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The American M.B.A. degree, already losing luster at home, is facing a new challenge from abroad. For the first time in more than a decade, most graduate business schools are reporting a decline in applications from international students.
Applications from foreign students for the academic year beginning in August were down at nearly two-thirds of all two-year M.B.A. programs in the U.S. through the end of February, according to a survey by the Graduate Management Admission Council. Interest from international students has weakened in recent years as programs overseas have become more competitive, according to GMAC. But the trend has accelerated since the fall.
The latest declines come as many foreign students express uncertainty about the Trump administration’s immigration and work visa policies, according to deans, admissions officers, recruiters and GMAC, which administers the entrance exam most applicants take.
“We’ve been inundated with questions from prospective and current students asking what’s going to happen,” said Jon Kaplan, assistant dean of the M.B.A. program at the Paul Merage School of Business at the University of California in Irvine, where about half of all students come from outside the country. “The simple answer is we’re not sure.”
After issuing multiple versions of a travel ban earlier this year, President Donald Trump last month called for a review of a program that allows foreign workers to stay in the U.S. to perform high-skilled jobs. Critics say the current rules displace American workers.
Only 31% of the 324 American M.B.A. programs surveyed reported gains in international student applications from the same time in 2016, the smallest share in 12 years. For the 2015-16 application cycle, 39% of programs reported gains in such applications. Two years prior, nearly two-thirds of programs reported gains. The council declined to share more detailed application numbers.
The souring foreign sentiment comes at a difficult time for business schools. Demand for the pricey M.B.A. has weakened among young Americans due to an improving job market and increasing undergraduate student debt burdens. In response, U.S. business programs have amplified their sales pitch overseas to fill their classrooms. Those efforts have helped contain broader enrollment declines.
Overall enrollment in two-year full-time M.B.A. programs fell by more than a third from 2010 to 2016, according to a survey of 352 U.S. schools by business-school accreditor Association to Advance Collegiate Schools of Business. In the same period, the share of international students grew from 22% to 27%, the survey said.
University of Rochester’s Simon Business School had a single-digit percentage drop in international applications this year, according to Dean Andrew Ainslie, a development that raised concerns about a longer-term decline in enrollment. International students make up two out of three M.B.A. candidates and as much as 80% of other graduate programs at Simon, Mr. Ainslie said.
In recent years, the school’s administrators have stepped up annual recruiting trips to places like Hong Kong and India. They have also added four new master’s programs focusing on sought-after mathematics and technology skills.
A prolonged drop in international applications would have dire consequences for both business schools and companies, said Mr. Ainslie. “If we can no longer educate or hire the best and brightest talent from all over the globe, that could be catastrophic for American economic growth,” he said.
Many business schools have invested in new curriculum and faculty to launch cheaper, one-year degrees in disciplines like data analytics, health administration and entrepreneurship. International students made up 36% of such specialized programs in 2016, according to the business school accrediting firm AACSB.
“If this trend we’re noticing persists over a longer period of time, it could have an impact on the financial viability of some schools,” said Sangeet Chowfla, president of GMAC. “Budgets are already under stress as state funding is harder to come by.”
Most deans of U.S. schools say it is too early to assume the drop in international applications will persist in coming years, but that they will be closely watching enrollment figures this fall.
Lisa Shatz, an assistant dean at University of Texas in Dallas Jindal School of Management, said her team will likely increase domestic recruiting efforts next year for the school’s flagship M.B.A. and 14 specialty master’s programs. Applications from students in the U.S. and abroad are down slightly, she said, after years of strong gains alongside the growth of specialty programs.
Recruiters from University of Pittsburgh’s Katz Graduate School of Business traveled to India in 2012 amid a shift in strategy to focus more heavily on foreign students, according to director of admissions Tom Keller. The trip generated a surge of interest from the country, and applications for its M.B.A. ballooned from a low of roughly 430 that year to over 700 in 2015.
This year, applications have fallen 16%, a drop Mr. Keller attributes largely to cooling foreign interest. Mr. Keller said he expects around 25 students in next fall’s incoming Class of 2019 will come from outside the U.S., three or four fewer than the class before.
