Applications to U.S. graduate business programs plunged 25% in 2026, marking the steepest decline in nearly a decade.

According to the data released Tuesday by the Graduate Management Admission Council, the drop reverses two consecutive years of application growth.

A perfect storm of factors—including economic uncertainty, shifting visa policies, and geopolitical tensions—is weighing on demand. But the economy stands out as the biggest drag: 90% of graduate business programs surveyed said economic changes, including recession fears, layoffs, and shifts in the job market, affected application volumes, while 73% reported a major or moderate impact, the highest share of any factor.

That’s a shift from the usual pattern: When jobs are scarce, people often turn to school to improve their prospects. But this time, economic uncertainty is making prospective Gen Z students think twice about the cost of another degree.

It comes as entry-level jobs continue to be in the crossfire of AI. 

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.

MBA applications are on the decline—but top schools still offer salary prospects of $175,000

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 equally distributed. Applications to highly-selective programs, with acceptance rates below 40%, fell just 9%. At programs with acceptance rates above 85%, applications dropped 21%—suggesting that even as prospective students grow more cautious about business school, selective programs are proving more resilient.

The six-figure payoff may help explain 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.

But the high career prospects also come with a hefty price tag: Tuition at top MBA programs has climbed to over $300,000 in some cases, raising the stakes for students weighing whether the degree is worth the investment.

Like Gen Z, Fortune 500 CEOs have begun questioning the value of degrees

Even as young people increasingly question the value of degrees, some top business leaders have similarly voiced that credentials may not be worth the same as they did previously.

JPMorgan Chase CEO Jamie Dimon, who graduated from Harvard Business School in 1982, 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, an alum of the University of Pennsylvania’s Wharton School, has been more blunt.

“I studied international relations and history. I got an MBA later, but that was a waste of time,” Winters 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.”

For Joy Jones, GMAC’s CEO and a Stanford MBA alum, business schools need to be more upfront about the return on investment they can 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. 

Still, she remains bullish on business education: “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.”