Predictions have been made – the expectation is that application volumes this admissions season are going to be significantly down in comparison to past years. We’re coming off of a pandemic-related surge in app volumes the last two years, the strong US-job market is keeping a lot of would-be applicants OUT of the MBA applicant pool, and there’s an increasing trend for Europeans to want to “stay home” and attend European Programs.
Our hosts in this episode of Business Casual discuss this prediction and why that translates to a potential once-in-a-generation opportunity for many applicants to get a yes from a top b-school (and maybe a slightly better chance at getting off of the waitlist this summer for a few folks).
Additionally, what do applicants really WANT out of an MBA? Why do they pursue one in the first place? The team revisits the core reasons for pursuing an MBA and discusses why applicants should keep their long term goals in mind as they’re maybe reconsidering applying right now.
[00:00:07.750] – John
Hello, everyone. This is John Byrne with Poets and Quants. Welcome to Business Casual, our weekly podcast with my co host, Caroline Diarte Edwards, and Maria Wich-Vila. Maria, of course, is the founder of Applicant Lab. It’s sort of a do it yourself journey where she becomes your Sherpa through many videos and instructional, I guess. What would you say? Instructional? What? Tutorials.
[00:00:35.180] – Maria
I say interactive exercises.
[00:00:37.370] – John
Okay, how about interactive tutorials? I love that word. Tutorial, you know, so much the better. Sounds good. Caroline, of course, is the former head of admissions at INSEAD, as well as the co founder of Fortuna Admissions. And if you want a shorter to hold your hands for the entire process with a lot of coaching in between, that’s the place to go. So there are two things we want to talk about today. The first thing is the prediction that this coming admission season is a lifetime opportunity to get into a great school, and we’ll explain why. The second thing we want to talk about is what prospective students really want above all else in an MBA program. But first, we want to address the coming admissions market. There is a sense that with applications down, particularly from domestic US applicants to US schools and European applicants who are increasingly favoring staying home and near home and applying to European schools, that business schools are going to be hard pressed to find both US citizens and Europeans in the applicant pool this coming year. Part of this is the result of very strong job market in the United States, which is keeping many young people who otherwise would not be applying to graduate school back in their jobs.
[00:02:11.990] – John
They’re getting raises and promotions to keep them where they are because talent is in short supply and there are plenty of opportunities. Even if you don’t want to stay at your company, there are plenty of opportunities to move on your own without the need for a graduate degree right now. So that’s leading to a significant decrease in the number of domestic apps. And with a recession around the corner, I might add, you could expect that if, in fact, the recession materializes next year, as some predict it will, there will be the typical soaring rates of application flow to the business schools, which will make it harder to get in. Caroline, it was one of your colleagues, Matt Simons, who said, basically your chances of getting into a great school this year might be better than they’ve ever been. What do you think?
[00:03:08.810] – Caroline
I think that’s definitely the case. We saw such a tremendous surge in applications triggered by the pandemic, and so it’s a cyclical market. So if there’s a surge, that’s going to be followed by a drop at some point. And so I think application volume is dropping right now for the upcoming season. With such a strong job market in the US, so less incentive for people who are working in some countries where the job market is so strong to leave their positions and head off to business school. They may feel now is not the right time. Right. Because they’re getting promotions, they’re getting great job offers, they’re getting pay rises, and so they feel less motivated to pull out of that and head back to graduate school. And at the same time, it’s more difficult right now, I think, for the US schools to attract some international applications. So, for example, from China, much lower volumes from China than they may have seen in the past. And the currency fluctuations, the dollar is nearly at parity now with the Euro. Right. So it makes it incredibly expensive or more expensive than it may have been in previous years for candidates who are based in the Eurozone to buy into US tuition fees.
[00:04:32.870] – Caroline
And so they may be more incentivized to stay closer to home because of those currency dynamics. So I do think that there’s going to be a drop in application volume this fall, and therefore, meeting the competition will probably be less than usual. And therefore, if you are thinking about going to business school, then go ahead. This is a great time to do it. This may be an opportunity to get in to a school that you might.
[00:04:59.680] – John
Not otherwise got into, particularly because if a repression does materialize in the following year, as is often the case, applications are counter cyclical to the economy, and they go up really fast. The other aspect of this is for people who are currently on wait list, which basically have been sort of Neverland, right? I mean, pretty much people who get taken off a waitlist typically or very few. But this may be a very different time, right, Maria?
