by Brian DeChesare Comments (30)

If Your University or Business School Goes Virtual, Should You Take a Gap Year or Defer Your Admission?

Defer Enrollment University

We’re now ~3 months into this coronavirus crisis, and as I predicted back in March, the “cure” has been worse than the disease.

Entire cities in the U.S. are burning down, 40 million people have lost their jobs, and unemployment benefits for most workers end next month (July).

I have no idea where this will end, but I wouldn’t be surprised if any of the following happen:

  • In addition to killing small businesses, the protests and riots lead to a massive second wave of the virus.
  • The population of major cities, such as New York, drops by 50%+. I would not relocate to places like NY, SF, etc., for any amount of money.
  • Civil War 2.0 breaks out, and the country eventually splits up and dies.

I could go on about the apocalyptic scenarios, but I want to focus on a smaller aspect of the general breakdown of society:

I believe that a huge percentage of universities and business schools in the U.S. will shut down within the next 2-3 years.

Yes, right now, many of them are saying, “We’ll open for business in the fall,” and others are going virtual or using a hybrid model.

As a result, you might be asking yourself, “Is this degree worth it? Should I pay $50,000 per year for Zoom classes?”

But you should be asking whether or not your university will exist in 2-3 years:

How the University System Set Itself Up for Collapse

Professor Scott Galloway from NYU Stern put it best in his interview with Anderson Cooper (maybe the most interesting content on CNN in years):

The bottom line is that costs have risen far more quickly than the value proposition, which we can define as:

Undergraduate Value Proposition = Credentials + Learning + Experience/Networking

And at the MBA level:

MBA Value Proposition = Career Change/Advancement Potential + Networking

If institutions move to online classes, or even a hybrid of online and in-person classes, the “Experience” and “Networking” parts in those formulas approach 0.

The “Learning” part suffers greatly as well: online classes work for certain, specific topics, such as how to set up Pivot Table X in Excel or fix Image Problem Y in Photoshop.

But they don’t work so well for foundational knowledge, or for anything that requires a physical component, such as labs.

Therefore, all universities and business schools can offer students under this new model is the Credential or the Career Change.

But is it worth paying exorbitant sums for those?

If you’re attending one of the best schools in the country, maybe, because employers still hire based on your school.

And if you’re at a much-cheaper-but-still-good public school, maybe, because the ROI is still there.

But if you’re at an expensive-but-not-great university – most private schools outside the top ~50 or ~100 in the country – then the answer is an easy “no.”

We already see people realizing this, with reports that 4-year colleges may lose up to 20% of their students.

But it’s worse than that because enrollments for international students will drop even more substantially.

In 2016, international students in the U.S. represented 12% of the student population but 28% of annual tuition revenue.

Good luck without them!

Universities with multi-billion-dollar endowments get all the attention, but the median endowment is only $144 million.

And these endowments are not “discretionary funds”: universities can’t just use them to keep the lights on while attendance plummets.

Usage is usually restricted to big projects, and many endowments can spend only their returns – not the principal.

As a result, many lower-ranked universities will follow this pattern over the next few years:

  1. Move to an online or hybrid model.
  2. Find that students won’t pay nearly as much, or that enrollment falls substantially.
  3. Beg alumni for money repeatedly.
  4. Eventually, give up and shut down when they realize the numbers don’t work.

So, Is It the Perfect Time to Take a Gap Year?

A lot of students and parents seem to think the gap year is the perfect solution…

…but I don’t think it’s quite that simple.

The first problem is that it may not be possible to defer enrollment or, if you’re already in school, to take a “leave of absence” without sacrificing your spot.

For example, most business schools don’t allow students to do this because it disrupts their resource allocation and admissions targets.

Another problem is that if you’ve already lined up an internship for next year, or you’re in a strong position to do so, the firm you’re joining may not give you a full-time return offer once they find out that you’ll need another year to graduate.

And since the large banks now recruit a year in advance of internships, this is a major issue if you’re currently in university and aiming for IB roles afterward.

So, we need to divide this question into a few different cases:

Case #1: You haven’t started university yet, or you’re early in university (Year 1).

Case #2: You’re midway through university (Year 2-3).

Case #3: You’re at the MBA level.

In Case #1, I’d say it makes sense to defer enrollment or take a leave of absence.

You lose nothing because most internship recruiting won’t even start until the end of Year 2, the summer after Year 2, or Year 3.

