Go to Top

Business Talent Turns Elsewhere

Harvard Business School, Cambridge, Mass. on a snowy day
Harvard University, Cambridge, Mass. Photo by Ted Eytan.

Getting into Harvard Business School’s Master of Business Administration program is no mean feat, but it was just a little bit easier in 2017 than it was in 2016.

The Wall Street Journal recently reported that fewer prospective students are applying to MBA programs across the United States. Last year was the fourth in a row where applications declined overall. Top-tier programs like Harvard and Stanford universities also took a hit to their enrollment pools, though they had previously escaped the overall downward trend. The Graduate Management Admission Council surveyed 360 schools, and found that even top business programs saw application drops between 4 percent and 7 percent.

The trend has a variety of causes. Some of them are well-founded concerns among potential students that they would not get sufficient value in exchange for their increasingly high tuition payments. As I wrote last year, it is probably for the best that some particular schools are shuttering their programs. A lot of basic MBA coursework often overlaps undergraduate business programs, and the perception that MBA credentials are an automatic ticket to a higher salary has thankfully begun to ebb. Many students would do better to get a few years in the workforce under the belts to see if graduate studies make sense and to better focus their degree aspirations.

Many American students also have increasing amounts of undergraduate educational debt. Not only does this make it less appealing to pay for further study, but graduates are reluctant to forgo full-time work for the years necessary to earn an MBA. Other students are focusing on more specialized degrees, in the hopes that they will yield better economic results.

But the even larger piece of the puzzle is that U.S. business schools report international students are looking elsewhere for MBA programs. The GMAC survey found that 11 percent fewer international students applied to U.S. business schools this year compared to the year prior, while domestic applications were down only 2 percent.

This is partly due to concerns about the current administration’s stance toward immigration. Students worry that they may not be able to secure student visas, or work visas after completing their studies. Some may also worry about the results of geopolitical fallout; for example, many students studying in America are Chinese, and it is not inconceivable that their government could block their studies as part of the ongoing trade dispute, disrupting these students mid-program. Alternatively, U.S. officials may further push rhetoric labeling Chinese students a security threat. U.S. Citizenship and Immigration Services has also recently changed the process by which international students accrue “unlawful presence” in the United States, potentially making them subject to being banned from this country for as much as 10 years.

The change in business school applications is part of a broader trend of reduced international interest in study in the U.S. (and, for different reasons, in the United Kingdom). The National Foundation for American Policy found, through Department of Homeland Security data, that overall international student enrollment at U.S. universities was down 4 percent between 2016 and 2017, across programs.

It is also a reflection of rising competition from less expensive, increasingly attractive educational institutions in countries including Australia, New Zealand and Singapore. Germany is also holding its own; notably, in most German schools, foreigners don’t pay tuition. The GMAC survey found that overall, worldwide MBA application numbers were stable, because other countries were offsetting the drops in the U.S. and the U.K. East and South Asian programs saw an overall rise in applications of 9 percent in 2017.

While I continue to harbor the same reservations about MBA programs that I expressed a year ago, the broader trend away from interest in studying in the U.S. is not good news for our country. One of our great strengths for most of the past two centuries has been attracting many of the most hardworking, entrepreneurial and forward-looking people from all over the world. They came here to pursue the American dream.

They will continue to pursue that dream, but not necessarily in America. Not when they feel more welcome elsewhere, and especially not if they can get a comparable education for a fraction of the price.

Our bloated, overpriced educational establishment is going to need to reform if it is to compete. But we shouldn’t handicap it with an unfriendly and inflexible immigration policy. I would welcome a change to open the doors wide to hardworking immigrants at practically every point on the socioeconomic and educational spectrum. If we are not going to do that, though, let’s at least continue to compete for the world’s best and brightest. To do otherwise is to risk ultimately sacrificing our leading role on the global stage.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book The High Achiever’s Guide To Wealth.

The views expressed in this post are solely those of the author. We welcome additional perspectives in our comments section as long as they are on topic, civil in tone and signed with the writer's full name. All comments will be reviewed by our moderator prior to publication.

, , , , , ,