The PIE: Can you tell me about the history of GMAC and its mission?
Sangeet Chowfla: GMAC is an association of business schools founded 65 years ago. Originally we were nine business schools in the US, and the problem they were trying to solve was that when business education shifted from local to regional, then national to international, it became increasingly more difficult to evaluate talent on a level playing field. As a result, GMAC was created, and the GMAT exam.
We now have more than 2,300 business schools around the world [using the GMAT exam], we deliver the GMAT exam in 114 countries, we have offices around the world and we are a truly global organisation.
We see ourselves as representing the needs of graduate management education and candidates who want to find their way to business schools.
The PIE: What are some of the trends you are seeing in business education?
SC: In the past couple of decades, we have witnessed the globalisation of the supply-side of business education. High-quality schools traditionally tended to be in the US or maybe western Europe – now you see them all around the world. In 2000, 30 of the top 50 business schools listed in the FT Top 50 full-time MBA programs were in the US. Last year, only 23 were in the US and 10 were Asian programs that didn’t even exist 18 years before. We are really beginning to see that the supply of business education is a global phenomenon.
The PIE: Where are you seeing the majority of these new top schools cropping up?
SC: Well there are the usual suspects – Hong Kong and Singapore. Each has three highly rated schools. But the other areas where we are seeing high-quality business schools are in China and India. The quality of business education in both of those countries has dramatically increased. For example, the Indian School of Business is globally recognised and ranked and the China Europe International Business School has tremendous recognition.
“With the anti-immigrant rhetoric going on in the States right now, many students are saying it’s a risk they are not willing to take”
What has changed in China and India is the schools are beginning to move from a domestic, inward focus to a much more global focus not only in recruiting candidates but the type of programs [on offer], faculty and very importantly, job placement.
The PIE: Has there been a significant shift in the number of international students considering these schools in Asia over the traditionally popular US?
SC: Absolutely. If you look at the growth rate of economics in Asia, they are significant, and as a result, there is the creation of significant corporations and job opportunities. Alibaba or Tencent in China, for example, are right out there with Google and Facebook. Corporations such as these attract students, they offer jobs and around that the ecosystem of financial services and consultant services has grown.
Demographic and economic trends have slowly pulled some of the application volumes away from US schools, and recent political developments have accelerated the trends. The presidential election in the US has certainly had an impact on the numbers considering US schools, particularly schools which do not have the benefit of a globally recognised brand. Students are asking themselves, “why would I move halfway across the world, take a loan in my home currency and pay a high tuition fee if I will not have the opportunity to work in that country?”. Higher education isn’t only about earning skills and knowledge, it is also about the type of career you want to build and the immigration status you want to have.
The PIE: How are US business schools reacting to the decline?
SC: With concern. So I think certain institutions have refocused on delivering value to their local communities through a change in format. We’ve seen schools that have shut down their two-year MBA program and are focused on programs like master’s in data analytics, because these are the skills that are required in their state, for instance.
“We now have more than 2,300 business schools around the world”
Short cycle programs are getting more currency too. The common theme is focusing on the value and need of your local industrial or corporate employment base. They are recognising that it’s increasingly harder to compete with the international cohort.
The PIE: There has been a drop in the number of jobs available to international students who have completed an MBA in the US. Where are these students looking to now?
SC: This goes back to the heart of student mobility – the availability of post-study work visas. The actual and rumoured changes to the H1-B visa has had a chilling effect on inbound student mobility to the US because a student needs to apply this year, enrol next year, and graduate in the third year, so they need to think about a three-year horizon, where the visa situation could change. And with all the anti-immigrant rhetoric going on in the states right now, many students are saying it’s a risk they are not willing to take, particularly in light of the high-quality education options in the rest of the world.
Our data shows that slightly less than four in 10 MBA programs in the US had growth last year, but more than seven in 10 in Canada, the UK and continental Europe had growth in application volume and eight out of 10 in Asia.
“Higher education isn’t only about earning skills and knowledge”
The PIE: So is the UK experiencing growth in numbers, regardless of Brexit?
SC: When the Brexit vote was taken, we started surveying candidates who were considering studying in the UK, and about 35-40% said the vote would affect their decision to study at a business school in the country. So that was fairly significant, but that was around their intent to study, not action.
Four months later the US election occurred and we asked the same question of students considering the US – roughly the same amount agreed that it would affect their decision. We have been doing that same study in the US for 18 months and the figure hasn’t changed.
In the UK however, it did come back. We believe it could be due to the decline of the pound, and partially because the UK schools tend to have a one-year format, which again makes it cheaper and students are out of work for one year rather than two – so British education became that much more attractive. Yes, the lack of a post-study work visa is an issue, but UK schools have a very international focus, there is a lot of recruitment out of the country.
The PIE: Have you any predictions about the next hub for business education?
SC: Predicting the future is risky, but what we are very excited about is the future of Africa. In about 15 years’ time, one in four school-age pupils is going to be in Africa.
Africa has this hidden growth story, it is a continent with a billion people, very young and when you put all of Africa together, the long-term development of Africa is something we really need to watch. Some schools are really focusing on developing the Africa market, and doing very well. We would not be surprised if an increase in the number of business schools started having operations in Africa. Also, we are seeing more African students in schools around the world. Africa will be the next India if you will.