Why MBA Pay & Placement Are Down This Year
Maria |
December 16, 2024

In this episode of Business Casual, the hosts discuss the current state of MBA job market trends and employment reports. They delve into the implications of the delayed and unflattering employment data from notable business schools like NYU Stern, UVA Darden, Georgia Tech, and Vanderbilt. The conversation highlights a shift in the kinds of jobs MBA graduates are taking, with many moving into sectors like healthcare and retail, which typically offer lower salaries but may align more closely with their career aspirations. The hosts also explore the potential impacts of artificial intelligence (AI) on future employment trends, suggesting a rebound in consulting roles as firms seek to navigate AI integration.

The episode reflects on the cyclical nature of MBA recruitment and emphasizes the importance of viewing career paths as long-term journeys.

Episode Transcript

[00:00:04.390] – John

Hello, everyone. Welcome back to Business Casual, the weekly podcast of Poets and Quants. I’m John Byrne, and my co-hosts here are Caroline Diarte Edwards and Maria Wich-Vila. They are in the house. There’s plenty of news to report. This is the time of the year when business schools release their telltale employment reports. I got to tell you, there’s a real lag this year in schools that would routinely report in early and late November who have yet to disclose how their Class of 2023 graduates have done. I’m thinking it’s because the numbers aren’t all that flattering. The numbers that we already have from NYU Stern, UVA Darden, Georgia Tech, and Vanderbilt, which are the only four notable schools that have put out numbers, all show a decline in average or median starting salaries for MBAs, as well as a decline in placement. I think it’s worth talking a little bit about this and what it really means. At NYU Stern, for example, offers at graduation were down nearly 5 percentage points to about 80.6%, while offers by three months after graduation were down by more than 8 points to 86.1%. In many cases, these kinds of numbers and the slight declines in base salaries, and we’re talking single digits, are coming off record highs.

[00:01:48.810] – John

We’ve seen in the past 5, 10 years, unprecedented increases in MBA pay, which for a little while was static. So the numbers do reflect select a slight fall from record numbers. The other thing that’s happened, of course, is the uncertain economy led many consulting firms to hire fewer MBAs last year. And of course, tech Companies were trying to rightsize after a hiring binge over a number of years, so employment there was down. What that meant, too, is that a lot of MBAs, for example, had to go and take jobs in healthcare, in consumer products, goods, in manufacturing companies, and the like, retail, that typically pay less, but in fact, may be the kinds of careers that young MBAs would like to join. That’s part of the context. The other thing that’s going on, I think that makes these numbers less worrisome is AI. Companies are very anxious about AI. They’re eager to employ young people to figure it out, and oftentimes, they will employ consultants. We would expect that the consulting industry is going to bounce back very strongly in terms of MBA recruitment in 2024 because more companies will be turning to the consulting firms to figure out how to use AI in a proprietary way for smarter and quicker decision making and for analysis.

[00:03:24.270] – John

So we think this is a temporary thing. Caroline, you’ve been through these ups and downs in the economy, and so have you, Maria. What do you think?

[00:03:32.600] – Caroline

Well, as you say, it is a cyclical pattern that we see in MBA recruitment, and that has always been the case, and it’s correlated with the economic climate. And there was a downturn in recruitment last year, but it was not a major downturn. It was not a big recession. And as you said, historically, the long-term trend has been very positive. And I think that in the long term, that trend will continue. So yes, it’s a small downturn, but I don’t think that it’s, as you said, it’s not a major concern. Often, graduates are able to shift to other firms if the company that they were targeting or their plan A career path was not immediately available, often they still have other fantastic opportunities, like you say. It does happen sometimes. The MBA graduates don’t get their dream job straight out of business school, but that doesn’t mean that they won’t get there eventually. I often see that MBA graduates will take a job immediately post-graduation that was maybe not their top choice. But then within a year or two, they’ve managed to make a shift. And so often, their career path means that they will take…

[00:04:47.540] – Caroline

There’ll be a stepping stone post-MBA that will then help them get to exactly where they want to be. And so I’m sure that will happen with some of those graduates from the 2024 class.

