A new report from the Graduate Management Admission Council, the folks who bring you the GMAT test, is full of the kind of positive news GMAC is known for. Indeed, the number of GMAT exams taken in Europe (which closely tracks the number of business school applications) was 24,298 in 2011, an increase of 40 percent over 2007. But if you run an MBA program, particularly one in the U.S., this report should keep you awake at night.
It’s becoming clear that in the last four years–as the world experienced a global financial meltdown–Europe, a big contributor to U.S. MBA programs, is becoming less so. While the percentage of GMAT scores being sent to MBA programs from U.S. test-takers has been on a slow, steady decline since 2008, in Europe the situation is markedly worse. In 2007, the MBA was king: 71 percent of GMAT test-takers in Europe were applying to MBA programs. Today only half are. At a time when the number of Europeans taking the GMAT surged, from 17,353 in 2007 to 24,298 in 2011, the number of applicants sending scores to MBA programs actually fell a bit, from 12,320 in 2007 to 12,149. Not exactly a ringing endorsement for the MBA.
An equally troubling trend has to do with the number of applicants who are crossing the pond. In 2011, a third of all European test-takers were applying to U.S. business schools, which sounds great–until you consider that just four years ago nearly half (47 percent) planned to leave the Continent to get their degrees.
Part of the reason for both trends is that applicants are coming to business school at a younger age. Today more than half of all European applicants are under the age of 25, up from 38 percent in 2007. Younger applicants typically have a tough time qualifying for U.S. MBA programs, which put a premium on work experience. GMAC found that they are more likely to apply to programs in Europe, where they have access to non-MBA “pre-experience” master’s programs designed specifically for applicants straight out of college.
The other reason is financial: traditional two-year MBA programs, especially those at top U.S. B-schools, cost a fortune, while the shorter European MBA programs (1 year for most) and MBA alternatives in both the U.S. and Europe (such as the MS in Finance) cost far less. If you’re just starting out in your career, as many of today’s younger B-school applicants are, these programs are increasingly attractive.
How attractive? According to GMAT, business schools in every European country received more score reports from European test takers in 2011 than 2007. France did extraordinarily well, receiving 7,771 score reports, an increase of 86 percent. The U.K, which had a 40 percent increase, didn’t do too badly either.
If there’s a lesson here for U.S. B-schools, it may be that a generation of younger applicants no longer finds the MBA essential to the careers they want for themselves, and that the degree itself–whatever its merits–is no longer the only game in town.