In this episode of Business Casual, John Byrne, Maria Wich-Vila and Caroline Diarte Edwards delve into the ramifications of Donald Trump’s re-election for U.S. and international business schools. They discuss the expected challenges and policy changes that might affect student demographics, particularly international applications, highlighting the potential shifts towards business schools in other countries due to perceived unfriendly policies towards immigrants and international students.
The conversation also touches on the broader economic and social implications of these changes, providing a well-rounded perspective on the future of business education in a politically shifting landscape.
Episode Transcript
[00:00:07.440] – John
Well, hello, everyone. This is John Byrne with Poets and Quants. You’re listening to Business Casual, our weekly podcast with my co-host, Maria Wich-Vila and Caroline Diarte Edwards. Big news, of course, in the US, which means it’s worldwide news. Donald Trump has won re-election to become President of the United States in January, so just a couple of months away. And we think that this is going to have a big impact on almost everything in the United States. And if it has an impact in the US, the biggest economy in the world, it will have a big impact everywhere because the ripple effect will just go through the world economy. And we think that one of the areas that is, frankly, in the crosshairs of the Trump administration higher education. When you look at why Donald Trump won re-election and won it decisively, it really comes down to one demographic. It’s uneducated voters. By and large, those without college degrees who have become in the United States disillusioned and aggrieved over the country’s direction, the loss of union jobs that paid them a good wage, the loss of a lot of jobs that went overseas over the last quarter of a century or more and has changed the standard of living for those folks, they’re angry, they’re upset, and they want to disrupt things.
[00:01:43.500] – John
They voted for Donald Trump in huge numbers, and that’s really what got him elected. And on one level, then you could argue that his election is a function of a war of sorts between the US US-educated people and those who are uneducated and who have not benefited from the prosperity in the US economy in the way that those who have gone to college and gotten an undergraduate degree, or even more importantly, an advanced degree, are almost living on a different planet than folks who have only graduated from high school. It is within that framework that you have to think that Trump will to operate as President, meaning that, to put it in the starkest terms, he would be an enemy of higher education. The Republican Party in the United States has not been all that supportive of higher education for quite some time. To give evidence to all this, even Biden has publicly said that the vast majority of jobs that were created under the infrastructure bill were going to people without college degrees. And even vice President Kamala Harris, who is campaigning to win this election, had said publicly that she will go through all the federal jobs and redefine them to make sure that as many as possible do not require a college degree.
[00:03:21.280] – John
So this has become a big and major issue. So the question then is, what will happen to higher education under a Trump administration? Now, this is definitely speculative, but it’s largely based on what he has said and what he has done in the past. And let’s go right to Caroline, because you’re our international maven. I think the number one immediate concern is the international applicant pool to business schools. In the US, it’s generally one-third of all master students are international. In some schools, it’s much higher. They are a source, an important source revenue for the schools. They’re an important part of the business model that sustains these business schools. What do you think is going to happen?
[00:04:08.210] – Caroline
Well, as you said, it’s speculation, although we do have the evidence of what happened with the previous administration. So I think we can speculate fairly confidently the applications from international applicants will go down. We saw that very clearly under the previous Trump administration, as there were concerns, difficulties with visas and then just generally about concerns about a less welcoming climate and less welcoming environment for international candidates, and particularly candidates from certain backgrounds. Of course, there was the Muslim ban to the previous administration. So I’m sure we will see a drop. So from an international perspective, that will benefit international schools, right? So I’m sure that schools like INSEEP, where I worked, and London Business School, and some of the other top international schools will see applications from candidates who might otherwise have looked to come to the US, including candidates from the US who might otherwise have stayed domestically, but who are now thinking, Well, this may be a great opportunity to get out of here for a year or so and get an international experience. Who can’t stomach the idea of living for four years under Trump. So I’m sure there will be some young Americans who will be looking to get an international experience as well.
[00:05:34.040] – Caroline
I think it will be a bonus for some of the international schools. Having said that, I don’t think any of them would have voted for Trump. No. Knowing the communities at these schools, I’m sure that they’ve all been as horrified as we are by what has happened. But of course, the UK schools have suffered post-Brexit, so at least there may be a silver lining for those schools that this may help to turn things around a little bit with the post-Brexit impact and also the change in visa regulations in the UK, which has resulted in a drop of international applications to UK schools. Perhaps there’s some hope there that things may turn around. Also, of course, with the new labor government, perhaps visa regulations will in any case change in the UK. But I think from the US perspective, it is rather bleak for business schools. International traditional candidates bring a great deal to the classroom experience. They add a lot of different perspectives, a lot of different experience. They really enrich the programs, the learning experience, they enrich the community, and that adds to the experience for everybody. It enhances the learning experience and the social experience for all students.
