Considering migrating across countries to pursue your MBA program. It is time to think again. The United States’ University of Illinois’ Gies College of Business has just joined the league of business schools to close off their full-time or part-time, on-campus MBA programs. The school will now focus more intensely on its online MBA option, the $22,000 iMBA. The online iMBA has seen huge growth since being launched in 2015.
The University of Illinois’ Gies College is merely joining the bandwagon. In 2018, the University of Iowa’s Tippie College of Business announced that it would end its full-time MBA program. Joining this league are the US’ Arizona State University’s Thunderbird School of Global Management, Wake Forest University, Thunderbird School of Global Management, Virginia Tech, and Simmons College (the country’s only all-female business school) which have all shuttered their traditional two-year programs.
In the UK, Henley Business School has canceled its full-time MBA for the 2019–20 academic year, pending a “review of the MBA market”. Recent data across the US shows the number of full-time MBA programs offered across the country slid 9% between 2014 and 2018, while online and flexible programs increased sharply. Although schools such as Harvard does not yet offer any degree programs like many other business schools (see The Best Online MBA Programs Of 2019), Harvard’s digital courses such as Business Analytics and Entrepreneurship Essentials to Disruptive Strategy and Economics for Managers have seen enrolment increase to more than 70% since the school re-branded its online program from HBX to Harvard Business School Online. So, why are on-campus business schools shuttering down rapidly? We discuss below.
The University of Illinois’ Gies College of Business, Like Other Business Schools, Admits It is Losing Money On Its On-Campus Programs
The schools believe there is no way on-campus business schools are remaining profitable. A look at the numbers at the University of Illinois’ full-time MBA, ranked in the top 50 by U.S. News will reveal a growing disinterest in on-campus MBA programs. For instance, Applications to Gies’ full-time program fell to 290 this year from 386 in 2016. This is even as the school enrolled fewer than 50 full-time students in each of the past three years. Even when apps were nearly 100 higher in 2016, Gies was only able to enroll in a class of 47 students. Instead, applications to Gies’ iMBA are reaching a 3,200 hit this year, up from 1,099 in 2016, although the program is not yet among the best online MBAs in the U.S.
Generally, applications to MBA programs have declined. Data from AACSB’s 2016–17 and 2017–18 Business School Questionnaires shows that 59 percent of U.S. business schools reported a decline in MBA applications. A longer-term view shows a culmination of years of slow but steady decline: when comparing survey responses in 2013–14 to 2017–18, 53 percent of U.S. schools reported a decline in applications to MBA programs.
Thunderbird, which first switched from a two- to a one-year MBA program before eventually abandoning its MBA in 2014, saw enrolment drop from 1,500 students in 1990 to 140 in 2012.
Alternatively, prospective business school intakes are channeling more of their resources towards pursuing their undergraduate business programs, especially master’s in business and online MBA programs. Almost 32,000 students are studying for an online MBA at the 25 largest programs in the U.S. At the same time Gies experienced declining interest in its full- and part-time MBA programs, interest in its online MBA has exploded.
Online MBAs Are Becoming Significantly Acceptable To Recruiters
The stress of moving on and off campuses is gradually being replaced by the convenience of learning from home. Recruiters themselves are buying into the story and turning their eyes away from intensely scrutinizing the worth of online MBA programs.
According to a recent report, recruiters say most employers accept job candidates’ online MBAs from respected schools. Many graduates of online MBA programs say they get positive outcomes immediately after getting their degrees. For instance, online graduates of Indiana University’s Kelley School of Business are reporting average salary increases of 29% over their pre-MBA pay. At the University of North Carolina’s Kenan-Flagler Business School, 76% percent of online students have received promotions or started new jobs while in the program. Students there also average 29% salary increases over their pre-MBA pay levels by graduation.
This is perhaps why international students are saving their travel fares and sticking to online MBA programs. As an example, the number of international students who want to study in the U.S. is down: 58% in 2016 vs. 61% in 2009, according to GMAC. For students in Western Europe, the top preferred location for business school is now the U.K., rather than the U.S., which was the most preferred option in 2009.
In other countries, the cost of hiring MBA graduates is also becoming unbearable. The King’s College, London now concentrates on master’s as against MBA programs. Henley’s suspension of its MBA occurred after U.K. employers expressed a preference for hiring talent at a younger, pre-MBA stage, according to the schools’ leadership. Reason: the cost of an MBA program is not only a concern for applicants. Hiring from MBA programs is expensive for employers, forced to pay starting salaries high enough to attract candidates looking to make a return on their investment and pay back their MBA loans. This explains why some employers favor early-stage hires from pre-experience master’s programs.
Prospective MBA Candidates Are Finding Options in Non-MBA graduate business degrees
According to the Wall Street Journal, many schools now offer part-time and specialized programs in accounting and finance, which students are increasingly choosing over a traditional MBA. These programs are potentially cannibalistic to MBA program per se.
Globally, candidates are considering other MBA-related disciplines. The percentage of candidates preferring only business master’s degrees has increased from 15% in 2009 to 23% in 2016, according to a 2017 report by the Graduate Management Admissions Council (GMAC), the organization that administers the GMAT, the business school entrance exam. Candidates considering only MBA programs decreased from 52% to 49% over the same period.
Again, the demand for master’s in data analytics has experienced a huge boom. It is now the second-most considered business master’s program after the master’s in finance, according to GMAC.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.