Amy Kristof-Brown sees plenty of uncertainty ahead in the turbulent business education sector, but has no regrets about her institution’s decision to wind down its full-time, in-person MBA just before the pandemic.
The University of Iowa’s Tippie College of Business, where she is dean, has joined a growing list of providers turning their backs on the flagship US two-year, in-person MBA, and shifting towards alternatives that are gaining in popularity.
These include part-time and online MBAs, shorter and more specialist masters, and also undergraduate degrees with a major in business. The latter are growing in popularity — but also the subject of debate — as an early way to acquire skills appealing to students and recruiters, and even as an alternative to a postgraduate degree.
“The type of qualification, the format and content are radically changing,” says Prof Kristof-Brown. “We’ve got to find ways to continue to provide people with new educational opportunities.”
Tippie’s dean says graduates want more flexible ways to study so they can train for internal promotions, stay up to speed at work or prepare for career changes. But “they are taking their education into their own hands. They don’t want to quit their job but continue working while studying. We’ve certainly seen demand for programmes that are more flexible”.
In recent years, Penn State, Arizona State University’s Thunderbird School of Global Management, Wake Forest in North Carolina, Virginia Tech, Simmons College in Boston, and the University of Illinois at Urbana-Champaign have all closed their full-time MBAs in response to shifts in demand.
The latest survey of admissions by GMAC, which runs the GMAT business school entry test, showed a 3.2 per cent drop in graduate management education applications in the US last year, with a larger fall for international students. Among the business schools that responded, 65 per cent reported higher applications than 2022 for full-time, one-year MBAs and 58 per cent had more applications for online MBAs. By contrast, less than half experienced an increase in applications for more traditional US full-time two-year MBAs.
Inflation-adjusted average salaries for US-based business degree graduates, four years after graduating have also been dropping, according to an analysis by the workforce data company Revelio Labs. MBA pay remains attractive, though, and outperforms the alternative degrees.
But, while the top “M7” US business schools report robust demand for their MBAs, even they are seeing uncertainty. Late last year, Harvard reported a drop in the share of its alumni with jobs three months after graduation. Meanwhile, Chicago Booth has decided to launch a one-year masters in management as an alternative to its MBA.
Susan Fournier, dean of Boston University’s Questrom School of Business, added to the shake-up by launching an online MBA for just $25,000. She is now preparing “a total re-do in the undergraduate degree, designing it from ground zero, promising to be really disruptive” organised around “capacities” rather than functional skills.
Overall, the long term trend for business education still looks positive. US official data shows that, while the number of masters degrees in all subjects has nearly trebled in the past 50 years to nearly 900,000, those focused on business have jumped from 11 per cent to 23 per cent.
Similarly, while the total number of bachelors degrees awarded in all subjects has more than doubled to above 2mn annually over the same period, the proportion taking business has risen from 14 per cent to 19 per cent — the single most popular major in the US, ahead of healthcare.
“There is a lot of demand for business from students — and their parents,” says Erika Walker, senior assistant dean for instruction at the University of California’s Berkeley’s Haas School of Business. Haas has changed its rules to allow high school seniors to apply to Berkeley for a guaranteed place on a business major before they begin their undergraduate studies, rather than competing for limited places which, in the past, were only granted in their third of four years of university study.
Competition had led to potential students who were keen to major in business accepting places elsewhere to guarantee a spot on their course of choice. And those who did attend Berkeley were sometimes less focused on teamwork and co-operation than fighting off rivals as they sought scarce slots for themselves, Walker says.
She points to a shift in recruitment trends, with internships that may later lead to jobs being offered ever earlier during undergraduate courses. “There has been a shift in employer behaviour in the last decade: they recruit earlier and students are vying for internships. Education is becoming a more transactional commodity, with more focus on getting jobs and less emphasis on discovery.”
Andrew Karolyi, dean of the Cornell SC Johnson College of Business in Ithaca, New York state, also observes a growing requirement for “return on investment” among potential undergraduates — reflected in greater demand to major in business.
“Many families want their children to learn at the very best institutions but also to know, once they are successfully matriculated, that they have taken courses that will make them better prepared to contribute positively in the workforce and accordingly rewarded,” he says.
Along with a number of other deans of “comprehensive” US schools offering both undergraduate and masters-level business degrees, he calls for greater scrutiny of the “societal value added” that universities provide.
They are seeking evaluations that focus on measures such as access and affordability, exploring how far universities fulfil a public mission of social mobility by recruiting a high proportion of students traditionally under-represented in university, and offering a degree that is relatively cheap.
Some of that data is easy to obtain; other statistics are more complex or inaccessible to collect or interpret. Nonetheless, official Department for Education statistics already provide a start: they include data that shows salaries of students who received financial aid for business majors, and the net debts they incur (see table below). That puts Berkeley at the top for those who can get in.
Barbara Coward, founder of MBA 360 Admissions, a consultancy, argues that employers love “a winning combo” of an undergraduate business degree and a one-year specialised masters with quantitative skills such as business analytics — a route that is cheaper for student and company alike than MBAs. But still, she admits, “I think the MBA has that status that is alluring.”