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By: Joseph Pisani, CNBC News Associate | 30 Sep 2008 | 12:04 PM ET
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As Wall Street tries to survive the credit crunch, business schools are planning their own rescue plans: tinkering with their curricula and preparing students for a different job landscape.

AP

“Our advice to them is that this will pass,” says Joseph Baczko, dean at Pace University's Lubin School of Business in New York City. “We’ve gone through this before,” he says, referring to other crises like the 1987 stock market crash.

If tumultuous market swings weren't enough in recent weeks, Wall Street has undergone structural changes that are likely to shrink the number of jobs available to future business school graduates.

Investment banks Goldman Sachs [GS  Loading...      ()   ] and Morgan Stanley [MS  Loading...      ()   ] have opted to become bank-holding companies, while others—Merrill Lynch, Lehman Brothers [LEHMQ  Loading...      ()   ] and Bear Stearns—have either been bought up or filed for bankruptcy protection.

As a result, many schools are working to reduce the anxiety their student's are feeling by re-evaluating the curriculum and helping students navigate the gloomy job market.

At the Villanova School of Business, in Villanova, Pa., Dean James Danko sent a letter to all business school students on Friday Sept. 19, 2008; the end of a week that saw Lehman Brothers file for chapter 11 bankruptcy protection, Merrill Lynch agreed to a takeover by Bank of America and AIG receive an $80-billion federal rescue package. The letter encouraged students to meet with career services and to investigate “different career paths, industries and companies.”

That thinking was evident at other schools as well. Take Dean Van Tassell, 27, a senior in the MBA program at Pace.

Wall Street in CrisisWALL STREET IN CRISIS - A CNBC SPECIAL REPORT
“I’m starting to develop a contingency plan,” he says acknowledging that his dream job on a trading desk may be even harder to attain in this market. He's now also seeking opportunities in other areas like corporate finance and portfolio management.

Villanova dean Danko said the school is working with a more diverse group of companies looking to recruit business students including teen clothing retailer American Eagle Outfitters [AEO  Loading...      ()   ], conglomerate General Electric [GE  Loading...      ()   ] (the parent company of CNBC and CNBC.com) and British engine maker Rolls-Royce.

Ed Fredericks, a professor at Pepperdine University’s Graziadio School of Business and Management in Malibu, Calif. says that areas of growth for newer grads will be in smaller “boutique firms.” He recommends students intern over the summer to improve their chances of landing a job upon graduation.

That was the case for Andrew DeVries, 29, a senior in the MBA program at Emory University's Goizueta Business School in Atlanta, Ga., who was recently offered a job at a Wall Street firm he interned at over the summer.

"Most of the banks seemed to strictly [hire] out of their summer classes," says DeVries.

Graduates may have another reason for optimism. “They’re cheaper than the older talent,” says Baczko.

Cheaper indeed. The credit crunch has hurt entry level pay and starting bonuses more than during other downturns. Sign-up bonuses are lower because there’s more people in the job pool, says Van Tassell, who’s now actively job hunting. “They aren’t competing for labor right now.”

Curriculum Changes

In addition to helping students navigate the new job market, many schools say they are shifting the curriculum so that students graduate with a broader business background.

Emory's business school has done that and more, while Villanova now offers a combined finance and accounting course that exposes students to both fields.

Change and challenges aside, schools say they are not expecting a drop in applications. “The classic situation is that when certain sectors go down people look to sharpen their skills,” says Baczko.

In fact, many have seen an increase this year as the economy stumbled. A survey conducted by the Graduate Management Admission Council, an association of graduate business schools around the world, shows that 77 percent of full-time MBA programs reported an increase in applications in 2008, the highest in five years.

In the testing year ending June 30, 2008, the GMAT, the standardized test used to get into MBA programs, was administered 246,957 times, the highest ever, according to GMAC. The second highest year the test was administered was in 2002, the time of the last downturn.

Some, however, are seeing signs of a shift away from business schools.

Lisa Jacobson, CEO of Inspirica, a high-end, one-on-one test preparation firm says many of her students are changing plans and opting for law school, which happened during other slumps. The joke is they’ll be busy doing bankruptcy work, she says.

“This younger generation has never really seen a bad economy," says Jacobson, "To them it’s really scary.”

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