The University of Illinois’ Gies College of Business has become the latest school to announce that it is getting out of the full-time, on-campus MBA market. Instead, Gies will focus more aggressively on its online MBA option, the $22,000 iMBA, which has seen big growth since being launched in 2015 (see Illinois To End Full- And Part-Time MBA Programs On Campus).
Why is Gies giving up on its full-time MBA? For one thing, the school admits it is losing money on the program. While it may surprise many observers given how high tuition rates are for MBA programs, many of these programs are actually loss leaders or “show” programs to get a U.S. News ranking. Secondly, applications to most MBA programs have been declining for years, evidence that there is less interest in the degree.
Just look at the numbers at the University of Illinois’ full-time MBA, ranked in the top 50 by U.S. News. Applications to Gies’ full-time program fell to 290 this year from 386 in 2016. The school actually 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 a class of 47 students.
There are a surprising number of schools in this same predicament. They have sub-optimally sized programs that cannot support the expenses required to deliver a quality program. And that is why we have seen a number of schools drop out of the full-time MBA market. The list includes the Univesity of Iowa, Wake Forest University, Thunderbird School of Global Management, Virginia Tech, and Simmons College.
Many are putting more resource behind their undergraduate business programs, specialty master’s in business, and online MBA programs. Today, nearly 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. Applications to its iMBA are expected to hit 3,200 this year, up from 1,099 in 2016, even though the program isn’t yet ranked among the best online MBAs in the U.S.
You can blame four things for the fact that there are fewer MBA applicants in the full-time pipeline:
- The strong U.S. economy
- The rising cost of MBA programs and the unwillingness of many millennials to go into substantial debt to get the degree.
- Donald Trump who has scared off thousands of international candidates who had been helping to offset a continual decline in domestic applicants for a number of years.
- A greater number of shorter, cheaper alternatives to a two-year, full-time MBA program, from one-year and online options to specialty master’s degrees in such subjects as data analytics and entrepreneurship.
The irony to all this is that business schools are still flourishing because of the demand for other programs. So while more schools are expected to drop their full-time, on-campus MBA experiences, there is plenty of evidence to suggest that alternative business programs are growing and will continue to grow.
John A. Byrne is editor-in-chief of PoetsandQuants.com, the leading website covering business schools. He is also the former executive editor of Businessweek and former EIC of Fast Company.