And even if you’re not paying directly for your university, or it’s fairly cheap, you’re going to get a diminished experience if you attend in the current environment.

This is especially true if you’re attending an expensive-but-not-top-ranked private university since they’re likely to experience the highest number of shutdowns in the coming years.

It’s worth it to take a step back, see what happens over the next year, and proceed from there.

It may make more sense to transfer to a good public school that’s more likely to survive or to do something like Lambda School or a trade school or boot camp.

In Case #2, if you’re midway through university, it’s tougher to make a case for a delay or leave of absence.

First, if you’ve already lined up an internship for next year, or you’re in a good position to do so, you have to follow through, which means staying enrolled in school for next year.

Second, even if you’re not in a good position for IB recruiting, it’s probably still better to stay in school and aim for internships in related areas.

Then, go for a full-time offer in one of those fields and use lateral hiring to get into IB or whatever industry you want.

If you’re in Year 2, you’re not in a great position for internships, and you have doubts about your university’s survival, then it might make sense to transfer elsewhere.

But I’m not sure what you would gain by taking time off from school in this case.

Case #3: The MBA Level

There are a few key differences at the MBA level:

  1. There are few “cheap” MBA programs worth attending, especially if your goal is a finance or consulting job.
  2. Most programs do not let you defer enrollment. HBS changed its policy this year to allow it (the deadline was June 1), but other programs did not follow suit.

(The incoming class at HBS will have only 720 students, down over 20% from its normal levels.)

So, this case is simpler: if you’ve already won admission to a top-tier program where finance and consulting firms recruit, and you’re planning to go into one of those industries, enroll.

Yes, it will be a bad experience, and you’ll get much less networking value out of it, but you’re mostly paying for the career-changing potential.

On the other hand, if you’re in any of the following categories, I’m not sure how an MBA program makes financial sense in the current environment:

  • You’re not recruiting for finance or consulting roles (why are you reading this site?).
  • You’re attending a non-target MBA program.
  • You’re personally responsible for the full price of your program, but you’re not 100% certain how you’ll use it.

You’re better off doing almost anything else, from staying in your current job to learning new skills via a boot camp or trade school to doing volunteer work (see: “Is Business School Worth It?”).

Summary: The Collapse of Higher Education, and How to Respond

In short, here’s what I expect to see over the next few years:

  • The elite universities and MBA programs will survive because of money, branding, and artificial scarcity, and cheaper/public schools will survive because the ROI is still there. Expect many expensive-but-non-top-tier private schools to shut down.
  • Banks will keep recruiting at the top schools out of tradition and alumni connections. Yes, it will take more than a pandemic, depression, and massive civil unrest to disrupt an entrenched recruiting system.
  • If you haven’t started university yet, or you’re early in it, it could make a lot of sense to defer or delay your next year (if possible). If the alternative is to “attend” and pay a ridiculous amount for online classes, why bother?
  • But if you’re already midway through university, this plan makes less sense – especially if you’re aiming for an IB internship that you can convert into a full-time offer.
  • At the MBA level, deferral is usually not an option, so if you’ve won admission to a top-tier program, just go through with it, and use it to change careers.
  • If you’re about to pay a huge amount for a non-top-tier MBA program or you are not attempting to make a career change, immediately reconsider your plans.

Questions? Ask away.

M&I - Brian

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street. In his spare time, he enjoys memorizing obscure Excel functions, editing resumes, obsessing over TV shows, traveling like a drug dealer, and defeating Sauron.

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  1. I think it’s a little disingenuous to claim your prediction re: covid was accurate (or at least a little early).

    Cities are burning because of unrelated protests, and the virus turned out to be MUCH less lethal than originally predicted.

    That idiot Neil Ferguson needs to be prosecuted.

    1. Everything happening now is 100% related to the virus and the lockdowns. If unemployment were still at 3-5%, how many cities would be burning? How much looting would there be? Would people be toppling statues for fun?

      Sure, some people genuinely support “racial justice” and point to legitimate problems in the system, but the majority are just exploiting the situation because they feel hopeless and have lost their jobs, don’t know what to do, and needed to go outside.

      When 40 million people lose their jobs, civil unrest inevitably follows. Literally anything could have lit the spark here. But the catalyst isn’t the cause – the cause was massive income/wealth inequality, made even worse by the lockdowns, the Fed, etc.

