July 5, 2000
By DAVID LEONHARDT
With a swiftness that has surprised and puzzled educators, law schools have gained the advantage in their long tug of war with business schools for the attention of corporate America’s future elite.
At virtually every top business school, the number of applicants fell last spring, and some of the numbers are startling. At the University of Chicago, they dropped 24 percent. At Cornell, the dip was 23 percent, and at Stanford, it was 18 percent.
As a result, it is considerably less difficult to gain admission to some business schools than it was a few years ago, and school officials have relaxed their requirements for work experience and stepped up overseas recruiting efforts.
Law schools, meanwhile, are enjoying their first increases in applications since the 1980’s. Around the country, about 77,000 people submitted applications to begin law school this fall, up about 3 percent from the previous year. It was the second consecutive increase, reversing a string of declines that accounted for a 30 percent overall drop from 1991 through 1998, according to the Law School Admission Council.
Deans say they have no clear explanation for the trend, which comes after a decade in which interest in M.B.A. programs grew as rapidly as stock market values did. Top schools became so selective that at some the admission rates plummeted, to 10 percent or even less. At the same time, law schools became less selective, thanks to a growing perception that there were too many lawyers anyway.
Now, however, the tight labor market is causing companies to offer promotions and perquisites to retain young employees who otherwise would be considering business school. "The opportunities presented to someone like me are pretty compelling right now," said Brian D. Gale, 27, an equities trader in Boston who is trying to decide between going to the University of Chicago full time and working for a bank in Cleveland that has offered to pay his tuition if he enrolls in Chicago’s weekend program. "It’s difficult to take a timeout for two years. People are saying, ‘I’ll postpone it until there’s a need for me to go back.’ "
In fact, graduate programs of almost all types, from the humanities to the physical sciences, have received slightly fewer applications over the last five years than in the past, according to the Council of Graduate Schools. The number of people in their late 20’s has decreased, and the strong economy has given them many alternatives.
Law schools have managed to defy the demographics, though. Unlike many business schools, they accept students directly from college, before the students have employers who are desperate to keep them. The law schools also seem to be benefiting both from corporate America’s willingness to hire lawyers for a broader range of jobs than in the past, deans say, and from a heightened interest in public-interest work after a long economic expansion.
Nevertheless, the speed and the size of the turnaround for business and law schools defy easy explanation, administrators say. "Nobody I’ve talked to has come up with a really good reason for this, and we’re all concerned," said Mary Miller, the associate dean for admissions at the Stern School of Business at New York University, where the number of applicants fell by 15 percent this year.
The flip-flop in the schools’ fortunes is connected, graduate-school experts say, because both draw from the same pool: ambitious young adults who have decided against careers in specialties like medicine and engineering and opted instead for degrees that can be passports to wealth and success in just about any business field.
Last summer, the first warning signs that M.B.A.’s were losing some luster came as applications fell at schools that traditionally attract people interested in technology, like Stanford and the Massachusetts Institute of Technology.
This year the bad news is widespread. In fact, the list of schools where applications dropped, and acceptance rates spiked, reads like a magazine ranking of the country’s best programs: Harvard, the University of Pennsylvania, M.I.T., Columbia, Michigan, Virginia, Northwestern, Duke. The declines are steepest among American applicants. Yale’s business school appears to be the only big-name M.B.A. program with an overall increase each of the last two years.
Officials at the schools themselves tend to be among those who blame the hot economy. "Career prospects generally look so good now that a two-year investment in an M.B.A. may be hard for many to justify," said Richard L. Schmalensee, the dean of the Sloan School at M.I.T. Indeed, the combination of tuition costs and lost wages can easily exceed $200,000 over two years.
George G. C. Parker, an associate dean at Stanford, added, "There are a lot of people who feel things are moving so quickly that they don’t want to stand on the sideline."
