Are MBA Programs Going to Die Out?
MBA programs were once the fastest way to catapult a business career from promising start to upper management. It was fairly straightforward — you got an undergraduate degree, spent a couple years making a name for yourself as an intelligent and hard-working young person, then spent two years getting an MBA.
Afterwards, the world was yours.
Of course, getting an MBA was always prohibitively expensive and less likely to qualify you for scholarships or financial aid. Even more than undergraduate degrees, MBA’s were the domain of wealthy, mainly white male, elites who often relied on familial support or executive sponsorship to bankroll their hefty price tags.
Still, if you could get into a good program and afford the tuition it was almost a no-brainer that completing the degree would help your career and increase your lifetime earnings.
But is that still the case? Many schools are eliminating their full-time MBA programs entirely, citing that they are losing money due to declining enrollment.
Why is Enrollment Declining?
There are many reasons for the drop in MBA enrollment.
For one, draconian immigration policies and general anti-immigration rhetoric on the part of our country’s leadership has led to a decline in international student enrollment since 2016. Traditionally, international students are a significant source of revenue for universities, as they often do not qualify for financial assistance or scholarships and pay out-of-state tuition.
Up until a few months ago, the US enjoyed high employment which removed much of the incentive for students to sacrifice their salaries in addition to shelling out high tuition costs to pursue a secondary degree.
Higher education is being disrupted, with many schools offering low-cost, online MBA programs. There are specialized Master’s programs that take less time and money, and online boot-camps that offer certifications in things like digital marketing, data science, and computer programing.
Once, employers would pay for their most talented employees to get an MBA. IBM is a notorious example of a company that would often invest in sending their future managers to business school. However, employers have stopped doing so, mainly because people are no longer spending their entire careers at one company. It doesn’t make sense to pay for an expensive degree only to have your employee leave after a couple of years.
And most of all, MBA’s are just plain expensive. They can cost over $100,000, and for full-time programs come with the opportunity cost of taking a year or two off of work. Many students are finding the ROI just isn’t there. Recently, a Bloomberg reporter provided an update on her NYU Stern MBA class, a group of students who shelled out a whopping $150,000 on their MBA programs and are now struggling to justify the cost in the current economic climate.
But Are They Worth It?
Full disclosure, I am currently halfway through an MBA program. Fuller disclosure, I’m also an employee of the school where I’m doing my program, and have my tuition taken care of by the school.
Since it’s a public school, the full cost of in-state tuition is about $50,000. Although I don’t pay tuition, I do pay taxes on the tuition as if it were salary. So, it’s not free, but it’s a lot cheaper than paying $150,000 to do an MBA at Stern.
My situation is also different than many who pursue an MBA. I’m in the NGO business development field, and I’m doing the MBA to gain business savvy, marketing skills, and organization leadership skills that I can apply to the non-profit industry and start my own social enterprise one day. It wouldn’t make sense for me to spend hundreds of thousands of dollars and expect a big return.
I already feel that my experience in the program has paid off. Taking basic courses in Accounting, Finance, Supply Chain Management, Economics and Organizational Behavior has given me a great deal of insight into how organizations are run and how the global economy works. I feel that I understand “business talk” a lot more when listening to podcasts and reading Wall Street Journal articles.
For those who do work in an industry where they can expect a significant bump in pay once they receive their degree, and MBA can be worth it even at a higher price. Especially schools like Harvard Business School and Stern have a brand name that can get you in the door at a lot of places that might not have looked at you twice without the degree.
A big drawback I would offer to those considering online degrees or certificate programs is that students lose out on the networking element. Meeting your fellow classmates, doing group projects, and sharing ideas is an invaluable part of the experience.
But is it worth $150,000? In my mind, definitely not. I would find a more economical degree program that paying full price for Stern or another expensive private school.
Will MBA Programs Survive the Pandemic?
Lots of schools are going to have a hard time justifying the continued existence of their full-time MBA programs. Enrollment is going to go off a cliff this semester, with social distancing requiring virtual classes and international students being heavily restricted.
While I think the traditional MBA does add value still, it needs to be updated.
Many schools are already moving in a new direction, offering online-only, tech and data-focused MBA programs with shorter completion times.
In my opinion, Universities have a golden opportunity to drop tuition and increase enrollment by offering much more virtual and hybrid learning options. While a virtual class does not offer 100% of what an in-person class does, technology has gotten to the point where it can get 80% of the way there.
What I find valuable about MBA programs is the balance — they educate students about a wide range of business-related topics, rather than honing in on one topic like a specialty Master’s degree does. Although this can be seen as a luxury (like liberal arts education), I believe that it is important for leaders to understand at least a little bit about every aspect of how their business works. MBA’s are perfect for that.