[00:04:59.920] – John

We’re really talking about slight decreases in pay. For example, at NYU, the average starting salary in 2023 was 168, 182. In 2024, it’s 166, 148, so it’s off by $2,000. And signing bonuses are off by about a thousand. The average was 37,000 in 2024. It was 38,2 in 2023. So these are not major declines, they’re slight declines. There’s slight declines, and it’s really a function of the mix of jobs that MBAs were taking in 2024. Maria, you’ve seen these ups and downs as well.

[00:05:41.030] – Maria

Yes, absolutely. I mean, as Caroline said, as the economy has its changes from time to time, those are going to be reflected in the graduation opportunities that people pursue. But I also agree with her that your career is a marathon and not a sprint. I do I think that if you are graduating into a market situation where maybe that first choice dream job isn’t available, take something that is adjacent. Take something that will still give you some of those foundational skills that you would need for that dream job. So that way, when that opportunity does present itself in one, three, seven years, whatever it is, you can just grab it. So I do think that the Career Services offices of the schools are probably being very strategic with students if those students are not getting their first choice to think about, Okay, well, how can you set yourself up so then that way, you will be ready to grab that job when it eventually does become available to you because it eventually will. I also thought it was interesting that a lot of the shift in NYU, just because that’s the data that we have the most of right now, there did seem to be an increase in the consumer package goods and retail, general retail, which was interesting for me.

[00:06:52.990] – Maria

Maybe people were taking those jobs because they didn’t have a choice. But I also think that there’s definitely a lot to be said for going to work for some of these larger traditional companies. They might not be as shiny or as sexy as some of the more recent tech companies, but I think they offer tremendous opportunity for growth. I think they offer tremendous work-life balance. I do think that a lot of these traditional industries are now about to start implementing AI. They’re about to start becoming much more digitally savvy to use the digital aspects of, let’s say, optimization or data analysis to take a new technology, shiny technology, but to adapt it to their more old-fashioned business. There may be some really interesting opportunities at these companies that maybe 15 years ago, you would say, Well, who’s going to go Walmart? Something like a Walmart or a Parker & Gamble or what have you might not be very exciting. But now, if Procter & Gamble is coming to me and saying, Well, we want you to optimize our supply chain for whatever it is that we make. I mean, who knows? That actually might be really compelling.

[00:07:54.020] – Maria

It was interesting not to segue us to another topic that we have on deck for today. But you guys also have an article at Poets and Quants about some of the best companies to work for if you want to become a leader in the future. I thought it was really interesting that Procter & Gamble, Pepsi Company, Johnson & Johnson, those are all in the top 15 to 20. Walmart is number 26. I wonder if there might be some… Some students are, in fact, looking at their careers more as a marathon and saying, Well, if I start my career at a Procter & Gamble, for example, maybe that will set me up in the longer term for this job and this influence that I want to have. So obviously, we’re only speculating, but I wouldn’t be surprised if there’s some element of that occurring as well.

[00:08:40.300] – John

And that pattern at NYU Stern was repeated at UVA Darden as well, where more students were going into retail and consumer products, goods, and health care, where the salaries tend to be slightly lower than they would be in consulting or investment banking. That’s really true. I think this brings to mind one my pet peeves about students who look at ROI based solely on the starting compensation they’re likely to make when they graduate. This is a long-term journey. Your MBA is going to change your trajectory in many different ways. And the investment return can’t be measured by a single year in what you make when you graduate. It’s really over a lifetime of earnings and a lifetime of opportunities in the network that you graduate into, which expands your opportunities and lets you see many that would otherwise be invisible to you.

[00:09:37.110] – Maria

I was going to also argue that there’s total compensation, but I think another metric that I personally like to look at, and I think more and more people of this generation are looking at as well, it’s not just what your total compensation, but what’s your compensation per hour worked? So it’s true. Look, management consulting, investment banking, those jobs are going to pay a lot of money, but you might make, I don’t know, 30 100% more money, but you might be working twice as many hours or something along those lines. So we have friends who have been working at an IBM or a Microsoft for 20 years. And if they had spent those 20 years at McKinsey, would they be making more? Sure. But they have also had to work. They have the 40-hour work week. They have those more sane and humane, perhaps, corporate policies. I think, I don’t know. Again, speculation, but I wonder if you look at total comp, that will push you in one But if you look at if another metric that’s important for you is more, okay, compensation per the actual amount of hours that I have to work, I think that a lot of these other industries and functions can provide excellent opportunities along those lines as well.

