Visa Rules May Spell Trouble for U.K. MBAs

Overseas MBA students have sought out British business schools in droves for much of the past decade, attracted by a generous immigration provision that allowed them to stay on and work in the country after graduation.

Come next spring, MBA students will no longer have the same luxury, according to new regulations for student visas announced last month by the British government. The reforms, enacted to crack down on rampant abuses of the student visa system, do everything from cap the number of foreign skilled workers that U.K. companies can hire to tighten language requirements. The existing program, popular because it allows MBA students to stay for two years after graduation to look for work, is slated to close in April 2012. In 2009, about 38,000 of these work visas were issued to students, including MBAs, according to a report from the Home Affairs Committee of Britain's House of Commons.

The news is not all bad, though. The government has set a cap on the number of foreign workers who can obtain the coveted Tier 2 skilled-worker visas, but business school students will be exempt from this cap, as long as they are hired while in school or shortly thereafter and receive starting offers of more than £20,000, according to Dina Giannikopoulou, a researcher at the Association of MBAs, a U.K. accreditation group. MBA students also are exempt from some of the more stringent requirements of the visa changes because of their post-graduate status. They'll be able to stay a few months post-graduation to look for jobs, though the U.K. government has not yet specified how long that period will be, Giannikopoulou says.

Lobbying Efforts

The regulations for business school students are the end result of several months of lobbying by business schools, which are concerned that overseas students might not come to the U.K. to study if the government does not provide an alternative to the current post-study work visa route, says Giannikopoulou.

"There was a huge amount of concern at the outset when this debate started late last year, and what has happened, I would say, is a collective sigh of relief," she says. "I wouldn't say schools are happy with what happened, but it could have been a lot worse."

The U.K. is the world's second-largest destination, after the U.S., for global GMAT examinees, and its schools are known for their diverse student bodies—often more than half the MBA class is made up of students from outside the European Union. In 2008, non-EU students made up 83 percent of all international students enrolled at U.K. business schools, according to the Association of MBAs.

Fewer Applications

The new government restrictions and the debate in the media that has whirled around them over the past few months have caused concern among overseas applicants, especially those who want to work in the U.K. for a period of time after they graduate, say career services directors at U.K. schools. Many applicants have expressed worry that it will be tougher to find a job and, as a result, some schools have seen dips in applications this year. In an Association of MBAs survey of 47 accredited business schools conducted this January, 97 percent of responding schools said they believed continued restrictions on student visas are likely to affect their enrollment numbers.

"It is certainly a highly emotive topic for U.K. business schools, since they've spent the last 20 years building up their reputation to attract high-quality international candidates," says Nunzio Quacquarelli, managing director of QS Quacquarelli Symonds, a London company that organizes the annual QS World MBA Tour. He notes that international applications to U.K. business schools are down five percent to 10 percent this year. "However, as the proposed changes stand," he says, "they are not so onerous as to pose a major impact on [U.K. business schools'] ability to recruit non-European candidates."

Fiona Sandford, director of career services at London Business School (London Full-Time MBA Profile), says she believes the revised visa rules are a positive development for MBA students. They will affect only a small percentage of students, because the vast majority of MBA students (92 percent) find jobs before they graduate, she says. Of the school's 600 graduate students, she reports, only 17 took advantage of the post-study work visa route last year.

Favoring Residents

Next year, U.K. companies should have an easier time than they do now hiring MBA students from outside the European Union while the students are in school, she says. For example, before hiring a foreign B-school student, companies currently must first prove that no qualified European Union candidate can do the same job, a requirement known as the "resident labor market test." Under the new rules to be enacted next spring, companies will no longer have to do this. They'll also be able to hire MBA students without worrying about a cap on the number of skilled overseas workers who can secure jobs in the U.K. This year, the cap has been set at 20,700 for people coming in under Tier 2 visas.

"While graduates will not longer get unrestricted access to the labor market for two years after graduation, it has become much, much simpler for any company that wants to hire a London Business School graduate to do so," says Sandford.

Colin Hudson, director of career development at the Cranfield School of Management (Cranfield Full-Time MBA Profile), expresses a similar sense of relief at the new guidelines.

"We've only had clarity on this for the last few weeks, so it is difficult to know what the student reaction has been so far," he says. "However, it can only be positive, because there is now a clear route students can take if what they want to do is work in the U.K."

Friendlier Climes

Still, some worry that the new regulations may encourage overseas students to consider countries with friendlier immigration policies. For example, Canada has a post-graduation work permit program that allows students to stay and work in the country for three years, while Australia allows students to stay in the country for 18 months after graduation.

"We're starting to see a huge amount of interest in Indian and Chinese business schools, and a lot of students might say that other countries in Europe have more favorable post-graduation work policies," says Giannikopoulou at the Association of MBAs, "so the concern is that the U.K. will lose out to [other] European [countries], China, Australia, and Canada."

Michael Luger, dean of Manchester Business School (Manchester Full-Time MBA Profile), says applications at the school have slipped about 10 percent this year, due in large part to the uncertainty students feel about job prospects in the U.K. The new visa regulations will have only a "marginal effect" on students' job prospects, because unlike many British schools, Manchester's MBA program is 18 months long—which gives students ample time to look for jobs while they're still in school. But many business schools in the U.K. offer programs that are just one year long, and MBA students often don't have time to start their job search until after graduation. The new visa rules could put students in shorter programs at a disadvantage in their job hunt, he notes.

Keeping up the Pressure

Luger says he plans to lobby the government to reinstall the post-study work visa program in 2013.

"The elimination of it is both a symbolic and potential threat, and students see that as a reason to apply to other schools, when otherwise they would have applied to U.K. business programs," he says. "It is a done deal for 2012, but is not a done deal beyond that, and we definitely will keep the pressure up."

U.K. business schools say they are preparing students and employers for the changes that will come next spring. At Cranfield, Hudson says the school is going to have to be more proactive in working with employers, especially smaller ones that currently hire students under the post-study work visa program. London Business School is organizing a conference this June, bringing together government officials and immigration attorneys to work with the school's major employers to make sure they are up to speed on the new regulations, says Sandford.

But the real test will come in 2012, when foreign students at British business schools start looking for jobs in the U.K, says QS's Quacquarelli.

"The first year of it being implemented will be key," he says. "If the U.K. job market is decent and those graduates find that they can get Tier Two visas relatively comfortably, then I think any concerns will be quickly put to bed."

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