In the latest episode of Business Casual, hosts John, Maria, and Caroline delve into the notable surge of international students in the U.S. MBA programs. They examine how, since 2020, prestigious schools like Columbia Business School, Yale, and Duke Fuqua have seen a remarkable increase in international student enrollment, in some cases nearly doubling.

The conversation explores the reasons behind this trend, suggesting it might be due to a decline in domestic applications, now supplemented by high-quality international candidates. The hosts also discuss the enriching effect of this diversity in the classroom, offering varied perspectives that could greatly benefit U.S. students.

Additionally, they touch upon the challenges this trend poses for career management offices in these schools and its broader impact on MBA education. The episode intriguingly contrasts this trend with the dynamics of European business schools, sparking thoughts on its impact on their global appeal. Tune in for an insightful look at the evolving landscape of MBA education and its implications for students and educators worldwide.

Episode Transcript

[00:00:07.370] – John

Hello, everyone. This is John Byrne with Poets and Quants. You’re listening to Business Casual, our weekly podcast with my co hosts Maria Wich-Vila and Caroline Diarte Edwards. We’re going to talk about international students and US MBA programs. We just ran a fairly detailed agree on the percentage of international students in the latest cohorts that entered in the fall of last year at all the big and important MBA programs in the US. And one undeniable trend is that schools are recruiting and enrolling far more international students in US programs than ever before. In some cases, the numbers have almost doubled since 2020. I’ll give you a few examples. At Columbia Business School, well, it’s not a doubling, but it was 44% in 2020, pretty high because of its location in New York City, 47% now. Yale is up 25% from 40% in 2020% to 50% now. And that number in all these international numbers, in fact, it should be noted, typically include even permanent residents of the US with foreign passports or dual citizens. But that’s always been the case. So it’s not going to really interfere with the trend. Duke Fuqua. 38% in 2020, now it’s 47%.

[00:01:38.910] – John

UVA Darden it was 24%. Pretty low back in 2020, it’s now 41%. Michigan Ross similar trend there, 23% in 2020, 43% now. NYU stern almost double. Actually, it’s more than double. It was 23% in 2020. Now it’s 48%. Caroline, what’s going on?

[00:02:08.730] – Caroline

These numbers are quite startling. I’m very surprised at how high the percentages got at some of the. So. Well, as you know, I’m a great advocate of international diversity. So I think that in many cases, it’s a very positive thing for the classroom experience for everyone. Right. Because you have a lot more diversity of perspectives and cross cultural experience that people can bring to the classroom and that can really enhance the learning experience for everybody. However, I suspect that it’s not necessarily been a strategic move of most of these schools to increase the international cohort. I would suspect that in many cases, that they are filling their seats with those international students because of a decline in domestic applications and they’re getting such great quality applications from overseas that they can fill up. In many cases, pretty much half of the classroom with outstanding international admits that they’ve become much less reliant on the domestic poor.

[00:03:23.160] – John

Yeah, really true. And in some cases, it’s tripled from 2020. Like at UNC. Keenan Flagler, great MBA program. It went from 11.5% to 34% at Vanderbilt. The Owen school, it went from 10.3% to 29%. So that’s a tripling. At UT Austin McComb school, it went from 10%, which is awfully low back in 2020%, to 26%. Now, Maria, what do you suppose this does in a classroom?

[00:03:55.570] – Maria

I mean, I think the positive side is that, as Caroline mentioned, she’s completely spot on. To the extent that globalization or international business is still a. I know that there are attempts to try to rein it in, but I do think that that Pandora’s box has already been open. And I do think that globalization is going to be part of business for decades to come. So to the extent that that’s going to be a big part of everyone’s careers going forward, it’s great to have more international students in your classroom because they are going to give perspectives, and also both in the classroom, but also beyond the classroom after you graduate, they may become very valuable contacts for you to have if you are trying to expand your business into other countries or things of that nature. So I do think, in terms of the classroom, I do think that it may lead to a more engaging and far ranging discussions in the classroom. So I think it might be a great thing for the US students because I think the US is sort of famous for being insular overall. And so I think for the US students attending these programs, I do think that it might actually be a terrific thing for them.

[00:05:07.080] – John

I wonder if the higher percentages of international students in MBA classes in the US erodes to some extent some of the advantage of going to a European business school, where admittedly the percentage of students who come from outside a native country is often 90% plus. They’re not, as not nearly were there with these us schools. But does it erode the argument that, hey, if you want a more global education, you should not go to a us school?

