Investment banker Sean Lamb spotted opportunity when business fell on Wall Street. In April he left his job at TD Securities -- and enrolled in Stanford University's business school.
"With the markets down, it's a nice time to make a transition," said Lamb, 27, who specialized in mergers and acquisitions for the unit of Canada's Toronto-Dominion Bank.
Lamb said he chose Stanford to prepare for a shift into biotechnology, which he expects to be the "next hot area." Bankers and veterans of failed Internet ventures are helping spur an increase in business school applications. In the 2000 to 2001 academic year, about 209,000 people have taken the Graduate Management Admissions Test, the main gauge for applying to MBA programs. That's up 34 percent from the 1997-98 period.
"When there's a business downturn, it produces a surge of applications for business school," said George Parker, senior associate dean for academic affairs at Stanford and director of its master's in business administration program. "When the job market is less frothy, people retreat to the notion of wanting better credentials to compete."
More than 500 Internet bus-inesses closed in 2000 and 2001 as the NASDAQ stock index slid 60 percent from March 2000. Wall Street firms including Goldman Sachs Group Inc, Merrill Lynch & Co and J.P. Morgan Chase have quite predictibly responded to a decline in business by announcing job cuts totalling 12,000 so far this year.
"Bonuses are probably going to be bad this year, so it's a good time for an educational hiatus," said Malkah Buchweitz, who works at Aetos Capital, a New York investment firm, and is headed to Harvard Business School in the fall.
Before the Internet, people often worked a few years on Wall Street to gain experience, then left to earn a master's degree in business administration. The boom in startup companies in the late 1990s drew a lot of MBAs, leaving Wall Street with a shortage of business school graduates.
"A year ago, when we were in the tech craze, we had a fair number of students we'd already admitted request deferrals" because they got job offers, said Rose Martinelli, director of MBA admissions and financial aid at the Wharton School of the University of Pennsylvania.
Now, there has been a reversal of fortunes. More students are showing up in need of financial aid, some already mired in debt. "A lot of people are coming in who really got hit in the market," Martinelli said. "Everyone wanted to get rich quick."
The expense of graduate school can be intimidating, even for those with a Wall Street cushion. Attending Wharton, for example, costs more than US$100,000 for two years, though most returning to school are ready to brave the expense.
"I'm facing the fact that like every other citizen in this country I'm going to be deeply in debt," said Buchweitz. "But it will all pay off. Higher education is always a positive."
Academics see a wider benefit when battle-scarred financial veterans return to school. In New York, the shakeout from Wall Street and failed Internet ventures is being felt in a rise in applications at Pace University, where 1,300 of 1,700 graduate students are part time.
"It may be part of the trend with failing dotcoms," said Peter Hoefer, dean of the Lubin Business School at Pace University. "In many cases, you merely had the ill-informed advising the misinformed.
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