U.S. Schools: Less international students

In the past business schools appeared to be almost recession proof: admissions used to be counter-cyclical as students either planned to ride out bad times on campus anticipating an upturn in the economy on their graduation - or spend redundancy cash on tuition fees. These days may be over. The US-based Graduate Management Admissions Council (GMAC), a regular surveyor of MBA graduates and recruiters, noted in its 2008 “Global MBA Graduate Survey” that “graduates who attended full-time MBA programs outside their country of citizenship rated overall value lower compared with graduates who attended similar programs in their home country”. Therefore GMAC expects a decline in applications from students in countries such as China and India to American business schools.

European schools apparently fare better. In the MBA class of 2010 at London Business School, for example, nine out of ten students are from outside the UK with the rest of Europe, Asia and North America accounting for 68 per cent. At IMD, in Switzerland, which has a reputation for internationalism and diversity, the MBA class of 2009 has 90 foreign students representing 38 nationalities. However, although figures may appear healthy, these programs were sold in 2008 or earlier during a very different economic climate. Not a few are wondering what the figures will look like in the future.

Three factors affect international students’ willingness to travel abroad to study: financing their studies, the jobs market and the availability or otherwise of good business schools in their home country. The first two have become increasingly problematic in the U.S.: the recession has caused many American banks to withdraw from a scheme that allowed international students to obtain a financing loan of up to $150,000 without having an American guarantor. The lack of such a scheme makes it extremely difficult for international students to raise financing. 
The job situation for international students has been made worse in U.S. by provisions in the government’s recession bail-out scheme that prevents companies in receipt of government funding from hiring foreigners if they have recently had laid off workers. A number of international MBA graduates therefore have had job offers from American companies withdrawn. The result is evident: If foreign-born students cannot legally work in the United States after earning their degrees, fewer will enrol.

Again though, the situation appears to be slightly better in Europe. Anyone who earns an MBA from a business school on an official list is automatically eligible to work in Britain for at least one year. But the fact is that, given the current downturn, many international students no longer see North America or Europe as great sources of interesting and lucrative jobs. Increasingly they are seeing their own economies, particularly in India and China, as better bets.

Added to this is the growth in stature of business schools outside America and Europe. Both India and China will soon have business schools considered to be the equal of the established giants of the West. Increasingly they are gaining world recognition through global accreditation agencies: experts suggest that at least seven Chinese business schools will be part of the elite within a few years. Therefore it may prove that the decline in international student applications turns out to be a long-term structural change rather than a short-term reaction to current economic woes.

www.gmac.com