[00:05:42.210] – Caroline

Caroline yeah, I think you’re right. To a certain extent. I think that this must be having an impact on the international programs in Europe, as a lot of these students would otherwise have likely gone to INSEAD or London Business School or one of the many other great programs in Europe that, as you say, are very internationally diverse. Having said that, I would suspect that it’s still quite a different experience, because if you’re on a campus where no individual nationality represents more than about 10% of the student population, then there is no dominant culture. And so it really is an incredible melting pot. Whereas even though the percentages have increased a great deal on the programs that we’ve discussed, you’ve still got a majority in many cases, of American students. And also, as you said, many of the international students will also be us passport holders and may have spent many years, if not most or all of their life, in the US as well. So may not bring as much international experience as you would think. And then, of course, it’s not just about the people on campus, it’s also about the entire curriculum. And if you look at the curriculum at INSEAD or London Business School or Oxford or Cambridge, they are using international cases.

[00:07:11.590] – Caroline

The faculty are very international. The whole methodology and the pedagogy is designed to train people to think more internationally and globally and to learn much more about working across countries and borders. And so it’s really sort of part of the DNA of how the program is designed in every aspect. Right. And then also that is reflected in recruitment. So if you go to one of the international programs in Europe, then you will get access to recruitment opportunities around the world. So the top firms will be coming to recruit not just for the UK or not just for France, but they’ll be recruiting for many different offices around the world, whereas the recruitment opportunities at these US schools will be very much us based. Of course, that may be what some of the students are seeking. They may be coming to the US schools because they would like to stay in the. And that’s great if that’s what they want to do. But it’s still, I think, quite a different proposition to doing an international MBA in Europe.

[00:08:18.150] – John

Yeah. To the extent that students in MBA programs bring their own work experience into the program, and much of the learning is from your classmates, your peers, as opposed to the professor, a more diverse class would then obviously bring more global perspectives, differences of opinion, but also differences of how business is done in different countries, both in the way capitalism is practiced as well as culturally, which has to add whole new dimension to the experience. Now, Wharton, where international students make up only 31% of the class. And I should say that in recent years, typically the schools aimed for about a third international students in the US. So these numbers are way ahead of that historical norm. But at Wharton, they’ve still kept it down to 31%. But what’s interesting is that the number of countries represented by that portion of the international group is 70, quite a few countries. At MIT, Sloan, it’s 60 countries. At Stanford, it’s 55. Chicago Booth, 54. Duke Fuqua, 51. Yale, 46 countries, which is exactly the same as NYU, Stern. And we have a chart that shows this. I think while we kind of believe that most of these students tend to come from India, where we know that that is the most sort of oversubscribed part of the applicant pool for elite MBA schools.

[00:10:03.570] – John

The number of countries that different people are coming from makes it pretty amazing. I mean, 70 different countries in the class at Wharton is kind of remarkable, don’t you think so, Maria?

[00:10:17.030] – Maria

Yeah, absolutely. I mean, they are certainly casting a wide net and really bringing in a wide variety of voices. So even though at 31%, it’s a lower percentage of the class, at least within that 31%, I would assume that there’s at least one or two students from a wide variety of countries that might not typically be in an MBA classroom. So that’s pretty cool for Wharton to be doing that and to be extending admissions to people from so many different backgrounds.

[00:10:48.330] – John

And I’m going to think that having a onesie or twosie kind of approach from countries is better than a whole bunch of people. Because what happens is, if there are a lot of people from your home country, you tend to gravitate toward them and not integrate. So you’re segregated in some sense from the overall class. This is very true of schools that recruited and enrolled a lot of Chinese students who were much more reluctant, in part because of the difficulty of speaking English as a second language. They just didn’t integrate as well. And so I think the fewer numbers from the larger numbers of countries is probably a better mix for classroom discussion than too many from one or two countries where they’ll find each other and kind of stay with each other and not mix all that much. Now, Caroline, you had the experience of INSEAD, which is totally different than a us school, where I think people integrate a lot more effectively at an INSEAD than they would at probably a Harvard. Do you think?

[00:11:56.070] – Caroline

Yes, because there is no dominant culture, so you would have a very small group of people to hang out with if you only wanted to hang out with your own nationality. And also, people are going to a school like INSEAD because they want to get exposure to people from all over the world, and they have an international orientation, and that’s something that the school is screening for in the admissions process. They’re looking to attract students who have the ability to immerse themselves in a very different environment and embrace that opportunity. And most students already have a track record of doing that. That’s something that they’re specifically looking for.