      Anyway, I’m done. Currently in the process of renouncing U.S. citizenship.

      1. Oh wow, renouncing your US citizenship?

        Where are you taking up residency? Is it game over for the United States?

        Im Canadian but am working on getting EU (through the czech republic) and Israeli citizenship.

        Do you think I’ll be relatively safe in any of these places?

        1. I could potentially apply for citizenship in an EU country this year, but I’m also considering Singapore and New Zealand. Can’t do it immediately because the whole process takes time, and I still have illiquid assets there.

          I don’t think the U.S. will suddenly implode, necessarily, but I think the standard of living will gradually fall, and life will get worse each year for the average person. Right now, its only advantage over other countries is that it has the reserve currency… but that won’t last forever.

          Hard to say what’s “safe” for the foreseeable future, but I think anything in the EU and even somewhere like Israel are safer than the U.S. At least cities are not burning down.

  2. Hi Brian, I have been reading a lot of your articles recently and I have found them all very interesting. I know you are a graduate of Stanford, and I am heading there next year as an incoming freshman (I am an athletic recruit). I am very interested in finance, but I was just wondering, if you could do it all over again, and could go into any field/profession from Stanford, what would you go into?

    1. I’m not the best source here because I would not even go to university today if I had to do it all over again. It made sense 20-30 years ago if you wanted to move up in the world, but today, elite universities only make sense if you come from a wealthy family, pay nothing, and you’re doing it to continue a high-priced private education. You’ll see when you arrive that the vast majority of people come from that background, even if they don’t admit it upfront.

      Anyway, as far as industries to go into: it’s too vague a question to answer because it depends on what you want and what your time/money constraints are. I had no money, and my parents were poor, so I pursued money at the expense of everything else. If you’re not in that situation, look for some type of role that maximizes your options. I think sales at tech companies is one promising but always overlooked option because no one wants to do it, but it can be very useful for other jobs and if you want to start your own business.

  3. Thank you very much for your post Brian. It is so meaningful to have your suggestions in the midst of this COVID-19 pandemic.

    I am on leave of semester absence due to the coronavirus, which delays my graduation until 2021 summer, and I have a SA program lined up at a BB this summer (so I am still eligible for a return offer).

    However, I am stranded in a foreign country and there is very little chance that I can go back to start my internship before it finishes. What’s worse is that the program is in-person (I’m not in the States), so my bank is considering relocating me to my current location to do the internship. My bank only has a tiny presence in my current country, and I guess return will be fairly tricky since bankers in the original location won’t know me at all after the summer and, even if I may be eligible for returning to my current country full-time, I’m surely disadvantaged because I have never been part of their plan.

    I am wondering if I should try to communicate with HR and defer my SA program until next summer under my circumstances? Doing so I can also delay my graduation by one semester further to make myself still a student next summer.

    I understand that deferring SA program is extremely rare and very risky, but if I’m certainly disadvantaged this summer I would rather try.

    I would be grateful if you could offer any advice.


    1. In this case, yes, I would ask HR and see if you can defer your internship until next year (and then also delay your graduation so you’re still a student). It may not work, but you lose nothing by asking. You’re right that you’ll be at a disadvantage if everyone else does the internship in-person, but you’re not physically present.

      Normally it’s risky to ask for deferment of an internship, but in this case, you’re not losing much because the odds of receiving a full-time offer aren’t very high if you do this remotely.

      1. Thank you so much for the prompt reply.

        Would you recommend me to articulate how disadvantaged I would be to HR and showing how badly I want to work in the original location? And would you recommend asking this ASAP even though they said they were trying to sort something out for me (but nothing concrete yet start date is three weeks away) already?

        Finally, just want to say thank you again. I’ve been following your posts for a long time, and it is so fortunate for us all to have you to help out students and young professionals benevolently.

        1. Thanks. I would just write a short message asking if they can defer your internship and position it as a win/win for them – they don’t have to sort something out for you, and they don’t have to worry about managing you with all the in-person interns, so both sides save time and money. If you just say you’re disadvantaged, it’s not an appealing request because there’s nothing in it for them.

  4. Hi Brian,
    Thanks for another insightful article! Having done an IB internship, I have realized that writing ability is one of the most underrated skillset in investment banking. Do you have any recommendations to improve my ability to write coherently and concisely for business purposes? Thanks.

