A Short History of STEM Designation in MBA Programs

The Wisconsin School of Business at the University of Wisconsin obtained STEM (science, technology, engineering and mathematics) designation according to the Department of Homeland Security (DHS) taxonomy for two of our MBA specializations in 2016. Since then, many U.S.-based business schools have followed suit. Five years later, we want to reflect in this article how we got here.

The term “STEM designation” is a bit of a misnomer; when we say that a program is STEM-designated, we really mean that the program has a CIP (Classification of Instructional Programs) code that has been designated by the DHS to belong to a group of CIP codes that qualify for the STEM Optional Practical Training (OPT) Extension. Note that other STEM degree classification schemes exist besides the one used by DHS, such as the taxonomy used by the National Science Foundation.

OPT is a program that allows foreign students on F-1 visas to work in the United States, either during or after their studies. The program has existed in some form since 1947, and since 1992 has allowed these visa holders to work for up to 12 months after completing their degree [1]. The regulations that define this important immigration policy are crafted by the executive branch and not by Congress. This is an important distinction; Congress has the authority to set H-1B visa limits, but OPT policy is set without congressional oversight.

This ownership by the executive branch made OPT a soft target for lobbying efforts. Bill Gates, then chairman of Microsoft Corporation, prepared a written testimony to congress on March 12, 2008, highlighting the shortfall of skilled scientists and engineers in the United States, as well as the need to invest in more basic research and development by the public and private sectors. While Gates lays out several policy goals in his testimony, one of these goals is specifically related to STEM OPT. Gates writes [2]:

“First, we need to encourage the best students from abroad to enroll in our colleges and universities and, if they wish, to remain in the United States when their studies are completed. One interim step that could be taken would be to extend so-called Optional Practical Training (OPT), the period of employment that foreign students are permitted in connection with their degree program. Students are currently allowed a maximum of 12 months in OPT before they must change their immigration status to continue working in the United States. Extending OPT from 12 to 29 months would help to alleviate the crisis employers are facing due to the current H-1B visa shortage. This only requires action by the executive branch, and Congress and this committee should strongly urge the Department of Homeland Security to take such action immediately.”

This testimony came in the middle of the Great Recession during the waning days of the Bush administration in the middle of an election year. The executive branch reacted quickly. By April 2, i.e., less than a month later, the Department of Homeland Security had outlined key aspects of the STEM OPT extension. Michael Chertoff, Secretary of the DHS, prepared a memo entitled “Extending Period of Optional Practical Training by 17 Months for F-1 Nonimmigrant Students with STEM Degrees and Expanding Cap-Gap Relief for all F-1 Students with pending H-1B petitions” (Federal Register, Vol. 73, No. 68, April 8, 2008). The memo outlines:

“This interim rule will allow F-1 students who have received a degree in a STEM field to obtain an extension of their existing post-completion OPT period for up to 17 months, for a maximum period of post-completion OPT of 29 months. The extension, however, is only available to students who are employed, or will be employed, by an employer enrolled (and determined by USCIS to be in good standing) in USCIS’ E-Verify employment verification program at the time the student applies for the 17-month extension. (…) The student’s degree, as shown in SEVIS, must be a bachelor’s, master’s or doctorate degree with a degree code that is on the current STEM-designated Degree Program List, which is based on the ‘Classification of Instructional Programs’ (CIP) developed by the U.S. Department of Education’s National Center for Education Statistics (NCES).”

The same memo also outlines the important role that OPT plays as a bridge toward the “greatly oversubscribed” H-1B visa.

CIP is a “taxonomic coding scheme of instructional programs. Its purpose is to facilitate the organization, collection, and reporting of fields of study and program completions” [3]. CIP codes are organized by 48 two-digit codes denoting the most general groupings of related programs (e.g., code 52 for “Business, Management, Marketing, and Related Support Services”), and thousands of four-digit codes within that broader structure (e.g., 52.1301 for “Management Science, General”). Originally introduced in 1980 by the National Center for Education Statistics (NCES), the scheme is updated every 10 years to reflect the changing nature of education. The most recent change occurred in 2020, and includes, for example, new codes for Business Analytics (30.7102) and Digital Marketing (52.1404). NCES uses these codes to create reports, such as their annual “Condition of Education” report (https://nces.ed.gov/programs/coe/). These reports, in turn, are used by policymakers and other government agencies. According to NCES, the “CIP is not intended to be a regulatory device.” The agency itself cannot make policy decisions. Educational institutions, or rather the keyholders within these institutions, decide how to classify their programs according to CIP, and DHS decides which CIP codes are STEM-designated. There is no central gatekeeper that evaluates whether assigning a STEM-designated CIP code to a particular program is warranted.