[00:12:36.450] – John

That’s a really good and important point. I totally agree with. I think that people who apply and enroll, particularly in a European business school, are really seeking that global diversity, and the people who apply to a us school are not really purposely seeking that diversity, but instead they’re looking at brand, they’re looking at wanting a job in the United States if they’re an international student. But that global diversity isn’t as important a factor to them as it would be in a European business school.

[00:13:11.050] – Caroline

Yeah. Yes, I agree. They’re coming because they want to come to the US and want to come to one of the US schools rather than immersing themselves in a very international environment. And it’s interesting, looking at your table of stats there, of, as you were saying, the percentage of international students on the program and then the countries represented. And I think you’ve kind of got two different groups there in the US. So you’ve got the group of schools that have a very high number of countries represented, but then they also have. They’re on the lower end of the scale of the percentage of international students in the classroom. Right? So schools like Stanford and Wharton, and then you have another group of schools that have a much higher percentage of international students in the classroom, but then conversely, a lower number of countries represented. And so their international student body is much less diverse than the international student body, as you were saying, at a school like Wharton. And if you go to a school like London Business School or INSEAD, then you get the best of both of those numbers, right? Because you will get the very high number of international students.

[00:14:20.400] – Caroline

So pretty much everyone is international and you’ll get a very high number of countries represented. So typically at INSEAD, sort of 80 or different, 90 different nationalities each year. So it is quite a different strategy, I think, from the schools in terms of how they are admitting international students and what they’re looking for from their international students.

[00:14:42.570] – John

Yeah. Now, Maria, I would think that the increase in international students at us schools puts greater pressure on career management offices because unlike the European schools, they’re not really used to having to help place and having to support that many people from different countries where there are obviously visa restrictions. To the extent that many of these programs are now STEM designated, in part, that has also attracted more international applicants and students. But I’m thinking this puts a lot more pressure on a career management office than had existed before, when international students generally made up only a third of the class. You agree?

[00:15:26.280] – Maria

I do. But I do think at the STEM designation, the fact that you can get now that work visa for three years has been a tremendous help, because now, as an employer, if I want to hire some talent to come and join my company, who may not have official work authorization, if they went to one of these now very rapidly expanding STEM programs, I know that I can keep them for at least three years. So I do think that it helps quite a bit. I pulled up NYU Stern. We were talking about how their percentage has gone up from, I think, 23% international to 48% international within sort of a three year period. And yet when I look at their most recent employment data, it looks like their international students fared equally as well in terms of salary levels as the US citizen permanent resident graduate. So admittedly, there may be people in here who maybe did not get a job, and so maybe they’re not in this average. But you don’t see a dramatic. It’s effectively a negligible difference in terms of the average salaries because I do think that a lot of them are staying in the US and they’re getting paid that us salary, which I think also helps.

[00:16:41.290] – Maria

It becomes sort of like this virtuous cycle where the schools need more international students to fill their seats, but it also makes the schools more easily able to pitch the idea of like, look, you’re going to go $200,000 into debt or $100,000 into debt or whatever to come and get this degree in the US, but look at what your compensation is going to be. So I think it becomes, because of that opt, that three year STEM designated working rights or the ability to continue to work here. I think that it’s sort of a win win for a lot of different parties involved.

[00:17:18.650] – John

True. I think it is a win win. And I think there’s also something that’s ironic about it. And let me explain what I mean by that. Globalization in the US business school was a big thing 15, 20 years ago when most us business schools realized that they were behind and they were laggards at teaching what globalization meant, what strategies companies, multinational companies were employing to be global, what it was like to work from people from dramatically different cultures. That was something that happened 15 years ago. In fact, you can make the argument that globalization has now taken a backseat to digital transformation, data analytics, sustainability, DEI, other things that are now hot because globalization isn’t very hot anymore, in part because the pandemic showed us how reliant the world became on global supply chains, which resulted in a lot of disruption. And globalization helped to basically propagate a virus that affected the entire world. And globalization has given rise in one country after another to nationalist politicians who are trying to limit immigration and basically prevent their populations from getting any more diverse than they already are. So if anything, globalization has not only jumped the shark.

