ATLANTA — Two construction cranes hover above a giant construction site just outside the Scheller College of Business at the Georgia Institute of Technology.
What they are building is both a sign of optimism and a way to attract more students to something universities desperately need but are starting to worry about: graduate education.
The $200 million project will house Scheller’s graduate and executive business programs in one tower and connected to Georgia Tech’s School of Industrial and Systems Engineering in the other. Combining graduate business programs with other disciplines has been found to increase demand; Scheller has already added a science, technology, engineering and math major to its master of business administration program, resulting in an increase in applications, the school says.
At a technology-focused university, this “seemed like a natural fit, and we saw some of our competitors doing it,” Peter Severa, Scheller’s associate dean for MBA student engagement, said in a conference room overlooking the construction site.
It is also the type of incentive that has become necessary in response to signals that, after years of growth, the number of graduates, on whom universities largely depend for revenue, may be falling as potential students question the cost of postgraduate studies and the fact that they are shorter, cheaper and longer flexible alternatives are emerging.
“What we’re seeing now is a combination of stabilization and a big question mark about where this long-term trend is going,” said Brian McKenzie, director of research at the Council of Graduate Schools.
Unlike undergraduate admissions, which have been steadily declining, graduate admissions have increased over the past decade. According to the National Center for Education Statistics, the number of undergraduate students decreased by 15% between 2010 and 2021, while the number of graduate students increased by 9%. This was partly due to a change introduced in 2007 that allowed graduate students to borrow up to the full cost of their education, unlike bachelor’s students who can only borrow a limited amount.
This growth has made graduate programs a lucrative source of revenue for universities. To make money, universities and colleges have significantly expanded their offerings to graduates.
It seemed like a good bet. Even the pandemic did not slow down the increase in the number of university graduates. It reached an all-time high in 2021 as laid-off or furloughed workers opted to pursue degrees. Then in 2022 it dropped.
There was a slight rebound in fall 2023, but it was mainly due to the number of international students. Among domestic students, the number of graduates has decreased.
Beginning next year, the decline in the number of 18-year-old Americans is expected to have another major impact on undergraduate admissions. The basic math suggests it will eventually find its way into graduate programs as well.
There are other challenges. All these graduate programs that universities rushed to introduce meant that even as graduate admissions rose, the number of students per course - and therefore the revenues from these programs - fell.
Meanwhile, a strong job market means many people stay in their jobs rather than continue their education.
“The choice was, ‘Do I go to graduate school or do I take advantage of some of these very good opportunities?’ Many of them chose to take the money,” said Julia Kent, vice president for best practices and strategic initiatives at the Council of Graduate Schools.
There has also been an increase in alternatives to traditional master’s degrees, such as cheaper, short-term certificate programs and other non-degree offerings.
“We live in a fast food society,” said Lily Bi, president and CEO of the Association to Advance Collegiate Schools of Business (AACSB). “People want something easy and quick.”
And flexible. Twenty-seven percent of master’s programs and 66% of MBA programs are now offered online, giving students more choice when and where to pursue them. This is an increase from 12% and 36% in 2012, respectively.
According to the U.S. Department of Education, graduate students make up only just over one-fifth of all college students, but they account for nearly half of federal student loans.
The analysis shows that the average student with a federal loan owes $70,000 and one in five has borrowed more than $100,000.
The rise in postgraduate loans has sparked a warning from the Department of Education, which notes that a growing number of borrowers are completing postgraduate studies with very high levels of debt. And while college-educated people generally earn more than those without, the premium has flattened, “suggesting a potential decline in the net rate of return,” noted the department’s chief economist.
With all this in mind, the Council of Graduate Schools formed a task force to study the costs of a graduate-level education and recommended expanding graduate eligibility for the Pell Grant and lowering student loan interest rates from the current 8.05%, Kent said.
Postgraduate programs are increasingly forced to depend on a single market that is constantly growing: international graduate students. According to the National Student Clearinghouse Research Center, their numbers increased by 21% in 2022 and 22% in 2023.
Nearly every field of study that saw an increase in admissions did so because of a large increase in the number of international students, even as the number of U.S. citizen and resident students declined.
AACSB data shows that at business schools, the number of students who are U.S. residents or permanent residents dropped by 7% in the fall, while the number of students from other countries increased by 19%.
That increasing reliance on international students may be risky; during the pandemic, they almost disappeared. Geopolitical tensions may also have an impact; Although more international students continue to come to the United States from China than from any other country, the number of Chinese students declined slightly last year, according to the Institute of International Education. Still, McKenzie of the Council of Graduate Schools found that the number of students from India increased by 35% over the same period.
Universities are aggressively recruiting international students. Georgia Tech’s STEM MBA designation was designed, in part, to help reverse the steady decline in the number of full-time MBA students.
This is because a STEM degree allows international students to remain in the United States and work in their fields of study without employer sponsorship for three years after earning their degree, compared to the usual one-year limit.
“If a large portion of our applicants are international, it’s important to be attractive to them,” said Emily Sharkey, executive director of admissions and MBA admissions at Scheller.
Among the other universities whose business schools have added STEM designations: Arizona State, Carnegie Mellon, Duke, Indiana, Michigan, Northwestern and Rice.
Incorporating technology into business education also appeals to students who might pursue graduate studies in the future.
Even as a student at Scheller, “I learned coding and things that I probably wouldn’t have learned at other business schools,” said Elizabeth Curvin, who just finished her sophomore year there.
However, she is not ready to invest in MBA studies. “I would probably go to work and see if it was something I wanted,” Curvin said.
Junior Aubrey Charron said she, too, wanted to try her planned career in hospital administration first, “just to make sure I really found what I wanted to do.”
Individual students’ careers and universities’ financial performance are not the only concerns. The Council of Graduate Schools says the country is facing a growing shortage of workers for jobs requiring a college degree.
“The slight decline in the nation’s student population is concerning because it will be critical that more Americans participate in graduate education,” said Kent of the Council of Graduate Schools.
This graduate recruitment story was produced byHechinger Reportan independent, nonprofit news organization focusing on inequality and innovation in education.