U.S. Business School Applications Plunge 25% as Gen Z Balks at MBA Costs

Applications to U.S. graduate business programs plunged 25% in 2026 — the steepest decline in nearly a decade, according to data released Tuesday by the Graduate Management Admission Council (GMAC). The drop reverses two consecutive years of application growth and lands hardest on programs that aren't elite.

The economy is the biggest drag on demand. GMAC's Application Trends Survey found 90% of graduate business programs said economic changes — recession fears, layoffs, and shifts in the job market — affected application volumes. Some 73% reported a major or moderate impact from the economy, the highest share of any factor. Shifting visa policies and geopolitical tensions added pressure.

That breaks the usual pattern. When jobs get scarce, prospective students historically run toward school. This time, economic uncertainty is making Gen Z think twice about paying for another degree — and entry-level hiring is caught in the crossfire of AI.

How hard does AI hit entry-level jobs?

One-third of employers said they were replacing entry-level jobs with AI, according to GMAC's Corporate Recruiters Survey released over the summer. More than half of the roughly 600 respondents recruit for Fortune 100 or Fortune 500 companies.

The takeaway in plain words: the jobs an MBA traditionally led into are shrinking at the bottom rung, and prospective students see it.

Which programs are losing applicants?

The decline extends to MBA programs specifically. Two-thirds of full-time MBA programs worldwide reported application declines, with applications falling 13% year over year.

But the pullback isn't evenly distributed. Applications to highly selective programs — those with acceptance rates below 40% — fell just 9%. At programs with acceptance rates above 85%, applications dropped 21%. Even cautious students still bet on brand.

The six-figure payoff explains why. Across the elite "M7" business schools — Harvard, Columbia, Stanford, Northwestern Kellogg, MIT Sloan, University of Pennsylvania Wharton, and University of Chicago Booth — roughly 90% of 2025 graduates seeking employment received job offers. Median base salaries for graduates who accepted jobs reached at least $175,000 at each school.

The price tag has climbed too. Tuition at top MBA programs has risen to over $300,000 in some cases, raising the stakes for anyone weighing whether the degree pays for itself.

Do CEOs still value degrees?

Gen Z isn't alone in questioning credentials. JPMorgan Chase CEO Jamie Dimon, a 1982 Harvard Business School graduate, has pushed back on the idea that an elite education automatically makes someone a better employee.

"I don't think necessarily because you go to an Ivy League school or have great grades it means you're going to be a great worker or great person," Dimon told LinkedIn in 2024.

Standard Chartered CEO Bill Winters, a Wharton alum, went further. "I studied international relations and history. I got an MBA later, but that was a waste of time," he said last year. "I learned how to think at university, and for the 40 years since I left university, those skills have been degraded, degraded, degraded."

What do business schools need to prove now?

For Joy Jones, GMAC's CEO and a Stanford MBA alum, business schools need to be more upfront about the return on investment they offer — or where they fall short.

"[Gen Z] want a return on their investment that goes beyond salary: careers that feel stable and fulfilling, the flexibility to keep their options open, and work that makes a positive impact," she told Fortune.

She remains bullish on business education, but with a condition: "I believe the question isn't whether business school rebounds, but which programs earn the trust of a generation that wants proof of value up front."

With elite M7 programs still posting 90% offer rates and $175,000 median base salaries while less selective schools lose a fifth of their applicants, that proof of value now splits the market — and the programs that can't show it will keep absorbing the declines.