For business school applicants, sometimes even the best-laid plans go bust. Consider Andrew Brim, a 27-year-old husband and father of two who was planning to start the full-time MBA program at Brigham Young University's Marriott School of Management this fall. The software developer for Bank of America's (BAC) investment banking operation had even researched apartments and put down a deposit at BYU when fate intervened.
Unable to sell his townhouse in Aurora, Ill.—even after dropping the price by $15,000, to $200,000—he had to put his MBA dreams on hold. He plans to put his home back on the market in March in the hopes of enrolling next year, but he's not too hopeful. "I'm still kind of nervous about the same thing because market conditions aren't much better," confides Brim. Plan B: renting his home, attending a part-time B-school program in Chicago, or working remotely on nights and weekends while attending BYU next year.
Business school applications are up in the recession, but for some students, paying the bills isn't as easy as it used to be. The end result is that some students who have been accepted to business school programs are putting their studies on hold.
While some full-time MBA students are deferring because of finances, school officials say that Executive MBA programs are seeing deferrals rise as the cost of programs increase and companies cut back on tuition reimbursement. Executive MBA programs are flexible-format programs designed for professionals who are working full-time while pursing an MBA. Deferrals allow students who have been accepted to put off enrollment, typically until the next academic year.
A recent study by the Executive MBA Council found that the percentage of companies offering full sponsorship to EMBA students fell by 2%, to 32%, between 2007 and 2008, while the number of students receiving partial reimbursement increased 3%, to 36%. Students paying their own way decreased from 33% to 32%. Meanwhile, the cost of the average EMBA rose from $58,000 in 2007 and to $63,000 in 2008.
EMBA Council Executive Director Michael Desiderio thinks applications will stay strong, even among those students who are paying on their own. But even he admits that in this increasingly precarious financial landscape there are few guarantees. "I think smart people will generally invest in themselves.. The question we don't know is, how far can you stretch in this uncertain time?"
At Emory University's Goizueta Business School Admissions Director Julie Barefoot says deferrals to its Executive MBA program have increased this year. "Some even paid their deposit," says Barefoot, adding that the majority of these students deferred because their companies cut back on sponsorship. "As an educator, I think it's the wrong time not to invest in your employees, but to be truthful, it makes sense."
At the University of North Carolina-Chapel Hill's Kenan-Flagler Business School, the number of students deferring admission to the evening program, which is traditionally about 2 or 3 students, has jumped to 11 this year. There have also been 9 requests for deferrals to the weekend program, up from the typical 3 or 4 requests, and the school says a few companies have decided against paying tuition altogether this year.
Tightening the Belt
At Indiana University's Kelley School of Business, one corporation, which typically enrolls from 75 to 100 employees in the online Kelley Direct program each year, has cut the number of classes it will pay for from two to one a semester, meaning that its employees will require four years to graduate instead of two; that is, unless they foot the $945-per-credit-hour bill to pay for the additional classes themselves. Kelley, like all the schools interviewed for this article, declined to identify specific companies that cut back on reimbursements.
Boston College's Carroll School of Management spokesperson Warren Zola has also noticed that some evening program students are taking fewer classes, most often because of cuts to the tuition reimbursement policies at their companies. However, he has also encountered the opposite phenomenon as well: Students from companies offering uncapped reimbursement are loading up their schedules in anticipation of losing this perk as their companies' financial situations deteriorate. "You also do see students who are trying to expedite their way through the program in anticipation of the [tuition reimbursement] program being pulled. Rather than taking the one or two [classes, they'd] rather be very busy and know the employer's going to pay it."
Maury Hanigan, president of the MBA Scouting Report, who has been out talking to more than 200 students on campuses across the country, says that international students in particular are feeling the crunch because of issues in securing loans. "There have been a large number of all the non-U.S. students who used to have their loans guaranteed who are no longer having their loans guaranteed. That threw a huge wrench in their plans." According to Hanigan, though, some other students are sitting pretty because they sold nest eggs to pay for their tuition right before the market tanked. "What I've heard personally is that they liquidated their personal portfolios in July and are feeling incredibly lucky or like geniuses because if they wouldn't have, they wouldn't have them anyway." But next year's tuition may be a different story.