[00:06:53.160] – Caroline
And so that is going to diminish the value of the learning experience that you will get at at the US schools, unfortunately, for everybody. I think it diminishes the programs as well as it will diminish their financing because international applicants are a great source of revenue for US schools. That’s going to have an impact on budgets. I think, as we’ve seen in the past, the top schools will remain very strong because they have a loyal pipeline of candidates always coming through. Thick and through thin, they will have a strong pipeline. So I’m not worried about the Harvard’s and the Stanford’s and the Whartons of this world. But for schools that are a little bit further down the pecking order, where they have a bit more of a volatile situation, they could begin to struggle.
[00:07:58.090] – John
And this works on two levels. I mean, The first level is the one you pointed out, which is, oh, boy, Trump is elected. He doesn’t like immigrants. Therefore, the US is going to be increasingly unwelcome place to be. So therefore, I don’t want to put up with that. So that’s on the candidate side. But then you have what the government will do. Will they actually place restrictions on international students to study in the US? Or will they slow down the visa process so that it takes an awfully long time to get a student visa, and a year in which you were intending to start ends up being the following year, which decreases the pool and slows down whatever flow of international students remained. So you got this work in on two different levels here, and that’s really problematic. And we do have, as Caroline pointed out, the evidence from the previous administration, when literally there were There are international students in the US in MBA programs who are reluctant, reluctant to go on a global emersion tour for fear that they would not be allowed back into the country because some of their classmates had difficulty coming back because of Trump’s draconian immigration policies.
[00:09:24.350] – John
I think that that is the one obvious thing that will happen. I don’t think it’s speculative at all. Something that could be speculative, although it has been promised, is the elimination of OPT. Now, that’s optional practical training. It’s the reason why so many business schools, and the vast majority of them in the past five years, have had their graduate program, STEM certified, because a graduate from a STEM program program gets to spend not only 12 months in the US in a job, but an additional two years. So you get three years of working experience. Trump has said, and his special advisor for immigration has said that they intend to end this program. Whether they will, who knows? But this has come up a number of times on the campaign trail, and They feel pretty certain they want to get rid of it. That would also be a real major dent because those who still would apply to a US school thinking that, okay, it may not be the situation that I ideally want, but I’ll go there and I’ll get a great education. I’ll ultimately get a job. If I’m in a STEM program, I’ll be able to work in the US for at least three years, which gives me three shots in a H-1B visa, you may have suddenly find that that’s no longer available.
[00:11:06.380] – John
Just don’t know. We’ll have to see how that plays out. And I think in the first three to six months of the Trump administration, we’ll see how much he does. And how chaotic and disruptive it becomes. Caroline, what do you think?
[00:11:22.240] – Caroline
Well, I do wonder if he will implement everything he’s talked about, right? Because as you said in our pre-podcast discussion, he talks about a lot of things in the first administration which never got done. I think the reality will kick in of the implications of some of these policies. I think that there is hope that he won’t implement all of these very counterproductive policies. You have to wonder about policies that change immigration for young, talented professionals, because that brings so much value to the American economy. And so that’s really shooting the US in the foot if they do change that. So perhaps there was a lot of bluster on the campaign trail that may not translate into actual policies. We can but hope at this stage.
[00:12:27.300] – John
Right. Maria, your thoughts?
[00:12:30.170] – Maria
As much as I wish that hope is something that comes to pass, unfortunately, we’ve already seen in his previous administration that he did, in fact, take steps. Now, I don’t think that they were as draconian or as sweeping as he would have wished. But we’ve seen this movie before. We know how it ends. And so we know that a lot of that bluster, he does, in fact, try to implement it, and he often succeeds. And I believe he will be even more successful in doing these things because I think he learned his lesson, so to speak, from the last time when he had these advisors who were perhaps more experienced in certain things, but then they would put guardrails around him, and he clearly did not like those guardrails. And so there aren’t going to be some of these generals and these quote unquote grownups in the room to curtail his impulses, his worst impulses, because he’s just simply not going to hire them this time, I suspect. So I do think that it’s going to be bad for international students who are trying to study in the US, both in terms of getting into the country and then staying in the country.