[00:19:03.150] – John

It’s taken a few steps back, and yet here we are in these us schools seeing far greater percentages of international students than we’ve ever seen in history. And I think I want to come back to the reason for it. And the reason was cited early on by Caroline, which is there’s a shortage of domestic applicants. Domestic applicants. The US MBA programs has been declining for at least a decade, if not more. There are a lot of different reasons for that, but it is a major concern for the business schools. A number of admission directors have told me that in this current cycle, they’re seeing more domestic applicants, but not dramatically. Meantime, there’s been a massive increase in international applicants that have more than made up for the decline in domestic candidates. So there’s all of that, and it’s kind of fascinating just to point it out. Caroline, you agree with me, or as a resident globalist, maybe you’d completely disagree.

[00:20:06.450] – Caroline

Well, I think it’s wonderful that the schools are becoming more international. And I agree that there are a lot of forces that have disrupted globalization over the past two years. But I think that business schools have a role to play to keep that flag flying. Right. We do not want to become a fragmented world where everyone just focuses on their own backyard and incapable of forging partnerships across borders and oceans and with people on the other side of the world. So I think business schools have a very important role to play in maintaining that and cultivating a cadre of leaders who have the ability to operate internationally. I think that will continue to remain relevant, even though I agree that there have been several forces that have been disrupting that and making it less appealing in the eyes of some over the past few years.

[00:21:08.630] – John

And I should note that in a recent podcast, we were talking about the benefits of actually leaving your home country for your career and how enriching those experiences were. Each of us agreed they were among the most memorable experiences in our lives. To actually work in a culture and in a country that was essentially foreign to us. Maria, I know you loved your days in Hong Kong, and they’re really vivid and important memories and probably played a very important role in terms of who you are today.

[00:21:44.110] – Maria

Yes. But I do want to say, just to push back on this, kind of like the global. I know that globalization is not in vogue anymore as much as it was 15, 20 years ago, and I know that it’s currently a very easy political target. Right?

[00:22:00.810] – John

Yes.

[00:22:02.150] – Maria

Let’s bring manufacturing back to the US. And I know Biden’s been doing a lot of policies to bring manufacturing back to the US. And I know that Trump has talked about a, I think, a 10% universal tariff on goods, which I think might be devastating for the economy. But anyway, the point is you can get a lot of voter support if you sort of bang the nationalist drum and USA, USA, or whatever your own country is like, we have to support our own workers. But that having been said, I still think that globalization, and maybe I’m just naive, and I don’t want to admit that globalization is dead, but I can’t help but think that globalization is still going to be very important, because let’s say you’re an American company and you move your manufacturing from, say, China or Vietnam back to the US, you still need to sell your products globally. Any major corporation, regardless, know, the dynamics may shift in terms of where in the world something is produced, but in order to become a truly large corporation, you’re going to have to sell all over the world. Or if not, you’re going to be limiting or curtailing your potential as a company.

[00:23:14.830] – Maria

Look, the political winds are shifting and against globalization, but I don’t think that it’s dead. In a very pragmatic sense. I think in a very pragmatic sense, you’re still going to need that international knowledge.

[00:23:29.030] – John

Yeah, and the genie is out of the bottle, and you can’t put the genie back. You know, to the extent that we now view China in a more adversarial way, I think companies would be smart, and some are already doing this to move manufacturing into places like Vietnam, be a good place, friendly countries. In other words, in case there is a major disruption with China. And of course, every western country is trying to limit immigration. I mean, the United Kingdom in January imposed a new restriction on graduate students. They can no longer bring their families with them to study in the UK at a school. And under review in the UK right now, is their work visa policy for internationals. How that plays out, we don’t know. Hopefully it doesn’t play out at all, because I think we all agree that there are tremendous benefits from the diversity that different people bring. And after all, that is right in the pocket of what the United States is all about. I mean, we are the melting pot, have been the melting pot since the very beginning, and it’s enriched our country in ways that would not have been possible if not for the fact that we opened our doors the best and brightest all over the world, and, frankly, stole the best and brightest all over the world for decades.

[00:24:57.320] – John

If you want to talk about American exceptionalism, it’s due to immigrants coming here who were skilled, who wanted to work hard, who were ambitious, who wanted the better lives for themselves and achieved it here. And thank God they did. And if you closed that door, you shut it down. I think it would have drastic consequences on the American economy, without question. So there you have it. Hey, have a look at the story. It’s kind of fascinating to see just the percentages of international students and where they’re coming from. And the story, how many different countries. You can look at the story. It’s called the US MBA programs with the most international students. Hey, thanks for listening. This is John Byrne with Poets and Quants.