Do online MBAs expand access to business education?

Needing to save for her children’s college education and fund her own sustainability consulting business, Jennifer Saxe couldn’t afford an MBA. Or so she thought, until last year.

That’s when Saxe enrolled in the iMBA run by the Gies College of Business at the University of Illinois at Urbana-Champaign. This is a fully online, part-time degree so she can continue to grow her business. And, while many top schools charge six-figure fees for a full-time classroom MBA, the price for the iMBA is $22,000.

“I had already liquidated my retirement savings to fund my business,” says Saxe. “Even if I got a loan, as a single mom, I couldn’t afford to pay $100,000 for an MBA.”

His story demonstrates the potential of e-learning to democratize business education, making quality education cheaper, more flexible, and more accessible to far more people than expensive on-campus MBAs.

Jennifer Saxe: “Even if I got a loan, as a single mom, I couldn’t afford to pay $100,000 for an MBA”

The iMBA currently has 4,432 registered participants, down from just a few dozen full-time MBA students in 2019 — the year Gies discontinued that program. Economies of scale reduce the iMBA’s cost base, as it uses fewer faculty, who command high salaries, to teach larger classes than would be possible on campus.

“People think scale is inversely related to quality, but it’s the exact same degree you’d get in person,” says Brooke Elliott, executive associate dean of academic programs at Gies. “We chose inclusivity over exclusivity.”

In principle, many online MBAs could be much cheaper than they are because virtual classrooms reduce overhead costs such as physical teaching facilities. Yet many schools still charge similar rates for their residential and online programs — Carnegie Mellon University’s Tepper School of Business, for example, charges around $140,000 for its various MBA formats.

FT Online MBA Ranking 2022 – Top 10

“E-learning is inherently scalable, but quality online learning is expensive to produce,” notes Nick Barniville, associate dean of degree programs at ESMT, the European School of Management and Technology in Berlin.

Costs include payment for faculty to design and update asynchronous course components – which students can take whenever their schedule allows – in addition to career services, periodic residential modules and extras such as travel of global studies. Regular investments are also needed to keep the IT infrastructure and software up to date, and to train teaching and support staff.

“There’s always the dilemma for a high-end business school between prestige price positioning and a strategy that focuses more on accessibility, scale and reach,” says Barniville.

Some institutions claim that smaller class sizes improve academic outcomes, pointing to a divergence in approaches to online learning.

“In a small group, there is a lot of interaction between the participants,” explains Leonardo Meeus, Academic Director of the Online MBA at Vlerick Business School in Belgium. “We didn’t design our program to be less expensive. We wanted the same experience as a regular MBA, so we didn’t go for a huge cohort.

Compared to on-campus students, financial considerations are less of a concern for online participants, as they are typically experienced professionals looking to increase their already large earning power.

“For online students, funding isn’t that big of an issue, because you just pay the fees – there’s no opportunity cost of not working, no sacrifice of income,” says Amir Michael, Associate Dean of MBA Programs at Durham University Business School in the UK.

However, in a context of growing wealth inequality, this may mean that online MBAs play only a limited role in spreading opportunity more evenly across society, according to Will Geoghegan, chair of the Kelley Direct program at the Indiana University Kelley School of Business in the United States. .

He cites a “perverse incentive” to raise fees to attract top earners, who will have the best career outcomes and boost their alma mater’s position in MBA rankings. “The game is almost stacked,” he says. “There is a self-perpetuation in terms of certain inequalities.”

One of the biggest levers for expanding demographics is financial aid, with many schools reducing tuition through merit- and need-based scholarships.

“We strive for diversity not only in terms of nationality, which our sector focuses on, but also socio-economic diversity, which we believe is equally important,” says Norman Kurtis, Dean of Programs at the IE Business School. to Madrid. “There are many areas that are relatively affluent locally, but it’s difficult for people to pay fees in stronger currencies.”

Although in principle online learning can be a global playground, online MBAs largely appeal to local learners. This is partly because some countries, including China and the United States, do not recognize online degrees from foreign institutions or restrict access to post-graduation work visas for foreign students online. , as opposed to international students on campus.

Additionally, coordinating live lectures across multiple time zones poses a challenge for course administrators, and relatively few business schools have a globally recognized name. “You would have to spend a lot of money to launch the brand overseas,” says Paulo Prochno, associate dean of online programs at the University of Maryland’s Smith School of Business.

While some business schools partner with digital platforms, such as Coursera, to teach students in countries they probably couldn’t reach on their own, they have to share revenue with those platforms in exchange for l hosting and marketing of their MBAs.

However, with online learning coming of age during the pandemic, ESMT’s Barniville predicts that competition for students in a free market system will bring fees down. “When you’re one of very few players in a market, you can charge whatever you want. But, as new competitors come in, the landscape will change.

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