Via Financial Times

The future of the MBA is digital. While the number of applications for places on campus-based courses has declined globally for the past two years, demand is up for most online MBAs.

Online MBAs outgrew all other professional MBA programme types in the US in 2019, according to the applications data gathered each year by entrance test administrator the Graduate Management Admission Council (GMAC).

“The shift is from all forms of physical study to online,” Sangeet Chowfla, GMAC president, says. “Online gives new options for people who used to go for the part-time evening or weekend programmes as well as the new generation who have grown up digital.”

There is some evidence that online MBAs are cannibalising campus-taught courses. The MBA.com Prospective Students Survey last year found that 42 per cent of those considering part-time study were also considering an online MBA, up from 32 per cent in 2015.

However, it is also true that online programmes are drawing in people who would never previously have considered a business education, either because of the flexibility offered by being able to study wherever and whenever you like or because of the lower cost of such courses.

Going places: the ability to study anywhere attracts many to online MBA programmes © Dreamstime

“The demographic of the typical online student is older and more experienced than campus-based students,” Mr Chowfla says. “Therefore it cannot be just a case of online courses taking away demand from campus-based courses.”

Business schools are reacting by increasing their online MBA offerings. Five years ago just 20 per cent of the 862 institutions accredited by the Association to Advance Collegiate Schools of Business (AACSB) said they offered an online MBA. At the end of the last academic year, this had grown to 35 per cent.

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“Learners demand more options, which is why we have also seen a growth in specialist, accelerated and part-time masters programmes,” says Juliane Iannarelli, AACSB chief knowledge officer.

Schools, she adds, have become better at delivering online education, sometimes with outside assistance. “[They] are investing in the technology to provide these programmes but there are also many more support providers to help them deliver content online through learning platforms such as Coursera and 2U.”

Many of the new providers are experimenting with offering online MBAs at a lower cost than their campus-based courses. These lower price points mean that people who previously could not justify the expense of business school are enrolling.

However, online MBA providers do not compete on price alone. Many have deliberately kept their online MBAs at the same price as campus-based tuition.

Take, for example, Indiana University’s Kelley School of Business, whose very successful online MBA was able to expand its intake from 276 in 2014/15 to 454 in the current cohort. Yet the tuition fee of $74,520 for the 54 credit hours required to complete the course is comparable with that for a residential MBA at a school such as the University of Wisconsin-Madison or Texas A&M.

This image of Sample Gates was taken on October 8, 2018. Kelley School of Business. Indiana.
Growth area: Kelley School of Business has increased the intake for its online MBA © Nick Ebertz

What Kelley has discovered is that its online MBA is attracting both students who would only want to study online and those who might also consider a campus-based programme.

“More and more students are coming into the online space who would previously have studied full time,” says Ash Soni, executive associate dean for academic programmes at Kelley.

“The reason for this is that the economy is doing very well. People are saying, ‘I can get a great experience on an online MBA course. Why should I take two years out and forgo the salary for full-time study?’”

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One of the reasons why Kelley has not reduced the cost of its online MBA is that building the programme and the delivery mechanisms has involved a significant investment. The school is spending $10m creating state-of-the-art studios and virtual classrooms for its online students, according to Mr Soni.

“The biggest challenge is to figure out how we can meet the needs of all our students,” he says.

One characteristic of the online MBA students is that they give regular feedback to their teachers, perhaps more than for the full-time course, according to Mr Soni. “That is a challenge but also an opportunity,” he says.