[00:05:33.710] – Maria
Yes, absolutely. I think precisely for the reasons that Caroline and you have talked about, because the economy is doing so well and a lot of employers are desperate to hold on to talent. I’ve had some clients reach out to me and say, look, I was just offered the post MBA role I was hoping for now. So why would I go get the MBA? And I don’t have a good answer for it. I’m like, well, you could think about the long term skill development. But yeah, honestly, if I were in your shoes, I would also reconsider if this is why you’re going to business school in the first place. So I think the summer is going to be a once in a lifetime opportunity as well for people on the waitlist as well. I recently a couple of days ago, I heard from one of my clients who got off of the Harvard wait list, which is one of the tougher ones to get off of, only because their yield is so high. So many people who are offered a spot there take that spot and they’re committed to it. The minute they get that acceptance letter, they’re like, cool, I’m all in.
[00:06:32.150] – Maria
So therefore, getting off of the HBS wait list is usually pretty dire, a little bit tough to do. So I’m definitely seeing sort of anecdotally people already getting off of wait lists, and it’s just the beginning of June. So that to have that movement this early in the summer versus, say, July or August, it’s a pretty good indicator that I think a lot of people are opting to stay in the workforce. And I don’t know that they should, because I think what goes up must come down. And so right now your job might be awesome, and they just gave you that promotion. And then next year, if there’s a huge recession or some other wave of monkey pox, whatever takes over the world, you might be furloughed, right? You might be furloughed, or you might get laid off, as we have said, ad nauseam on this podcast, like the MBA is a long term something you do for your long term career. So I would urge anyone listening if you’ve got an offer in hand, even if your employer is trying to sweeten the pot for you to stay, I would just kind of think about that long term.
[00:07:39.240] – John
Yeah, that’s really good advice and advice we’ve given people over the time that we’ve been doing the podcast. I have heard that one top admissions official at a major school is predicting that this summer for the schools will be a bloodbaths, a blood bath in the sense that there will be a lot of people who will not attend, who were invited to attend. That’s called summer melt.. Summer melt is an actual term that admissions people use and typically results in. You have three offers. You can only accept one, or maybe for personal reasons, you decide not to go. And it’s usually a small percentage who don’t go for those kinds of reasons. But this year, because companies are actually fighting to hold on to their professional employees, the summer melt is going to be a lot larger than it typically is. So for those people on the waitlist, this is a good time. Not that it’s really a great time to go on anyway, let’s face it. But if you had to choose your time, this is the time to choose. The other evidence of how strong the job market is for young professionals occurred this past week.
[00:08:52.560] – John
Uva Darden became the first school to report some career stats for the class that just graduated two weeks ago. Median base salary for Garden MBAs up 21% to 175k. That is extraordinary. I think the last time we saw increases year over year of 20 plus percent. We’re probably thinking back to the 1980s in really the heyday of the MBA degree, when school is going to produce enough MBAs. Universities didn’t have enough business schools to produce them, and salaries were just galloping forward 21%. I don’t think anyone has seen a 21% year over year rise at median base salary in decades, and it’s not like a high percentage of the class wasn’t reporting in yet. In fact, 92% of the class received a full time job offer by graduation. That’s very high, particularly at graduation. Usually that’s a number you might see three months later. And 89% of the class accepted their full time offer by graduation at Darden. So that’s really good proof of how strong the market is for MBAs. And then you have to think if you’re an employer who has a young professional who is really hard working and brilliant, you don’t want to lose them.
[00:10:23.740] – John
So you’re going to offer them 20 plus percent increase in pay and greater responsibility and opportunity to do something that they really want to do. And that’s making for what we think will be a really great Commission season for those who want to apply to highly selected business schools. It still means you got to have the goods. I mean, isn’t that current, Caroline? Isn’t that right? And Maria, you can’t just go in there thinking, okay, now it’s my chance. I have that well below average GMAT score. My transcript from my undergraduate years is a mess. I haven’t been all that successful at work since I graduated from an undergraduate institution. Now is my chance to get in, let me tell you. No, because the applicant pools are very deep, and while your chances are significantly improved, we think in this admission season, you still got to prove that you can do the job and you’re still worthy of getting into a great school, right?
