’m already making, but not that much more. Well, it is a marathon, not a sprint. So yeah, maybe right now you’re at the same level as your peers, but maybe if you get the MBA, you will be exposed to a wide variety of frameworks, a wide variety of industries, a wide variety of thinking about, wow, you know what? If I take what I learned on this case on the pharmaceutical industry and I apply it in the manufacturing industry, what lessons can I learn from that? So that might make you a better investor in the long term. It also might make you a better people manager. At a certain point, if you ascend to the real high levels of some of these professional services firms, it’s more about being a rainmaker and bringing in the clients and/or also being able to manage your team to do the work for you because you can’t be in a hundred different places at once.

 

[00:20:15.960] – Maria

The MBA will help give you those skills. It’ll give you the network of people to call upon and say, Hey, I’m now working at this consulting firm. Do you guys need help? Hire us, or knowing how to manage people a little bit more if you take those leadership courses. Or even if there is a downturn, heaven forbid, you’ve got the network in place that makes it more likely for you to be able to call people up and say, Hey, you know what? Lost my job. Do you know anyone? Can you think of anything that might be out there? All of those All of those intangibles, even for the current high earners, I still think makes it worth it.

 

[00:20:50.890] – John

All right. Even though the general news out of the calculator is very positive, we say it’s not nearly as positive as it actually is in reality. That’s your bottom line.

 

[00:21:03.160] – Heidi

I would add one more intangible to this whole thing, which is in my Stanford class of 400, at last count, there were 25 marriages.

 

[00:21:13.860] – Maria

I’m one of them. I also married the person I met in business school. But talk about intangible benefits. That was a joke, guys.

 

[00:21:28.440] – Heidi

It’s a great dating app.

 

[00:21:30.540] – John

There you go. So MBA really doesn’t stand for married but available after all.

 

[00:21:37.140] – Maria

It doesn’t for all of us. Maybe it does for some people.

 

[00:21:42.320] – John

All right. Well, Heidi, thank you for joining us today. And Maria, thank you as always. And for all of you out there, we hope we shed some light on the return on investment on an MBA. If you want to check out our story of Poets and Quants on this topic, look at ranking MBAs by return on investment. We have a fair bit of skepticism in there, but we also parsed the numbers in a way that makes them very visible and obvious. We show the top 25 schools and then how the highly ranked schools compare. The numbers are amazing. They’re really interesting to look at. Thanks for listening.

 

Business School News | General | P&Q Podcast "Business Casual"
Ranking MBA Program By Return-On-Investment
Maria |
August 6, 2024

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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