    1. I don’t know if there are books that teach this skill, but one trick you can use to practice is to write a set of instructions in 1 page, and then condense it to 1 paragraph and then 1 sentence. That will force you to focus on the most important parts and cut the rest. Then you can do it in the other direction and try to collapse and expand your writing to understand what’s important vs. not important/confusing in writing.

  5. Avatar
    Venkatesh Hemadribhotla

    Hi Brian,

    What do you suggest for candidates who got in to 1year prestguous programs like oxford and cambridge who has focus on consulting.


    1. If you’re doing it just for the credential and job, sure, go ahead. But if there are potential issues with that plan, such as not being able to work in the country due to visa issues as an international student, or you have to pay a much higher price, etc., then maybe delay it for now.

  6. Great post. Please could you help me with the following?

    I’m a Consultant working for a Big 4 as an Actuary for ~3 years. I’ve been offered admission in Cass Business School, London for MSc in Actuarial Management. My main reasons to go for a masters were 1. Get exemptions 2. Have a break 3. Have a shot at higher earnings in pounds (I’m not from the UK).
    Given that, I’m an international student with a possible travel restriction, should I go for the course? How do you think the job market will be in the UK after a year when I might graduate?

    1. Thanks. I would try to delay enrollment if you can because tuition seems quite high for a program that may not be completely in-person. Also, you’re taking a risk with the possible travel restrictions and the job market potentially not being so great upon graduating. MSc programs are usually best when you have a super-specific goal, such as one industry you’re targeting, and you’re attending just to change careers and get in (after having done all the prep work).

  7. Hi!
    Thanks for such a great article. I will be starting MBA at Rotman (University of Toronto) in September. My target areas would be Asset Management post MBA and I do think Rotman is a target school in Canada. What’s your view for somebody in my situation?

    Also, very you say “if the university is not very expensive” How do you classify expensive? Thanks again!

    1. Thanks. In Canada, the issue is that MBA-level recruiting isn’t big for IB roles, but asset management may be a different story (not sure offhand, as we don’t track AM closely). “Expensive” means something like $50k+ tuition per year, while “not very expensive” is more in the $10-$15K per year range (still a lot, but more feasible to pay for).

      It looks like Rotman MBA tuition is close to $50K per year, even for Canadian citizens, so that would be in the “expensive” category – but most MBA programs are like that.

      So, what should you do? In Canada, the only 2 MBA programs that get you much are Ivey and Rotman, so you should probably just go through with it. Yes, it will be a bit silly to pay that much and get some type of online or hybrid program, but the top MBA programs are still worth it for the credentialing and career change ability.

  8. Hi Brian,

    Depressing way to start my day by reading this article… but still an important article.

    Of your 3 scenarios, I think a huge spike in Coronavirus cases is the most likely. Cant imagine how groups packed together like that will not lead to a lot of sick people.

    I agreed with you about top cities prior to this whole pandemic and rioting. I couldnt imagine living in a huge city like that with rommmates, high rent, and that kind of lifestyle. a lot of people my age loved it though. I am about to turn 27 living at home with my parents. I thought maybe in the next year I would move closer to my city (much smaller metro area) but after all of this stuff, I could better imagine me moving deeper into the suburbs, maybe even into the rural area. At the same time, I’ve heard plenty of people say in the last two decades that “this event would be the event that gets people to leave the city”. It briefly did and then people moved back.

    A thought of another Civil War is scary. Way too many people have been radicalized on both sides via social media. The media and the President are constantly throwing fuel on the fire. I think if we see a change in November where Democrats take the White House, but Republicans barely hold the Senate, you will hopefully see people calm down a little bit. The problem is we have a two-party system that focuses more on going to war with the other side than a political system with many parties where building a coalition is more important. As long as America has a two-party system, we are not going to get any better.

    I agree with your point about universities. Colleges, continuing to hire useless admins, support majors with no serious job prospects, and them knowing that the government will continue giving kids crazy amounts of money to spend, have made college way more of a luxury than it should be in a functioning society.

    It’s a sad state of affairs we live in right now. It kinda reminds me of the early 1900s. Thanks as always for the article.

    1. Yup, agreed. Everyone is crazy. I’ve given up watching the news or following social media. To escape reality, I’ve just been drinking and playing video games in my spare time.