[00:11:24.590] – Caroline
Yeah, absolutely. And I think the people that it will really make a difference for are those high achievers who might struggle to get in because they have quite a common profile.
[00:11:34.380] – Maria
[00:11:34.750] – Caroline
So the management consultants or the investment bankers or the engineers who are applying in vast numbers to business schools and are incredibly well qualified. Right. Often have fantastic undergraduate track records, great GMATs, very impressive professional achievements, etc.
[00:11:52.670] – Maria
[00:11:52.940] – Caroline
Etc. But struggle, unfortunately, to get into the very top schools just because there’s so many of them applying. And so I think it’s those profiles that will really benefit from this downturn, because, as you say, you still have to be very well qualified, and they are incredibly well qualified, but they just may not face quite as much extreme competition from vast numbers of people with similar profiles applying.
[00:12:19.170] – John
Right now, the other thing I’m thinking about is the psychological impact here when admissions offices go through a period where the yield decline significantly. And I think we’re going to see that with the summer mill and with companies fighting so hard to keep their people, they may be a little nervous and actually may be more willing to commit to people earlier in the cycle, particularly round one. Maria, do you think that holds any water, or is that just me speculating?
[00:12:51.590] – Maria
Yeah. I think when things are uncertain, you go for the candidate in the hand versus the candidate in the Bush. I do think that that will happen. Of course. Then in that case, I think the downside to sort of shifting more of your focus on around one as an admissions officer is that then there’s a whole extra several months in which that person might decide that they don’t want to come, that you’re giving them three extra months to go to their employer and say, give me a counter offer. What are you going to give me so that I don’t leave? So I’m not sure. I think if I were an admissions officer, I might try to front load my round one acceptance, but I think I would just lean very heavily on my waitlist because nobody knows. I mean, we don’t know if the again, if the monkey pox recession, something hits in October. Now our round two is suddenly going to get crazy. And boy, oh, boy, we gave away all of our spots in round one, and I wish we wouldn’t have. So I don’t know if hopefully they won’t jump the gun too much.
[00:14:02.570] – Maria
But, yeah, I mean, get that application in sooner because since right now things are hot, take advantage of that and don’t hold on to don’t hold off on applying, understanding that who knows what might happen in a few months.
[00:14:19.790] – John
That’s true. Caroline, you would agree that round one is the round you got to go for if you want to take advantage of this decline in applications, because if the recession starts to kick in in the fourth quarter of the year, you’re going to see a rush of people to try to get in second round.
[00:14:37.970] – Caroline
Absolutely. And if the schools, as you say, face a lot of summer melt and struggle with their yield for the class starting this fall, they will be under a lot of pressure to deliver better numbers for the following season. And so the temptation will be to make the most of round one in a context of uncertainty. But I do think, as Maria said, in that context of uncertainty and volatility, they will no doubt wait list quite a few people because they just don’t know how things are going to evolve. Round two, who knows if we’re actually going to go into recession?
[00:15:16.910] – Maria
[00:15:17.080] – Caroline
There’s a lot of talk of recession, but it may not transpire. So round 2 may not deliver the volume that they expect. So in which case they will start clearing people pretty quickly from the waitlist. But I would certainly encourage candidates who are ready to submit earlier rather than later this season.
[00:15:39.770] – John
Right must be predicting a recession. He says he’s going to lay off people in advance of the recession, even though his electric cars are as high as they’ve ever been. Jamie diamond is worried about a financial meltdown next year. He said it could happen. Let’s hope it doesn’t. But if it does, you know what’s going to happen. Application is going to explode again. They always have that is certain. So if you want to take advantage of this window, move through it, move through it quickly and make it happen. So this goes to the second issue that we want to discuss today, which is what do prospective students want above all else in an MBA program and published a survey by an organization called Niche Grad Searcher. And there was a sort of predictable response to this question among the MBA students who filled it out. The other prospective MBA students, not surprisingly, people were going to MBA programs to advance their careers. 37% reported being motivated by a planned career change, which actually on some level is low compared to what we know because the vast majority of people who go into full time MBA programs at the schools that we talked about and we cover are wanting to do a career switch.
