In the United States today, nearly four times as many students earn an MBA as earn a law degree, a ratio that was one to one a mere 40 years ago. Even as American demand begins to level off, students in emerging markets, especially India and China, are flocking to the degree in growing numbers. But against this backdrop of swelling popularity, prospective MBA applicants are taking a hard look at the potential return on investment as never before. As follow up to its rankings, released last week, the Economist examined these and other important shifts in the MBA landscape as part of an article published over the weekend.
Data from the Economist’s most recent rankings show that the average basic salary for MBA graduates has dropped $1,500 in the past five years, to $94,000. Meanwhile, student surveys the Economist conducted as part of its rankings reveal that students are more focused now on how much they stand to make post-MBA than they were before the economic crisis. Moreover, as salaries have fallen, tuition has climbed. At the University of Chicago Booth School of Business, ranked No. 1 in the Economist 2013 rankings, tuition has gone up by $17,000 since 2008, to $112,000. At Harvard Business School (HBS), it has increased by $25,000 in the same time period.
Prospective MBA applicants must now do a careful analysis before starting a program to make sure it is worth their time and money. But that’s only one of the ways the MBA has changed, the Economist points out. Another shift has been toward more specialized degrees and concentrations within the MBA, with more and more programs now offering tracks tailored to specific industries, such as health care or luxury goods, or specific study areas, such as data analytics. This shift is driven by the steep competition students face to line up their post-graduation career before day one of the MBA. Students are sometimes so focused on finding the right job that they can forget to savor the learning experience, Chicago Booth Dean Sunil Kumar told the Economist.
The biggest change the MBA faces, according to the Economist article, is the rise of educational technology. To MOOC or not to MOOC – that is, to offer some courses free of charge to students around the globe via online platforms – is a question business schools are grappling with. The University of Pennsylvania’s Wharton School recently announced that it will offer its core MBA courses via MOOC, and HBS is also developing online courses.
But beyond giving classes away for free, how and when business schools embrace distance learning as part of their for-pay offerings will likely prove the hottest arena to watch, the Economist suggests. The University of North Carolina’s Kenan-Flagler Business School blazed the trail, with the debut last fall of its MBA@UNC program, an online MBA program that can be completed in 18 months. UNC currently enrolls approximately twice as many students in its online program as in its full-time, on-campus program – and it charges the online students more, the Economist reports.
According to Douglas Shackelford, who directs the MBA@UNC program, online classroom technology has now reached a tipping point, where it is at least as good as a real classroom and in some respects even better. MBA@UNC classes are capped at 15 students, all of whom can interact with each other from locations around the globe. Professors, likewise, can lecture from India, France and across the United States. And those lectures are available 24/7 for students to watch as often as they like, at their own pace.
Business schools, though, should take heed, the Economist article suggests. Because as MBA students are given more choice as to how to obtain their degree, business schools may be forced to compete on price, many for the first time.
