Why US Business Schools Need to Invest in STEM MBAs

The total number of applicants hoping to land a spot on an American MBA program for the 2019-2020 academic year reduced by 9.1 percent, a report by the Graduate Management Admission Council (GMAC) revealed.

International applications also fell at the sharper rate of 13.7 percent in the same year.

This is particularly worrying for business schools, as MBAs are some of their most popular programs: overall, four in five b-school graduates consider pursuing one, and two in three usually end up choosing a full-time option.

To counteract the decline in b-school applications, many US business schools – such as the Wisconsin School of Business, the Fuqua School of Business and the Haas School of Business – have now put forward STEM-designated MBAs – hybrid degrees that prepare students to face business challenges with analytical and technological skills.

They offer traditional MBA classes, such as accounting, economics and marketing, while also placing an emphasis on the skills of the future, with courses such as information technology, data mining, programming, forecasting and operations research.

So why are these programs increasing in popularity?

Let’s take a look.

They help international students

Research has found that harsher immigration and visa policies have deterred international students – who usually comprise up to 40 percent of all top MBA classes – from applying to the best US b-schools.

In October 2019, 50 business school deans sent the White House an open letter urging political changes to the process.

It reads: “A combination of our outdated laws, artificial regional and skills-based caps on immigration, and recent spikes in hostility are closing the door to the high-skilled immigrants our economy needs to thrive.”

And this is when the attractive pull of STEM-designated programs come into play.

International students enrolled on these programs can remain in the country up to three years after graduation under an optional practical training (OPT) extension, as opposed to non-STEM majors who are legally obliged to leave the country a year after graduating.

OPT extensions also give foreign students extra time to apply for the H-1B employment visa, making them more attractive to employers and allowing them to enter the American workforce more easily.

They could boost b-school applications again

STEM MBAs have been particularly successful in the past year, with a 43 percent increase in overseas applications compared to 26 percent for non-STEM programs.

While overall MBA courses reported declines in both domestic and international applications, we can’t underestimate the potential benefits that STEM courses could have on boosting the appeal of b-schools once more.

Suh-Pyng Ku, vice dean at USC Marshall School of Business, told BusinessBecause that the school expects to see a 5 percent increase in 2020 applications as a result of offering this type of program.

Peter Johnson, assistant dean of the MBA at UC Berkeley’s Haas School of Business, said that domestic students are too becoming more and more interested in developing the tech abilities that have grown to be “increasingly important to employers of all types,” from healthcare to education and social science.

Duke’s Fuqua School of Business has already proven this. Last year, over 30 percent of MBA graduates went into a tech-oriented field – a figure that is likely to increase alongside applications to STEM-designated programs.

They could fill the tech employment gap

In 2018, 2.4m STEM jobs in the US went unfulfilled – the equivalent of the population of Chicago.

Research predicts this number will decrease, however, it does show there will still be a shortage of 1.1m STEM-specialized workers by 2024.

These figures reflect the progressive digitalization of many American industries: according to the US Bureau of Labor Statistics, by 2024 73 percent of STEM job growth will be in computer occupations.

Current graduates don’t seem to possess the technological acumen and skills businesses need, as most MBA courses don’t branch into fields like data analytics, AI and digital security, but this will likely change as STEM MBAs become more widely available.

The future

In early January 2020, the NYU Stern School of Business became the latest US school to offer a STEM-designation for its full-time MBA program, following the Michigan Ross School of Business’ announcement from the week prior.  

At USC, Suh-Pyng Ku predicts that most top 20 American b-schools will offer STEM-designated MBAs in the near future.

It’s difficult to say whether changes to immigration policies, application rates and the job market will occur at a sharper rate as the US prepares for the next Presidential election. Nevertheless, preparing students for the future of employment is and will always be a business school’s main goal – and if it entails blurring the lines between business and tech, so be it.