By Anjali Athavaley, CareerJournal


Business is bad on Wall Street, and business schools across the country are bracing for the impact: A surge in applications this year to their full-time M.B.A. programs.

With financial markets in turmoil, the economy slowing down and Wall Street undergoing a profound structural change, many people are deciding that now is a good time to head back to school. Some would-be students are the victim of layoffs roiling the financial industry. Others think their jobs could disappear soon. Even some applicants whose jobs are currently stable are deciding that it makes sense to go for a graduate degree now — since promotions and new opportunities could be hard to find in the next few years.

Schools don’t have application tallies yet — as deadlines for the first round of admissions are in mid-October for most top-tier schools — but many already are reporting big increases in interest.

New York University Stern School of Business reports a 30% increase in attendance at off-site information sessions this year. Northwestern University Kellogg School of Management has had a 22% increase in applications so far. University of Chicago Graduate School of Business says it is seeing significant increases in inquiries online and attendance at information sessions. And University of Michigan Ross School of Business says that campus visits by prospective students have more than doubled.

People are also registering for the Graduate Management Admission Test in greater numbers this year. According to the Graduate Management Admission Council, a McLean, Va.-based membership organization of 165 graduate business schools, U.S. GMAT registration volume for the first nine months of this year totaled 129,902, up 5.1% from the same period last year. Veritas Prep, a test preparation and graduate-admissions consulting company, says its GMAT test-preparation registration has gone up 50% since June.

The numbers underscore a trend that has occurred in previous economic downturns. Graduate admissions are countercyclical — meaning that they move in the opposite direction of the economic cycle, business schools and economists say. “When you look back over the last several decades, there is a strong correlation between changes in graduate-school enrollment and changes in the unemployment rate,” says Linda Barrington, research director and labor economist at the Conference Board, a New York business research group. The unemployment rate stayed flat at 6.1% in September from August.

But the severity of the financial crisis and the demise and consolidation of financial powerhouses that in previous years have nabbed top talent at schools across the country make this year’s flight to business school different. When this year’s M.B.A. applicants graduate, they will enter a dramatically different Wall Street and potentially smaller job market that has been altered by the ripple effects of the credit crunch.

“The demand for managing money and the demand for banking skills, that’s going to be here,” says Stacey Kole, deputy dean for the full-time M.B.A. program at the University of Chicago Graduate School of Business. But “it may migrate to different firms.” Ms. Kole says the school is seeing more boutique firms recruit on campus, as well as employers in other sectors recruiting for finance jobs. “People who may have gone to Wall Street will go to Main Street in a finance role,” she says.

This year’s newly minted graduates already encountered a tougher job market. At the University of Chicago, the percentage of 2008 graduates that either had offers or had already accepted them dropped roughly three percentage points from the previous year, Ms. Kole says.

Indeed, schools say not knowing what the job market will look like upon graduation could deter some prospective applicants who have stable jobs from applying. “If you are in a good position and you are not confident of how the picture is going to look two years from now, you may stay in that position,” says Peter Johnson, executive director of admissions for the full-time M.B.A. program at the University of California Berkeley Haas School of Business.

Some applicants are taking their chances. Scott Valins, a former residential-mortgage-company owner, started thinking about business school when the credit crunch worsened in late 2007. Now, he wants to get a job in capital markets at an asset-management firm after graduating. “I might have to be patient after school and take a slightly more indirect path to get to my goal, but I have faith in the overall system,” he says.

Other graduate schools are also expecting increases in applicants. There were 28,939 Law School Admission Tests, or LSATs, administered last June, up 15.3% from a year ago, according to the Law School Admission Council, a membership association of 212 law schools. Kaplan Test Prep & Admissions is seeing an increase this year in registration for practice LSAT and Graduate Record Examination tests, as well as graduate-admissions seminars and workshops.

Some people in finance jobs have left for degrees in other fields. Manal Dia, 24, had deferred admission to Massachusetts Institute of Technology’s electrical-engineering and computer-science Master’s program for two years to work as an analyst in the fixed-income-research division at Lehman Brothers Holdings Inc. This year was her last chance to enroll without having to apply again. She quit her job to attend MIT just a couple of weeks before Lehman’s September bankruptcy filing. “I left the company having felt that this is not the best of years to be in finance and that it was a good year to go get a degree,” Ms. Dia says.

Also a factor for students to consider this year: The credit crunch has roiled the market for student loans. In the past year, 144 education lenders have suspended private and federal loans, according to Mark Kantrowitz, publisher of, who has been following the developments.

Still, Mr. Kantrowitz says business-school students should be able to find loans. Many lenders, he says, have suspended loans for undergraduate and continuing education students but not graduate loans. For lenders, “graduate student loans are the most profitable because the loan balances are the highest,” he says. But students may face tighter credit requirements in getting private loans and pay higher interest rates.

M.B.A. applicants will also likely find the competition for spots particularly fierce this year. While the number of applicants is expected to rise, most schools say their number of slots will stay the same. “I’m going to have to work a lot harder to get into the school I want,” says Kunal Das, 25, a search media strategist at Microsoft Corp. in New York.

Mr. Das is applying to three to five top-tier M.B.A. programs this year. He plans to highlight in his application experience that may help set him apart from financial-services refugees who are applying — namely his two years in advertising at Microsoft and the businesses he launched in college.

To be sure, business schools say they have seen a rising number of applications for the past few years for a number of reasons other than the job market. They attribute the trend to demographics: according to the Census Bureau, last year, there were an estimated 21 million people ages 25 to 29, up from 18.8 million in 2002. M.B.A. programs are also seeing a rise in international applicants and younger applicants with fewer years of work experience.

Those who applied for business school in response to the 2001 recession caution that applicants should be sure they aren’t just doing it because of job-market conditions. “This is an investment,” says Colin Gallagher, who was laid off from a start-up in late 2001 and attended an accelerated part-time M.B.A. program at Northeastern University in Boston. “It’s a lot of money and a lot of work.”

Things worked out in his favor, he says. In 2004, he found a job through a classmate as a product manager in Hopkinton, Mass. at technology company EMC Corp. “If you’ve thought about going to business school, and you’ve put it off because you don’t have the time or energy, now is a good time to go,” Mr. Gallagher says.


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