[00:13:45.100] – Maria
But I also think some of his policies, if they come to pass, are going to be really bad for domestic MBA candidates as well. If these tariffs come into play, the resulting price increases are going to drive demand down. So if you’re aspiring to work in, say, any company that has a hardware component to it. Let’s say a large percentage of Apple’s revenues still come from the phone and the hardware and the desktops and computers that they make, all of those Prices are going to go up, and so demand will probably go down. Health care is another industry that relies really heavily on international supply chains. So the cost of health care, which is already pretty astronomical, is going to go up. Should Robert F. Kennedy Jr. Become the head of our country’s health policy? Any company that makes vaccines is going to suddenly see a dramatic drop, perhaps in their revenues. If people stop getting vaccinated as much, we’re going to start seeing the next pandemic that might come or even the old pandemics from 100 years ago that we thought we were done with. They may make a return. So I think that there’s a lot of…
[00:14:58.790] – Maria
The immediate losers in this are the international students. But I also, I don’t think that this is necessarily a slam dunk for domestic students as well. And as you have both pointed out, in the longer term, the American economy suffers because so many of our most talented executives were, in fact, international students themselves, right? The heads of Google and Microsoft and NVIDIA, and even Elon Musk himself was an international student who benefited from US policies that allowed him to come and study here and start businesses here. So it’s a real shame, and I don’t think there are any winners in this.
[00:15:42.420] – John
Yeah. I mean, there’s A firm that’s tracking some search traffic in the aftermath of Trump’s win on studying on campus for bachelor and master’s programs. And in The last 48 hours, there’s been a huge spike in the US from domestic students, researching programs in other countries. Traffic on the Canadian business schools is up 825% in the last two days. On United Kingdom’s goals, it’s up 530%. Interestingly enough, in Ireland, it’s up 1,300%. In Sweden, for some reason, it’s up 600%. But in any case, there’s been a major surge among US students looking to study abroad since Trump won the election only two days ago. We’re recording this two days after his win. The other thing he has promised to do is to dismantle the Department of Education. Now, the Department of Education in Washington supports, obviously, education throughout the country. It is also the administrator of all the federal loan programs that help people study in college. Trump and his advisors have said that they would like to transfer that function to the Treasury Department because they handle money. But any dismantling I think the handling of the Department of Education would be very disruptive to higher education in general and also cause more chaos.
[00:17:24.860] – John
If in fact, in this handoff of the federal loan programs to Treasury Department, if that comes off, there’s bound to be a heck of a lot of things that fall through the cracks, could delay the approval of federal grants study in college that could prevent more people from enrolling. Then you have DEI, diversity, equity, and inclusion. The Republican Party has been at war against DEI programs at universities for quite some time now. With Trump in office, you can expect probably things like federal funding to any universities could be used as a leverage point to eliminate a DEI program on the basis that it’s essentially mandated affirmative action, and it discriminates against certain types of students. That could also be another source of trouble. Don’t think we’re all here being pessimists because we’re making these judgments and speculations on the basis of having lived through four years of a Trump era before, when in fact, as we pointed out, he had more guardrails around him and he was new to government. He really didn’t know what leverage to push or how to get things to happen. In this case, it looks like he will have a Republican-controlled Senate and a Republican-controlled House so that he’d be able to do things more quickly more sweepingly, and he will, in fact, recruit around him in terms of advisors and cabinet members and department heads, people who are far more loyal to him than they have expertise in the given fields in which they’re assigned.
[00:19:17.620] – John
That’s why we think that more of his promises on the campaign trail are likely to happen, even in diminished form. Yeah, is he going to increase? Is he going to a tariff on every product and they’re going to be 30 plus %? Highly unlikely. But will he put tariffs on most products and it could be 5 or 10 %? Probably. And that could cause a recession in and of itself. Ondly enough, though, You look at Wall Street and the stock market hit a new record in the aftermath of his election. How do you figure that out, Maria?
[00:19:55.190] – Maria
Well, I think that there’s a couple of things going on here. I think there’s this narrative that Biden has been bad for business. I think one could make the fair argument that Lena Khan has, in fact, stifled certain M&A deals. I don’t think that that critique is entirely unfounded. I think that there’s this idea that with less regulation, fewer things standing in the way of, say, large mergers and acquisitions going through less government scrutiny. Now, whether or not that lack of government scrutiny ends up being good for the American consumer, the American citizen, who knows? I mean, a lot of these guardrails were put into place in the first place to protect people from monopolies forming or other negative externalities that happen when business does not have any guardrails placed on it. But to the extent that less regulation, less scrutiny of deals, et cetera, et cetera, is good for business, I do think that that is why the stock market is behaving the way it is.
