Do Online MBAs Expand Access to Business Education? – Natural Self Esteem

Having to save for her children’s college education and fund her own sustainability consulting business, Jennifer Saxe couldn’t afford an MBA. At least that’s what she thought until last year.

At this point, Saxe enrolled in the iMBA operated by the Gies College of Business at the University of Illinois Urbana-Champaign. It’s a fully online degree that’s part-time, allowing her to continue growing her business. And while many top schools charge six figures for a full-time in-classroom MBA, the iMBA is priced at $22,000.

“I had already liquidated my retirement plan to finance my business,” explains Saxe. “Even if I could get a loan, as a single mom I couldn’t afford to pay $100,000 for an MBA.”

Her story demonstrates the potential of online learning to democratize business education by making quality training cheaper, more flexible, and more accessible to a far larger number of 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 students enrolled, compared to just a few dozen full-time MBA students in 2019 — the year Gies retired that program. Economies of scale lower the iMBA’s cost base because it uses fewer high-wage professors to teach larger classes than would be possible on campus.

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

In principle, many online MBAs could be a lot cheaper than they are, since virtual classes lower overheads like traditional teaching institutions. Yet many colleges still charge similar prices for their in-person and online programs — Carnegie Mellon University’s Tepper School of Business, for example, charges about $140,000 for its various MBA formats.

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

Costs include paying faculty to design and update asynchronous course components — which students can take whenever their schedule allows — in addition to career services, regular residency modules, and extras like worldwide study trips. In addition, regular investments are required to keep the IT infrastructure and software up to date and to train the teaching and support staff.

“For a top-notch business school, there’s always a dilemma between a prestigious pricing positioning and a strategy that’s more focused on accessibility, scale, and reach,” says Barniville.

Some institutions say smaller class sizes improve academic outcomes, underscoring a divergence in approaches to online learning.

“In a smaller group, there is a lot of interaction between participants,” says Leonardo Meeus, academic director of the online MBA at Belgium’s Vlerick Business School. “We didn’t design our program to be cheaper. We wanted the same experience as a regular MBA – so we didn’t go for a large cohort.”

Compared to campus students, financial considerations play less of a role for online participants as they are typically high-level professionals looking to increase their already significant earning power.

“For online students, funding isn’t such a big issue because you’re just paying the tuition — there’s no opportunity cost of not working, no lost income,” said Amir Michael, associate dean of MBA programs at Durham University Business School in the UNITED KINGDOM.

But against a backdrop of rising 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 Indiana University’s Kelley School of Business in the United States USA .

He calls raising fees a “perverse incentive” to attract the top earners, who will achieve the best career results and boost their alma mater’s position in MBA rankings. “The game is almost stacked,” he says. “There’s a self-preservation about some of the inequality.”

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

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

Although online learning could in principle be a global playing field, online MBAs primarily appeal to local learners. This is partly because some countries — notably China and the US — either do not recognize online degrees from foreign institutions or restrict access to post-graduate work visas for online students as opposed to on-campus foreign students.

Additionally, coordinating live lectures across multiple time zones presents 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 get the brand off the ground 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 like Coursera to educate students in countries they probably couldn’t reach on their own, they need to share revenue with these platforms to host and market their MBAs.

But as online learning comes of age during the pandemic, ESMT’s Barniville predicts that competition for students in a free-market system will drive down fees. “If you’re one of the very few players in a market, you can charge whatever you want. But as more competitors come in, the landscape will change.”

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