The Selling of the American MBA

With U.S. enrollment down, B-schools are wooing foreigners.

Photographer: Kevork Djansezian/Getty Images

In December the University of Rochester’s Simon Business School introduced loans that don’t require co-signers for international students entering its full-time MBA program this fall. Simon is also cutting its tuition by almost 14 percent and strengthening career services to help foreign students land jobs. The school recruited in more than a dozen countries last year, holding events in Buenos Aires, Cairo, Taipei, and Istanbul, among other cities. The efforts reflect the school’s “very strong commitment to global diversity within its student body,” says Rebekah Lewin, assistant dean of admissions and financial aid at Simon, where about half of the 98 full-time MBA students in the class of 2017 are from overseas.

As the U.S. appetite for the MBA degree wanes, many of the country’s more than 700 B-schools are stepping up recruiting abroad, where regard for this American invention appears undiminished. (Harvard was the first institution to offer an MBA, in 1908.) The number of U.S. citizens taking the main business school entrance exam, the GMAT, dropped by a third from the 2010 to 2015 testing years, which run from July 1 to June 30, while the number of foreign nationals taking the test rose almost 19 percent, according to the Graduate Management Admission Council, the organization that administers the exam. International candidates accounted for 58 percent of the applicant pool at full-time MBA programs in the U.S. in 2015, according to GMAC.

Nunzio Quacquarelli, chief executive officer of Quacquarelli Symonds in London, which helps business schools recruit abroad, says international students make up more than 35 percent of the class at over 50 of the 200 U.S. business schools he tracks, compared with just a “handful” a decade ago. Foreigners are “providing vital tuition revenue and compensating for any decline in domestic revenue,” he says.

Enrollment in U.S. MBA programs is down 11 percent since 2009, according to a survey of 265 B-schools by AACSB International, an accrediting group. Tom Robinson, AACSB’s president and CEO, attributes the trend to a shift away from the MBA to specialty masters in areas such as marketing and nonprofit management. AACSB’s data show an overall increase in enrollment if those are counted. “I’m not worried about it, because there’s always going to be some subset of the population that wants the generalist management education and wants to do it full time,” he says.

This is a starkly different outlook than that offered by Roger Martin, who led the University of Toronto’s Rotman School of Management for 15 years. Martin, who stepped down as dean in 2013 and now heads a research institute at the university, says U.S. MBA education is in “the declining phase of its long and relatively illustrious history.” He predicts that half of U.S. business schools may not be operating in 10 to 15 years, because there won’t be enough enrollment to support their “very bloated” cost structures.

Ramping up international admissions is a temporary fix, Martin says. And helping foreign graduates land well-paying jobs in the U.S., which is what most of them aspire to, may prove a big headache. A student from India doesn’t want to collect his degree, he says, and “go back to India to an Indian salary.”

Fabio Bergamo, a Brazilian who graduated from Columbia Business School last May, says getting permission to work in the U.S. has been a “disappointing” struggle. Even though his employer, a fashion overstock startup in New York, is sponsoring his work visa application, there’s no guarantee the government will grant it. “You come here, you study, you want to stay here, you have a company that wants you to work for them, and the lottery just might not pick you,” he says. “I’m in the dark if I’m going to be here after July.”

Prodigy Finance, the London-based lender that financed Bergamo’s degree, says international MBA seekers in the U.S. have become an important part of its business. It expanded into the U.S. in 2014, pilot-testing loans at the University of Michigan’s Ross School of Business and Columbia Business School. Last year it loaned about $100 million in total, half to foreign students at about 45 top-ranked U.S. business schools. “There’s been huge growth in the U.S.,” says Ricardo Fernandez, the 75-employee company’s head of business development. “International students are critical to MBA programs.”

The bottom line: In 2015 international candidates accounted for 58 percent of the applicant pool at full-time MBA programs in the U.S.