      I do think we’ll see a serious shift away from the cities over the next decade. It’s happened before – cities always tend to become more appealing or less appealing in certain times.

      The only way most universities survive in their current state is if the Fed bails them out. I don’t think that’s likely, but who knows, maybe they’ll just give up, print $500 trillion, and then hand it out to everyone who asks.

      1. Agreed. I’m glad I’m not the only one who has stopped watching the news outside of my local news and I have logged off Twitter for 3 days now. So far I’m glad I did. The uneasiness about not knowing what people are saying has so far outweighed actually knowing what people are saying haha.

        I think a shift away from cities would be good. I think one of the reasons why, outside of our politics, people are so angry all of the time is because people live on top of each other. We have a huge country. One thought I had why people might be so insane right now is because we have all been locked up for so long. for some people who live alone, they have not had much human interaction for weeks or months. I’m hoping that finally getting outside, maybe going back to work, and seeing friends again might calm people down and get us running again. maybe that’s too optimistic.

        Knowing our Fed, they will bail out anyone with a pulse. most kids get a raw deal at colleges. To me, the only degrees with much value are STEM programs. most other degrees are pretty worthless.

        1. Yup, that is definitely true. Even I am going a bit insane, and I’m used to working from home. Lack of real, in-person human interaction makes life turn into The Shining after a while.

          STEM degrees from relatively good schools are worthwhile, maybe also fields like accounting that teach some type of practical skill set. But yeah, liberal arts degrees are really not worth it in most cases. Maybe if tuition were still $5K per year…

  9. Really informative post, thank you. I am a UK Economics graduate (3year course) who is looking to start a masters in September. I have offers for Durham (MSc Management Finance) and Newcastle (Finance MSc).

    Would you recommend someone at my stage taking these offers? I have interned at Big 4 and at a wealth management company and would likely be looking for a Big 4 Role/FAANG/Corp finance or boutique IB. Also, would it be better to take the Durham offer as it is a top 6 UK business school or go down the strictly finance route at Newcastle (still ranked highly but not a target school)?

    P.S most UK universities have said they will be opening campus for Septemeber 2020 start, however a lot of lectures will be online.

    Thank you!

    1. Thanks. If you don’t have a full-time job or internship currently lined up, yes, you should probably accept one of those offers. It’s still a lot to pay for an “online” experience, but the tuition rates are less ridiculous than the $50K+ ones in the U.S.

      I’m not sure offhand how those schools compare in terms of recruiting across all those industries, but I believe Durham is still better for finance roles overall.

  10. Brian,

    I’m going into my third year part time at UCLA MBA. I’ve already switched jobs to real estate private equity (still interning at Bascom). Is it even worth it to finish? It’s seriously all about the credential at this point. Thanks.

    1. If you’ve already done 2 years, yes, I would just finish at this point. Part-time programs are even more about the credential, even in normal times. Yeah, it’s kind of a waste if everything will be online or hybrid, but it’s still worthwhile if it helped you switch careers.

  11. Great post. I just finished my freshman year at USC. They announced a hybrid first semester with mostly in person classes but likely much worse social / event / accidental networking scene and finals ending by thanksgiving. No idea what second semester will look like. I’m not worried about USC surviving, but since I don’t have any important internships lined up yet, I’m not sure if I should take a gap semester/year anyway. Thoughts? Also, if I did take time off, what would I have to do in that year to make it not seem like empty space? I’m sure banks/consulting firms will ask about what I did, and there isn’t a ton of opportunity for in person internships right now.

    1. Thanks. Yes, I think a gap year might be helpful if the first semester next year won’t be completely in-person. As for what to do: you could apply for remote internships or do other work online, do volunteer work, study a new language, teach, or do almost anything that can be spun into sounding relevant. Even training in a new sport might work. It just has to sound interesting and somewhat more productive than sitting at home watching Netflix. If travel opens up a bit more, you could also go to another country to do some of those, as that tends to make these experiences sound more interesting.

  12. Thanks for the excellent post. Is an MBA program from Ucla/Johnson still worth enrolling to this year with no scholarship? Currently waitlisted at a M7. I am 30 this year and want to use Bschool to transition to IB. Thanks!

    1. Thanks. Yes, I would say UCLA is still worth enrolling in – but it is definitely more geared toward west coast IB roles. So it’s not ideal if you’re set on NYC right after graduation.

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