[00:10:44.600] – John

Yeah, That’s so true. I mean, a number of years ago, we actually ran a story that counted this up. It showed that MBAs, for example, at McKinsey typically work around 60 to 80 hours per week, and the average is 72 hours per week, maybe making it one of the most demanding work schedules among any MBA-type jobs. And true enough, at tech firms, consumer product companies, health care, other fields, people don’t put in 80 hours, 72 hours a week. So you’re right. If you took out your calculator and you figured out, Okay, how much am I making per hour? You might actually make more at a Pepsi, a Procter & Gamble, a Microsoft, dare I say, United Health care at this moment than you would at a McKinsey of Bain BCG or Goldman Sachs or Morgan Stanley or JP Morgan. I mean, that’s just the reality of it. This list that Maria was referring to is interesting. It was conjured up by Time magazine with a consulting firm. And what they did is they searched the backgrounds of a number of what they call influential leaders in companies. And then they saw which companies were in their background that got them to those influential positions and came up with a list of the best companies for future leaders.

[00:12:12.010] – John

Mckinsey is number one, IBM is number two, Goldman Sachs is three, Accenture is four, Procter & Gamble is five, PwC, six, PepsiCo, seven, Deloitte, eight, Bank of America, nine, and Ernst & Young, 10. Notice that none of the big tech companies not Apple, not Microsoft, not Meta, not Alphab, or Amazon are in the top 10, which is interesting to me. Microsoft does show up at 11, and Alphab is in there at 13, so it’s not like they’re far away. But, Caroline, what do you make of this list? Is this poppy cock?

[00:12:50.090] – Caroline

Well, I think there’s some interesting data in there, and it’s not terribly surprising. Consulting firms do very well, and we know that they are very good at recruiting outstanding candidates and giving them fantastic work experience, great exposure, as well as developing them and offering great opportunities to learn and grow through their careers at those firms. So I don’t think that’s terribly surprising that they would be there. I think it’s a shame that it’s a US only list. Far too often, rankings, in my view, are very myopic in just looking at the US perspective. And yes, okay, it would have been a lot more research, much more expensive to take a broader perspective, but still, I think that’s a missed opportunity. And then it does seem that younger firms seem to be at a disadvantage in this ranking, given the way that they’ve structured it and given that people who’ve joined younger firms, often the tech companies, who may be still at a younger age but have progressed very rapidly in their careers, they may not be well-reflected in this ranking because the ranking doesn’t take into account their current position. Taking the sample, they look at the current position, but when they calculate the ranking, they don’t look at the current position.

[00:14:15.910] – Caroline

And some people from tech firms may have progressed very rapidly and therefore may not have so many years of leadership experience because they may have just risen up the ladder much more quickly. And so I think that it doesn’t fully reflect actually the picture today. It is a historical perspective. So I wouldn’t encourage candidates looking at which firms they want to target for their job opportunities. I wouldn’t encourage MBA graduates to set too much store by this ranking.

[00:14:51.350] – John

Yeah, true. I mean, places like BP, Volkswagen, Siemens, and many other companies that are great places to work, including things like even the Japanese and German automakers, all excluded from this list. And how they did it is interesting. I mean, they apparently identified, and I’m not sure how, 4,000 of what they call the most influential leaders from various areas of the US society. Then they scoured their CVs to determine where they had worked in the past and basically then assumed that these companies would be great ladders for one to climb on to reach into this influential stratosphere. Now, Maria, what do you make of this?

[00:15:43.120] – Maria

Well, I think similar to MBA rankings, we should take it with a grain of salt. But I do like similar to when MBA rankings do this as well, when it does bring to folks attention, the fact that there’s more than just three firms out there that are worth working for. More than just five schools or seven schools out there that it’s worth going to, that are worth going to. So for example, when the MBA rankings come out, it might help people realize, Oh, actually, if I go to a school that is ranked top 20, top 25, top 50, it’s still going to be an excellent school. It’s the same with this. I like this in the sense that it does, I think, imply or give the message to folks who might be getting their MBAs right now. Like, yes, sure, if you want to work at McKinsey, you want to work at Goldman Sachs. But in case you don’t get that job, right? Coming off of the topic we were just discussing, in case you don’t get that job, there are so many other excellent companies out there that are going to give you fantastic training.

