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Business school applications drop – a great time to get an MBA!

According to new survey data released by the Graduate Management Admissions Council (GMAC), applications to full-time MBA programs have again dropped by 10%, following drops in applications in the previous two years. Even applications to Harvard Business School dropped by 4%. Women make up 35% of applicants to full-time MBA programs.

If you’re thinking of pursuing an MBA, now is probably a great time. First of all, it will be easier to get into a top business school. Second, the decline in applications is most likely due to the decline in attractivity of typical MBA jobs such as investment banking following the financial crisis, combined with fears that in a recession the hundred thousand dollar investment that is the MBA might not pay off.

It sounds like a fantastic time to start your MBA. You might have heard of the Harvard MBA Indicator – basically each impending stock market crash was preceded with a rise of Harvard Business School graduates flocking into investment banking jobs (whenever the ratio crossed the 30% mark, a recession ensued). 2010 data suggest we are just above the 30% mark, so one should still wait for the 2011 HBS employment daya to come out – I am expecting it to drop below.

A 2-year MBA is a long term investment, and if you enroll now, your job and earnings prospects are determined by the environment 2-3 years down the road. I would expect the job market to have picked up by then, and with much fewer MBAs graduating, your chances of landing a good job should be excellent. As a hedge, it might be worth doing an MBA at a business school that is strong in entrepreneurship, such as HBS, Stanford GSB or MIT Sloan. That leaves you the option of building your own business if things don’t work out!

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