[00:20:58.690] – John
Yeah. I think, I think they’re very eager to get another big tax cut, too. That’s what’s going on as well. Caroline, you are very well connected globally, and I wonder, what’s the reaction you’re getting? I mean, even in your own firm, you have people planted all over the world who are advising candidates all over the world. What are you hearing out there already?
[00:21:26.440] – Caroline
Yeah, I’ve had a lot of messages over the last 24 hours, and it’s astonishment, right? People are shocked and horrified, generally, about what has happened and trying to comprehend. I think it’s sad. It really diminishes the US on the international stage. I think people are surprised at someone who seems so ill qualified, indicted criminal, and so on. You could make a very long list of the reasons why he should be President. On an international level, people find it quite hard to believe that the US has frankly sunk this low. It diminishes the US as well because the US is therefore seen as less of a reliable partner internationally and a more volatile country. So on many different levels, I think it damages the US internationally, both in perception and then in relations and in so many different dimensions.
[00:22:35.340] – John
In fact, your colleague and co founder of Fortuna, Matt Simons, sent me a little note because he had a conversation with one international MBA applicant who applied in around one. And here’s what that person said, It’s challenging to grasp how such a significant portion of Americans resonate with the vision that Trump and the Republican Party represent. What’s even more concerning is how this might affect international students and professionals who contribute so much to the US. The climate feels less welcoming, and I’m sure many others feel so uncertain about their place and future here. And I think that’s really true.
[00:23:15.240] – Caroline
Yeah, that sums it up very well.
[00:23:18.790] – John
That’s what I thought. Now, at the same time, there’s no way you can imagine any upside to higher education with Trump’s election. No, impossible. Possible. But on the other hand, the dean of the Cogod School of Business, who has been a guest on this podcast over at American University, David Morchick, he immediately sent out a note to the community and struck, even though he was personally disappointed in the outcome of the election, he struck a more positive note. He mentioned that our work in academia is more important today than it was yesterday. If you believe we need to address the climate crisis, we should work to create more sustainable world through business as progress in the next few years will come through business, not government. If you believe that better business practices can help people of color and those who are impoverished, participate more fully in the economy, our scholarship and teaching in that area has never been more critical. Each of you changes lives every day with teaching, research, and engagement with students, helping young people reach their full potential enabling them to launch meaningful and successful careers. At the bottom of this, look, it’s four years, conceivably.
[00:24:40.870] – John
These things go up and they go down. I can almost tell you with certainty that within two years when there’s a midterm election, there’ll be some backlash because you can expect Trump to do some crazy things, and then his powers will be greatly It is an up and down thing. With an MBA degree in particular, we’re looking, again, we always say, look at the long term. Even when you evaluate the ROI on an MBA, we have told you in the past, do not merely look at starting salaries. The value of this degree is over a lifetime of work, personal too, not only professional. I also think that many decisions that can at this time, rather than to be disenchanted and disillusioned, you keep your head down and you think about the long term and how this is really, in the grand scheme of things, an ephemeral victory that has yet to play out. Now, Maria, I know you have inspirational words to impart as well to all our listeners, right?
[00:25:52.360] – Maria
I mean, people with these leanings have come to power in different countries in different periods of history, and it might take a while for the damage they do to be rectified. But ultimately, I do think that progress is eventually made. We saw it in Latin America, for example, when Pinochet came into power, Chile did eventually recover from that. They’re like, look at Germany today, look at where it was 90 years ago, 80 to 90 years ago, and look at where it is today. There’s definitely hope in the longer term. So I would just not lose hope overall, even though it means that the next four years might require some buckling up because I think it might be a bumpy ride ahead.
[00:26:42.340] – John
Buckling up and hunkering down. Yes, indeed. Well, if you want to read what we think, too, there’s a commentary on the site on Poets and Quants that I wrote yesterday, What Trump’s victory means for business education. Check it out. Meantime, thanks for listening. Sorry, this one’s a little more pessimistic than we’d like to be, but we all think there’s reason for it. Hey, this is John Byrne with Poets and Quants.
