Gutting DEI? Not So Fast, Say B-School Applicants

The debate over diversity, equity, and inclusion (DEI) initiatives in higher education has reached a boiling point, and business schools are at the epicenter. While conservative policymakers and corporations are scaling back DEI programs under political pressure, a growing cohort of MBA applicants is pushing back. A recent surge in applicant demand for DEI-focused curricula and institutional commitments to equity is creating a paradox: institutions risk losing top talent if they abandon DEI, even as legal and financial pressures mount.

The DEI Divide: Applicants vs. Institutions

A 2024 GMAC survey of 4,105 prospective business students revealed that 57% globally would reject a school that does not prioritize DEI. The stakes are particularly high outside the U.S., where DEI is a “deal-breaker” for 86% of African applicants and 74% of Central/South Asian applicants. Even in the U.S., 44% of underrepresented groups called DEI “very important,” compared to just 33% of non-underrepresented applicants.

This data underscores a generational shift: 61% of Gen Z applicants now view DEI as critical to their education, aligning with broader societal demands for equity. For investors, this means business schools that abandon DEI risk alienating a demographic that will dominate the workforce in the coming decades.

Regional Resistance and Corporate Pushback

The push to dismantle DEI is strongest in the U.S., where Supreme Court rulings and state-level legislation have eroded affirmative action and diversity programs. Yet even here, resistance is mounting. States like Minnesota and New York have defied federal demands to disavow DEI, while institutions like the University of Michigan Ross School of Business continue to invest in ESG and DEI programs.

Corporations, too, are split. While companies like IBM and Amazon have cut DEI budgets, others—such as Costco and Apple—have doubled down, with shareholders overwhelmingly rejecting anti-DEI proposals. This corporate divide reflects a broader truth: DEI is not just a moral imperative but an economic one. The GMAC report cites a 35% productivity boost at companies prioritizing DEI, aligning with applicant demands for schools that prepare leaders to thrive in diverse workplaces.

The Legal and Political Tightrope

The tension between applicant priorities and political forces is stark. The Trump administration’s 2025 executive order mandating the termination of federal DEI programs has spurred states like Florida and Alabama to shutter university DEI offices and reallocate funds. Yet this backlash has backfired in some regions. In Minnesota, the education commissioner argued that DEI is “not illegal” and warned against federal overreach, while New York’s education department refused to comply with certification demands.

For investors, the legal battles are a cautionary tale. Lawsuits like the National Education Association’s challenge to federal DEI cuts highlight the risks of investing in institutions that prioritize compliance over long-term equity goals.

The Bottom Line: DEI as a Competitive Advantage

The data is clear: DEI is a non-negotiable priority for a majority of global applicants. Institutions that embrace this—such as Purdue University (which integrated fintech and AI into its DEI-driven STEM programs) or Worcester Polytechnic Institute—are attracting talent and staying competitive.

Meanwhile, schools cutting DEI face a double whammy: losing applicants and failing to meet corporate demands for inclusive leadership pipelines. A 2024 McKinsey report found that 70% of Fortune 500 companies now require DEI training for executives, a trend that will only accelerate as Gen Z enters leadership roles.

Conclusion: DEI Isn’t Going Anywhere—Investors Should Take Note

The push to “gut” DEI programs is a political and cultural battle, but it’s not an economic one. For investors, the path forward is clear: back institutions that align with applicant priorities and corporate realities.

• Data-Driven Insight: Schools with strong DEI commitments, like Michigan Ross (which saw a 12% rise in applications from underrepresented groups in 2024), are outperforming peers in enrollment and alumni giving.
• Risk Alert: Universities in states like Florida and Alabama, where DEI offices have been dismantled, face reputational and enrollment risks.
• The Bottom Line: DEI isn’t just a buzzword—it’s a strategic imperative. Investors who ignore it risk missing out on the leaders of tomorrow.

In the end, the market for talent—and the investors who bet on it—will decide. And right now, that market is demanding DEI.