FYI: Factors Affecting Application Volume

cthd007 · 发表于 2003-11-18 16:33:00

Approximately one-third of the EMBA and full- and part-time graduate business school programs surveyed reported an increase in the number of applications received in their 2002–03 application cycle, compared with their 2001–02 application cycle. This increase is significantly lower than the increases reported over the past three years, even taking into account the unusually high number of applications that schools received last year.

This survey’s year-to-year look at the data illuminates what is affecting the market and how those trends are affecting behavior. The following factors contribute to a decline in the actual number of applicants, a decline in the number of applications sent to schools per applicant, and the necessity for a prolonged application process:

A weak economy has impacted household income and unemployment rates.
Fewer 25- to 34-year-olds in the overall population has affected the number of prospective applicants.
Worldwide political and health issues have impacted accessibility for prospective students seeking to attend school outside their country of citizenship.
Click on the following link to see a diagram of the effect of these factors.

Factors Affecting Application Volume

Unusually High Volume in 2001–02
In 2002, a record number of full-time programs reported increases in applications. When schools compare this year’s numbers with last year’s, the result is a record decrease. The following charts show year-to-year comparisons of the percentage of schools reporting an increase in their applications. Click on the following link to view the table that shows the percent of programs reporting an increase in applications by year.

Percent of Programs Reporting an Increase in Applications, by Year

To get a better and more realistic comparison of trends in application volume, GMAC® asked schools to compare the number of applications they received during the 2002–03 application cycle with the number received during the 2000–01 application cycle. The results still show a decrease in application volume for all program types, but not as dramatic a decrease. The following chart shows this comparison. Click on the following link to see the percentage of programs reporting an increase in application volume: 2002–03 compared to 2000–01 and 2001–02.

Percentage of Programs Reporting an
Increase in Application Volume:
2002–03 Compared to 2000–01 and 2001–02

The following sections discuss the factors that have affected the number of applicants in the candidate pool, the number of applications these candidates are sending out, and the extension of the planning and applying process.

A Weak Economy and Its Impact on Applicant Behavior
Effects of Diminished Household Income and the Unemployment Rate
The U.S. Department of Education has built a higher education enrollment model to project future enrollment. (Even though this is a U.S. model, the elements are applicable to most countries.) The key economic factors of the model are household income, which represents ability to pay, and an age-specific unemployment rate, which acts as a proxy for opportunity costs faced by students. In a weak economy, household income declines and the unemployment rate increases. In the short term, a weak economy has a positive impact on higher education enrollment because prospective students face less attractive career alternatives, as evidenced in 2002. However, in the long term, the effect of diminished household income overtakes the effects of the unemployment rate and increases opportunity costs.

In other words, when faced with a weak economy, prospective students will initially believe that going back to school is a better alternative than job hunting in a tight market. But during an extended weak economy, prospective students are less able (or willing) to pay for school because of salary freezes, depleted savings, and company sponsorship cutbacks. They are less likely to forgo the security of steady income.

From 2000 to 2002 alone, the household income of those under 35 years old dropped 14 percent—the biggest decline of any age group, according to the U.S. Federal Reserve's Survey of Consumer Finances.

Effects on Applicant Behavior
The first groups to be affected in a weak economy would be those who typically have a lower household income to begin with—females, U.S. minorities, and international candidates from certain countries. In addition to reducing the actual number of candidates who believed that going back to school was a viable option, diminished household income and market uncertainty alters the behavior of those choosing to apply. The financial cost of a school will become a more important school selection criteria, which means these groups would be more likely to apply to part-time or EMBA programs to remain employed and to public or less expensive schools to avoid high tuition fees and debt. Click on the following link to view the chart that shows the change in the number of applications from women.

Change in Number of Women’s Applications

A weak economy not only affects where candidates apply but also the number of schools to which candidates are willing to apply. Candidates narrow their school selection criteria. For example, candidates applying during the 2002–03 application cycle were significantly more likely to apply to one school, whereas candidates applying during the 2001–02 application cycle were significantly more likely to apply to two or three schools.

Click on the following link to see how many schools attendees of the MBA Forums® recruiting events had already applied to at the time they attended the MBA Forums (October/November 2002).

Number of Schools to Which MBA Forums Attendees Had Already Applied (October/November 2002)

If applicants were accepted by their first choice school (assuming they applied to their preferred schools), they might have forgone any additional applications, also resulting in lower total applications for the 2002–03 application cycle.

Diminishing Population
The typical age range of students in graduate business school is 25 to 34 years. As the following charts show, the overall graduate enrollment in the United States for this age range is negative to flat from 1999 to 2004 before starting to increase in 2005 (U.S. Department of Education). Click on the following link to view the chart that shows the percent change in enrollment: age range 25 to 34.

Percent Change in Enrollment: Age Range 25 to 34

The increase in 2005 and the surge in 2007 are partially due to the increase in population for this age group. The following table (Population Research Bureau) shows the percent growth rate for various world regions. Western Europe will experience the most difficulty in the future because of the size of their potential market and will need to continue their efforts to reach out to the worldwide community for potential applicants. Click on the following link to see the predicted population growth rate in world regions, by age group.

Population Growth Rate in World Regions,
by Age Group

Health Issues and Political Turmoil
The effect of the war in Iraq, SARS, and political changes in leadership in some countries has affected individuals on a psychological level (safety concerns) and in tangible ways (travel and visa restrictions). As a result, individuals are applying to programs in different regions than last year. The following table shows the number of schools indicating an increase or decrease in applications from a specific country.

Number of Schools Indicating an Increase/Decrease in Application from a Specific Country

FYI: Factors Affecting Application Volume

FYI: Factors Affecting Application Volume

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