[00:16:42.760] – Maria

Look at how these are going to serve as launching pads for the rest of your career. Think about the skills that you’re going to develop and acquire in that employer. So I do like very much the fact that I would almost start sharing this, I think, with folks who are getting ready to graduate just because this give that message of like, Oh, look, it’s not McKinsey, BCG, Bain, JP Morgan. Of course, those elite firms are in there, but there are so many other excellent companies as well. My one wishlist, I have several wishlist for this, but one in particular that I would really like to see, because I think this is true when we see this with MBA rankings, when MBA rankings pull out the schools into specialties or into certain industries. So the best MBA for real estate, the best MBA is for sustainability, the best MBA is for healthcare. I do think that this list would have been a little bit more interesting, perhaps not by industry, but by function. For example, the fact that Deloitte is number 8 and Ernst & Young is number 10, I wonder, a lot of times, those companies do have consulting, strategy consulting firms, digital consulting firms, but they also started primarily as accounting firms and auditing and CPA firms.

[00:17:53.040] – Maria

I think that a lot of CPAs and accountants leave that couple of years of auditing training, enter the corporate world, and eventually become CFOs. So when we look at that list of the 4,000 influential leaders that time shows, if a number of them are CFOs, as one of the many C-suites that are influential, that makes a lot of sense that Deloitte and Ernst & Young would be there. They are the two main factories of CPAs. And so I do think that that, breaking that out into maybe one more level of granularity would be that much more useful. But aside from that, it’s It’s fascinating. It’s a fascinating study and it’s really interesting.

[00:18:34.760] – John

Yeah, and it’s fun to look at the list. There are quite a few companies on there, and many… I think you’re right. It broadens your view of all the different opportunities that are available to you If you’re an MBA or even an undergraduate business student, for that matter. Maria, of course, mentioned rankings, and I got to tell you that we just came out with our composite ranking for US MBA programs. We will, in the next few days, our international list. Just to remind you how we do that, it’s a composite, meaning we take what we think to be the five more credible rankings. We weight them by what we think is their authority or credibility in the space, the five of our US news, the Financial Times, Bloomberg, Business Week, LinkedIn, and Princeton Review. We mash them together and we come up with an overall rank. This year, for the first time in 15 years that we’ve been doing this, Northwestern Kellogg is number one, Stanford is number two, Chicago Booth is three, Harvard, four, UVA, Virginia had its highest rank as well as Kellogg. They came in at five, which makes them the number one public business school on the list.

[00:19:46.840] – John

Here’s the benefit of this list. In one small glimpse, you can see where any given school ranks across these five different programs and then see how we match them up. So As opposed to going to one list or another list and looking at them in isolation, you can see if there’s an anomaly among the ranks across these five lists, you could see if there’s consensus, which would give you greater confidence that that school is indeed at a certain rank. We give you the top 100 in the US and the top 50 outside the US. If If you’re going to play with rankings and look at rankings, this is a good list to look at because you can look at them all in one fell swoop. I know that there’s been independent research that has shown that after US news, this is the most sought after and looked at ranking even ahead of the financial times, which is interesting. But I think it’s because you get it all in one place, which is helpful. There’s a ton of data and a ton of analysis in the story. Do check it out and do be aware that all three of us are fairly cynical about rankings in general.

[00:21:09.450] – John

You’ve heard Caroline, Maria, and I discount a lot of this stuff, but it’s a helpful list just to see where schools are, what schools have momentum, what schools are on a decline. And you could all find this out in the 2024, 2025 MBA ranking that we just published. Then look for the international list as well, which is about to come out in a couple of days. All right, so there you have it. Don’t worry about those declining employment rates and starting salaries for MBAs. We think it’s an aberration and temporary. Check out the list of companies that time came up with, which are in the background or on the resumes of people who’ve achieved a fair amount of responsibility and power in the US companies. And then check out our ranking and see where your target schools way. Meantime, I know you’re putting the finishing touches on your round two apps. We covered that really well, I thought, in our last podcast. If you missed it, go and listen to it. It’ll be helpful to you. This is John Byrne with Poets and Quants. Thanks for listening.

Business School News | General | P&Q Podcast "Business Casual"
Why MBA Pay & Placement Are Down This Year
Maria |
December 16, 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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