It doesn’t help that managers at some large companies are discouraging younger workers from going to business school, in part because they cannot spare them in the current job market and in part because they want to keep them a safe distance from Internet start-ups. Sally P. Lannin, the president of MBA Strategies, a firm in Edina, Minn., that advises applicants, said companies had become more reluctant to hire her to speak to their employees about how to get into a top school. "These organizations are really questioning whether they need to have these people go to business school because they’re having such a hard time getting them back," said Ms. Lannin, a former admissions officer at Stanford Business School.
Some firms have responded by helping employees get their M.B.A.’s in part-time programs while they continue working. Starting in January, for example, Paine Webber will pay for N.Y.U. to send professors to the company’s office in Weehawken, N.J., and teach night classes to about 20 of its most promising young employees. "This is totally related to the tight labor market," said Sue Emanuel, a corporate vice president for career development at Paine Webber. "We want to make this as convenient as possible for them."
Schools with higher acceptance rates have not been hit as hard, probably because they tend to attract younger students whom companies are more willing to let go, deans say. (There are no nationwide statistics for business schools because applications do not go through a clearinghouse, as they do for law schools.)
To get back on track, the most prestigious schools are relaxing some of the admissions guidelines they imposed at the height of their popularity in the 1990’s. Cornell University, the University of California at Los Angeles and a number of other top schools have begun accepting applicants with only two or three years of work experience, people who would most likely have been rejected in the past. Deans say their worry is tempered because they are still receiving far more applications than they need to fill a class. "There’s still plenty of hot competition," said Daniel Bauer, the managing director of the MBA Exchange, an admissions consulting firm based in Illinois.
Administrators also note that the recent downturn in many technology stocks could make some companies less appealing places to work and leave their young employees more interested in M.B.A. programs. The number of Americans taking the business-school admission test increased slightly this year — although turning test-takers into applicants is not easy in a strong economy, deans say.
Educators say the resurgence of the law schools is an even greater mystery than the business schools’ slippage. Maybe, they speculate, the business schools had become so selective that some people gave up hope of getting in and sent their résumés to law schools instead. And no doubt the big increases in starting salaries that many law firms have introduced in the last two years, in part to hold onto their associates, increased the law schools’ allure, administrators add.
The tight job market and the legal complications arising from new technologies are also opening up new opportunities for law school graduates. About half the consultants that Boston Consulting Group and McKinsey &Company now hire do not come from business school, for instance,and many instead hold a law degree, or juris doctor. "Increasingly, J.D.’s are becoming a surrogate for M.B.A.’s in business," said Trent R. Anderson, a vice president at KaplanInc., the test-preparation company, who has both degrees and who holds seminars for people thinking about applying to professional school.
America’s unprecedented prosperity probably also plays a key part. Many young people were not in the work force in the last recession and assume they will never have to worry about money. As a result, some educators suggest, they have set their sights on higher ideals. "Potential students to business and law school think they want to make a difference," said Edward A. Snyder, the dean of the University of Virginia’s business school, adding that most see the law as a better way to do so.
To be sure, gains in law school programs have not been as stark as the setbacks at business schools. Some law schools experienced big increases in applications over the last year, for example, but roughly half of the elite schools, including Duke, Harvard and Yale, registered declines.
Whatever erosion occurred, though, was generally slight and far less than the slide that characterized most of the 1990’s. Applications to Duke, for instance, fell less than 3 percent last year, compared with a 37 percent free-fall from 1991 through 1996.
Schools that have booming numbers of applicants, like Columbia, Georgetown and N.Y.U., are suddenly much harder to get into. In 1991, for example, the law school at the University of California at Berkeley admitted just one out of nine among its 6,527 applicants. By 1997, when only 4,171 people tried to gain admission, about one in five succeeded. This year, after three consecutive years of application growth, the odds were closer to one in seven.
Herma Hill Kay, the outgoing dean of the school, says many professors think popular culture, as much as any economic factor, has a hand in the changing interest in law school.
"When it was going through the roof in the 1980’s, people said it was because of ‘L.A. Law,’ " Professor Kay said. "When it was going down, people said it was because of the O.J. trial." These days, most people are not quite sure why it is on the rise again, she added.