Former Secretary of Homeland Security Michael Chertoff’s initial memo clearly outlines that the department “must also continue to ensure that the extension remains limited to students with degrees in major areas of study falling within a technical field where there is a shortage of qualified, highly-skilled U.S. workers and that is essential to this country’s technological innovative competitiveness.”

The next iteration related to the STEM OPT extension came in the middle of the second Obama administration. In November 2014, DHS Secretary Jeh Johnson released a memo [4] that included the following language:

“The OPT program should be evaluated, strengthened and improved to further enhance American innovation and competitiveness, consistent with current legal authority. More specifically, I direct that Immigration and Customs Enforcement (ICE) and USCIS develop regulations for notice and comment to expand the degree programs eligible for OPT and extend the time period and use of OPT for foreign STEM students and graduates, consistent with law. I am also directing ICE and USCIS to improve the OPT program by requiring stronger ties to degree-granting institutions, which would better ensure that a student’s practical training furthers the student’s full course of study in the United States. Finally, ICE and USCIS should take steps to ensure that OPT employment is consistent with U.S. labor market protections to safeguard the interests of U.S. workers in related fields.”

What prompted this memo is not entirely apparent. However, in August 2015, a lawsuit challenging the initial OPT STEM extension was greenlighted in federal court. It is possible that the Obama administration was preparing a replacement regulation in case the original regulation was struck down by the court. At the same time, though, the language of this memo created expectations that additional fields of study would be included in the STEM OPT extension. An article in the National Law Review [5] commented: “We hope that the expansion of degree programs will include degree concentrations in business administration, finance, economics, etc. so that a larger percentage of foreign students can take advantage of the STEM OPT extension option.”

The new STEM OPT extension regulation became effective on May 10, 2016. This regulation is still current. While the Trump administration has threatened to restrict the OPT program [6], no further regulation has been made since. The May 2016 regulation addresses key challenges made by the court in the August 2015 ruling, extended the STEM OPT extension from 17 months to 24 months, and expanded the list of STEM-designated CIP codes that are eligible for the extension. For business schools, the additional CIP codes now included on this list [7] were Management Science (52.1301), Business Statistics (52.1302) and Management Science and Quantitative Methods (52.1399). This is the set of CIP codes that business schools need to work with to obtain STEM designation for their MBA program. In essence, a business school needs to certify that its program is best described as a program of management science, business statistics or actuarial science, rather than any other CIP code, in order to obtain STEM designation. This list from 2016 is still current, despite the catalogue of CIP codes having been updated by NCES in 2020. As a result, the new business analytics CIP code (30.7102) is not STEM-designated, while business statistics (52.1302) is STEM-designated. While it is unlikely that DHS will revise the current list in the middle of an election year with a changing administration, a revision shortly thereafter seems likely. 

Wisconsin School of Business MBA Program

The MBA program at the Wisconsin School of Business is unique in its degree of specialization. Students select their career paths right from the start and follow a career path specific curriculum for two years. They engage in applied learning from day one, often led by industry practitioners in their specialization. They are part of a smaller cohort that chooses the same career path and are mentored by a faculty associate specializing in this career path. From the university’s perspective, our MBA program is not one program, but 10 different programs, each with its own learning objectives, curriculum, degree plan and CIP code. Since different career paths had different CIP codes, we could examine which of these paths would classify as management science, and which ones were not quantitative enough to allow for such a classification.

One such career path was our program in Operations & Technology Management. The program was still registered under a CIP code with the label of Operations Management and Supervision (52.0205). The description of this code clarified that it was intended for programs related to manufacturing management and supervision; the code was likely issued at a time when this program was indeed called Manufacturing Management. By now, however, the curriculum and the students have changed. Most graduates from the program are moving into technical product management positions or healthcare information technology consulting after graduation. The original CIP code did not fit the program anymore. In fact, many of the required courses already had a strong management science component. Additionally, many of the faculty teaching in the program were educated in management science. Therefore, we prepared a proposal to change the CIP code of this program to Management Science and Quantitative Methods (52.1399). In parallel, we prepared a proposal to change the CIP code of our Supply Chain Management program as well. We submitted these two proposals to the University of Wisconsin-Madison Academic Planning Council (UAPC) in May 2016 and were notified during the summer that the UAPC had approved our CIP code change. Our two MBA programs in Operations & Technology Management and Supply Chain Management had become the first STEM-designated MBA programs in the country, and the first MBA graduates with STEM designation left the school in May 2017.