[00:17:13.730] – John
Caroline, what’s your sense of that? Would you say that most people either want to advance their current career or simply want to change careers, and that is those are the two primary reasons people seek an MBA?
[00:17:28.610] – Caroline
Yeah. I think, as you say, actually, most of the people applying to the very top schools are looking to make some sort of career change, and that’s why they’re willing to make such a big investment in their career, because they want to open doors that might otherwise remain closed if they didn’t head off to business school. So while there’s always a core group of students who are heading off to business school to advance in the current sector and current field, there are far more students who are looking to make some sort of career change. And the vast majority of people will actually there’s always students who go to business school thinking, I’m going to carry on being a management consultant, and I’m going to go back to that afterwards. And then they have a change of heart when they’re at business school because it is a very transformational experience. And a lot of people have a change of heart while they’re there because they’re exposed to all these amazing opportunities and possibilities that might never have crossed their mind. And you learn a lot about yourself and you gain a lot of skills and discover possibilities that might not have crossed your mind.
[00:18:37.390] – Caroline
So that’s one of the wonderful things about business school. Right. Is that people go through this wonderful transformation and are able to go on to do things that they would never have dreamed of doing beforehand. So definitely a huge amount of change going on in people’s careers post MBA.
[00:18:59.270] – John
Another reason why people get graduate degrees is to get into fields that are otherwise close to them. And that’s certainly true with the MBA. Obviously, if you want to get into strategic management consulting, while Ibanking may be more open, it’s only open to undergraduates generally. So if you want to go into a banking and you’re not in a banking or a venture capital and private equity, although those fields are much harder to get into. Anyway, an MBA is a route to those jobs because without an MBA, it’s very difficult to get into those industries. Isn’t that true, Maria?
[00:19:38.150] – Maria
Yes, absolutely. The MBA, especially if you want to get into investment banking. I mean, if you’re in the military or whatever it is that you’re doing, if you were to just reach out to the banks, it might be. Now, some of the banks actually have started programs for veterans specifically targeting veterans. But it will be a lot easier for you to go to business school first and get that skill set because I don’t work for a bank. But I would guess if I were, I would think to myself, well, they’re about to spend two years learning all of these skills that I then don’t have to train them on. Right. I think it definitely helps some people get into some of the more standard post MBA routes, management consulting and banking being the two biggest ones. I will say that there are a lot of post MBA roles, to your point, that are, in fact, very difficult to get into without prior experience. Not just private equity and hedge funds, but even consumer packaged goods is one that they really do want to see some sort of marketing background especially well for their brand manager types of roles.
[00:20:46.850] – Maria
Yeah. I think this is why it’s also important for people to do a lot of research. Right. It’s one thing to say, well, 80% of people change their minds, but some of them are in a better position to change their minds than others in terms of what career they want after business school. And so just this is why I think it’s important if you are a veteran or if you are currently in the nonprofit space, reach out to the current veterans clubs, nonprofit clubs, etc. Find other people at the business schools who have your Premba background and ask them essentially point blank. Right. Here’s what I want to go work for a hedge fund after business school after being in the Peace Corps for two years. What do you think? Because don’t take it from me. Right. Do your research. You never know if there’s that one diamond in the rough who’s able to make that switch. But if so, you’re going to want to find out who they are and what exactly they did.
[00:21:35.930] – John
Yeah, that’s really good advice. The other piece of this is many people are often referred to employment reports at business schools to get an idea of the possibilities that a given school may provide. And I wonder if the two of you have any suggestions on how to read an employment report, because there’s a lot of kind of apples, bananas, oranges here. In other words, one employment report can be very different from another and very hard to compare against. There are some schools there are other schools that don’t reveal that at all. There are some schools that reveal average pay and not median pay. There’s some schools that report the opposite. So sometimes it’s difficult to compare apples and oranges and employment reports. But in general, what kinds of things should people be looking for and thinking about? Because here’s a good example. Kellogg puts a lot of people into consulting jobs and has done so for quite a few years, and it surprisingly has a small representation in the world of finance. Now, does that mean that if I want to go into finance, Kellogg is a less desirable school, or is it a more desirable school?
[00:23:01.270] – John
Because frankly, I have fewer people in my class who want those positions. How do you read that?
