Part Two: Recruiting Report
Part Three: Curriculum Report

When the economy hit the skids in the late 1980s, many young professionals fled the downturn by pursuing graduate degrees. As the stock market plummeted, law and business schools saw the number of applications skyrocket.

So when sexy headline stealers like Viant, Scient Corp., and Marchfirst Inc. began slashing payrolls last December, graduate-school prep centers like Kaplan and Princeton Review weren't surprised by an immediate increase in course registrations for the Graduate Management Admissions Test, or GMAT. Business schools, in turn, braced for a deluge of applications as candidates prepared to meet stiff competition from dotcom refugees. Today, those schools are still waiting ... and wondering what happened to the MBA torrent.

"So far, our numbers are consistent with 2000 and with 1999," says Rose Martinelli, director of MBA admissions and financial aid at the Wharton School of the University of Pennsylvania, which conducts rolling admissions that close April 10. "But last year, our overall numbers ultimately decreased. The class that enrolled in 2000 was down 11% from 1999, which was our largest applicant pool ever. It's just too early to tell whether admissions will be terrible, terrific, or static."

The Great Dotcom Snatch

Most business schools suffered a dramatic reduction in applications from 1998 to 2000, when stock options and management positions lured young candidates into the job market rather than the classroom. MIT's Sloan School of Management, for example, received 10% fewer applications than usual last year, according to director of admissions Rod Garcia. On average, he says, B-schools across the United States saw interest decline 5% to 19% in 2000.

Many schools were quick to blame the hot economy for kidnapping its bright young stars. Garcia, however, resists the temptation to attribute the MBA slowdown solely to the lure of Internet-related businesses. He says that B-school applications move in cycles and that law and medical schools likely sapped the MBA talent pool more than the economy did last year.

A Dwindling Generation X

In addition, Garcia says graduate schools across the board witnessed a demographic phenomenon in 2000: There were simply fewer 25- to 35-year-olds in the talent pool than there were 10 years ago, when the tail end of the Baby Boom generation filled out classes.

Now schools are anticipating Generation Y, the cohort born between 1979 and 1994 that totals more than 78 million people -- three times larger than Gen X, according to the U.S. Census Bureau. In 2004 and 2005, the first wave of this group will begin bombarding admissions offices at the nation's B-schools.