The benefits of STEM designation for our students quickly became apparent. The Financial Times captured the story of one of our international graduates who – because of her STEM designation – was able to secure her dream job at Dell EMC [8]. But benefits from the STEM designation did not just extend to our international students. Some of our domestic students, particularly in the military, reported that the STEM designation opened new career paths for them that required a STEM-designated degree. The STEM designation also became part of the student’s identity, with LinkedIn profiles explicitly referencing the student’s enrollment in a “STEM MBA.” International applicants took notice, and the volume of international applicants to these two STEM-designated specializations increased. It is noteworthy, however, that this increase in international interest did not initially lead to a large increase in total applications and enrollment. While in 2015/2016, around 200 students applied each year to the Operations & Technology Management program, only about 150 students applied each year to the program in 2017/2018, and enrollments remained stable at around 15-20 students per year. Further, it proved challenging to translate our STEM designation into successful employment outcomes. Many firms had simply stopped recruiting international students altogether for MBA roles due to the challenges of obtaining work permits for them. More recently, however, as the value of STEM designation became more familiar to both applicants and employers, applications and enrollment increased, and employers became more excited and willing to provide job opportunities to qualified graduates.

We did not stay the only STEM-designated MBA program in the country for long. Wisconsin led the beginning of a competitive bandwagon that saw STEM designation applied to MBA programs across the country. Universities realized the importance of STEM designation to remain competitive, and to continue to provide the most career opportunities for both their foreign and domestic students. We have identified three primary approaches taken by universities to obtain STEM designation for their MBA programs.

In the first approach, schools identify a list of courses that qualify as management science. These courses can lead to a certificate or major. Students can select these courses as part of their program, which ensures that they will receive a management science education. Only those students selecting enough management science courses will receive a STEM-designated MBA degree. This approach provides the potential for any student in a program to obtain a STEM-designated degree while maintaining the flexibility of the program to also attract the less quantitative “poets” to the program. While some programs require students to submit a formal application for a STEM-designated degree, identifying their intent for the certificate or major, others have a less rigorous approach, where any student can obtain the designation as long as they meet the specified number of predetermined courses on the list.

In the second approach, schools obtain STEM designation for specific majors or specializations within the MBA degree. This is the approach Wisconsin took. Schools can run separate programs that focus on management science under this CIP code, while running their non-management science programs under different CIP codes. This approach allows for differentiating among MBA students, and allows for students to self-select into a management science degree. Schools can award a STEM-designated degree only to those students that self-select into a Management Science program and go through the appropriate training. A student seeking a STEM-designated degree is thus limited in his or her options of specialization to only those specializations that have significant management science content.

The third approach lies in making an entire MBA program STEM-designated. This option is beneficial to students because they are thus free to focus on any sub-discipline in business and still receive the coveted STEM designation. It is also beneficial to schools because such flexibility is attractive to applicants. A valid way to accomplish this approach would be to incorporate sufficient management science courses into the core curriculum. However, such a measure could easily make the degree unobtainable for the traditional “poets.” Programs may thus lose those applicants since “poets” may not be particularly interested in a deep dive of analytics and optimization classes. They might shy away from a program that requires them to take so many classes in these areas without the ability to follow another path. This, in turn, could loosen the rigor with which such a STEM-designated program requires management science in their core.

STEM Designation at MBA Programs Going Forward

Without a doubt, the number of STEM-designated opportunities for MBA students has increased significantly. This development is beneficial for our students – particularly our international students who obtain a better opportunity to work within the United States upon graduation. It is also beneficial for employers who can broaden their base of employment. Some research exists on the societal impacts of STEM designation and suggests that this development is also beneficial for innovation [9]. But an essential question is whether this development is aligned with the intention of DHS and the spirit of the original STEM OPT extension regulation.