[00:23:08.870] – Caroline
Yeah, it’s a tricky one. First of all, I would say it’s important to look at the list of recruiters and if you’ve thought through your career goals and figured out which employers you’re targeting, just make sure that they’re actually coming to recruit people from the school that you’re targeting. Right. And look at how many people they’re recruiting. So generally, I would say if you’re looking to go into finance, it’s a positive sign. If there are several financial institutions coming to the campus and they’re recruiting in larger volumes, it suggests that when they come to your school, they probably have several positions that they’re looking to fill. They’re probably coming to campus to give presentations. They’re going to be interviewing on campus. It may make it easier to secure an interview. But it’s also true that you want to be at a business school where you can stand out. Right. So you want to be at a school where you can distinguish yourself among the student body if you’re looking to get into a field that is incredibly competitive. And so do look at the profile of candidates that they are recruiting and whether you have the right profile.
[00:24:28.140] – Caroline
Right. Because the most competitive field, private equity, as Maria said, and so on, they are not recruiting just any MBA student from top business school. They are scrutinizing profiles and hand picking certain students to invite to interview. And so you need to understand whether you have even if you go to that school, whether you have the right profile to secure an interview with your target recruiter.
[00:25:04.430] – John
Maria, do you have thoughts on that?
[00:25:07.250] – Maria
Yeah, I think it’s a fine line. I think it depends which post MBA route you want to take. I think. Yes. For example, let’s take finance at Kellogg. Yes. The good news is that you’ll have less competition. But I also think that employers are looking at it less from a school by school quota. And I think they’re just looking for the talent that will fill their needs. And so I would guess if I’m an investment bank based in Chicago and I interview people at Booth and I interview people at Kellogg, I might be selling more of my pool with people from Booth only because it is more quantitatively. It is more famous. It is more well known for being quantitatively rigorous. And I’m not trying to imply that Kellogg is not quantitatively rigorous, but it is certainly known for that. And so I wonder if part of it is, yeah, I might stand out more if I’m at Kellogg, but also I would worry a little bit about am I going to have the resources around me if I want to switch into something like finance? Are there going to be enough students around me that will help guide me in making that switch?
[00:26:07.430] – Maria
Because if everyone from the sort of Midwest area who’s a finance whiz goes to Booth, yeah, there’ll be more competition there, quote unquote, but also there will be more people who can help me and who can show me the ropes and things like that. But I would say for the more niche, not necessarily niche, but for the less overwhelmingly popular routes. I do think that’s also looking at the higher percentages makes a huge difference, things like entertainment and media, real estate or health care. That’s where you can see tremendous variability from school to school. And that is definitely an indicator. If you want to go into real estate and one school sends twice as many people on a percentage wise basis as another school, that’s probably a pretty good indicator that’s a more developed path or entryway into that field. Now, I would also say, don’t trust it blindly. As Caroline said, you’ve got to reach out to people, because the other thing that might happen is at a certain school, it becomes sort of like it’s like the circle of life from The Lion King, like if a school is known for sending people to real estate, they might attract more people from real estate.
[00:27:13.580] – Maria
And so that’s something that I think one thing I want folks to be a little bit cautious of is if you’re talking about, let’s say, working at McKinsey, a school might say, yes, we sent 50 people to McKinsey last year, but what you don’t know is that 30 of them were from McKinsey anyway. And we’re sponsored. And so getting to the core of which school is really going to actually help me make a switch. And I wish there were an easy magic one solution to this, but it really does come down to just reaching out to the consulting club at different schools and saying, hey, here’s what I do right now. How many people in the consulting club looked like me two years ago? And where are they going now? Because that’ll at least it’ll strengthen your application because you’ll be able to point to that as evidence that it is a feasible switch. But you’ll also when that first tuition bill comes due, you’ll feel a lot more comfortable about taking out that loan or whatever it is and making that investment that you might have to make which is a substantial one indeed.
[00:28:17.150] – John
In fact, the survey we just mentioned has affordability very high up is a concern that many prospective students have about graduate education in general. Again, we urge you to look at the long term, not the short term. And if you are looking at the long term, you might think this is a great time for you to apply. We think it is we think you should apply in round one. That’s what we think. So there you have it. Maria and Caroline, thank you so much for all your help here. This is John Byrne with Poets and Quants you’re listening to Business Casual our weekly podcast.