We can examine this question by looking at the inherent numbers; the original 2010 CIP scheme contains 1,848 different 2+4 digit CIP codes. Only 18% of these original CIP codes were STEM-designated in the 2008 STEM OPT extension regulation. This ratio increased to 23% of codes in the 2016 regulation. DHS was clearly selective in the CIP codes added. In general, the percentage of STEM-designated master’s degrees conferred had steadily increased over the years (from about 11.51% of all master’s in 2009-2010 to 16.44% in 2015-2016 [10]), indicating a growth of interest in STEM fields. The 2016 regulation has so far not led to a strong further increase in the percentage of STEM-designated master’s degrees (17.31% in 2016-2017 and 17.10% in 2017-2018). While most of the 2008 regulation is at the 2-digit code level (e.g., all 14.XXXX CIP codes), the new codes added in 2016 are at the 2+4 digit level (e.g., while 43.0116 Cyber/Computer Forensics and Counterterrorism is STEM-designated, 43.0117 Financial Forensics and Fraud Investigation is not). This aspect of the regulation speaks to clear intent by DHS instead of blanket coverage. Note that in the business category (52.XXXX), there are 94 2+4 digit CIP codes. Only 4% of these CIP codes are STEM-designated. Clearly, DHS was careful that its change in regulation would not lead to a massive increase in the percentage of STEM-designated master’s degrees in business, and that business students (who, with 23% of all master’s conferred in 2017-2018, have the largest volume of all categories, higher than health, education and engineering) would be limited in their STEM-designated options.

Another way of looking at this question is to focus on the description of the CIP code in question. The most relevant code here is 52.1301 Management Science. While three other STEM-designated CIP codes exist, this is the one most apt for MBA programs. Its official description is as follows: “A general program that focuses on the application of statistical modeling, data warehousing, data mining, programming, forecasting and operations research techniques to the analysis of problems of business organization and performance. Includes instruction in optimization theory and mathematical techniques, data mining, data warehousing, stochastic and dynamic modeling, operations analysis, and the design and testing of prototype systems and evaluation models.”

Although some business schools do educate some MBA students in these techniques, clearly not all MBA students receive deep training in them. MBA programs have always had their “poets” and “quants.” The advent of business analytics has increased the willingness and receptiveness among our MBA students for management science education. However, while many quants will have received training in these methods, most poets will have at best a superficial training in them and will not spend their careers applying these methods. The specificity of this CIP code therefore implies that the code does not apply generally to MBA programs; only programs that allow students to select into such management science training should allow a CIP code in management science for the students receiving it.

This discussion emphasizes that there are more adequate ways to implement STEM designations in MBA programs. Primarily, a blanket CIP code change that applies STEM designation to all MBA students in a school, particularly including general management programs such as executive MBAs, seems unwarranted and not in the spirit of the original DHS regulation. In contrast, the first two approaches identified earlier, where students can self-select into a management science program, maintain the integrity of the CIP scheme and appear consistent with the intent of the 2016 DHS regulation.

The individual incentives of business schools are to maximize their STEM-designation coverage; at the same time, if too many business schools follow that path, we risk the DHS ultimately removing the management science CIP code from their STEM-designated list, which would end STEM designation for MBA programs. We are, in other words, facing a tragedy of the commons. There is much at risk; as a group of business schools, we risk losing an important benefit for our students. As management scientists, we risk that the legal definition of what constitutes management science is made by a lawyer for the Department of Homeland Security rather than by our profession. And as individual schools, we risk promising extended OPT status to a pipeline of applicants, with possible challenges to their status down the road. The current regulatory framework – with DHS using the CIP codes for STEM designation, but NCES having no regulatory power – leaves a governance gap in the implementation and oversight of the STEM OPT extension. As business school leaders, we can choose to close this gap on our own by properly setting standards and regulating ourselves.

References

1. https://www.govinfo.gov/content/pkg/USCOURTS-dcd-1_16-cv-01170/pdf/USCOURTS-dcd-1_16-cv-01170-0.pdf
2. https://www.networkworld.com/article/2284389/bill-gates-written-transcript-from-today-s-congressional-testimony.html
3. https://nces.ed.gov/ipeds/cipcode/Files/2020_CIP_Introduction.pdf
4. https://www.dhs.gov/sites/default/files/publications/14_1120_memo_business_actions.pdf
5. Cohen, S., 2014, “President Obama’s Executive Immigration Reform: Shining a Spotlight on Reforming Optional Practical Training,” National Law Review, December 3.
6. https://www.wsj.com/articles/trump-administration-expected-to-limit-work-program-for-foreign-graduates-11590242401
7. https://www.ice.gov/sites/default/files/documents/Document/2016/stem-list.pdf
8. https://www.ft.com/content/07867c62-bdaa-11e8-94b2-17176fbf93f5
9. https://www.niskanencenter.org/wp-content/uploads/old_uploads/2019/03/OPT.pdf
10. These numbers originate from the “Digest of Education Statistics” published by NCES.