Online M.B.A.s Overtake Residential Programs

In a watershed moment for graduate-level business education, more full-time M.B.A. students were enrolled in online programs than residential ones during the 2020–21 academic year. According to data from the Association to Advance Collegiate Business Schools (AACSB), the leading business school accreditation agency, 45,038 students were enrolled in online programs last year, while 43,740 were in person.

The shift to online classes during the pandemic expedited the growth in online M.B.A.s, but trends have been pointing in that direction for years. AACSB data show that the number of accredited business schools offering fully online M.B.A. programs increased by 54 percent between the 2012–13 and 2016–17 academic years, and another 85 percent between then and 2021–22.

“The growth has been slow and steady,” said Sean Gallagher, executive director of Northeastern University’s Center for the Future of Higher Education and Talent Strategy. “The pandemic and the shift to online work and learning just took this trend that was already in place and accelerated it.”

It helps that employers have become more accepting of online M.B.A. programs in recent years. A study released last December by the Center for the Future of Higher Education and Talent Strategy found that 71 percent of employers now view business degrees acquired online as equal to or better than traditional programs in quality. That’s up 10 percent from 2019.

“Today, a strong majority of employers will welcome your online M.B.A.,” Gallagher said. “But it would have been a minority just seven or eight years ago.”

Early Adopters

When the University of Illinois at Urbana Champaign’s Gies School of Business launched its full-time online M.B.A. program in 2016, there were only a few online M.B.A. programs available from accredited, highly ranked business schools. Indiana University’s Kelley School of Business had launched the first one way back in 1999, but when the University of North Carolina at Chapel Hill launched MBA@UNC in 2011, that started a “chain reaction” of similar programs across other highly ranked accredited business schools, Gallagher said.

W. Brooke Elliott, executive associate dean for academic programs at Gies, who was involved in the launch of the iMBA program back in 2014, said the school was motivated in part by growth in online M.B.A.s but that disrupting a competitive market and differentiating themselves to applicants were major factors as well.

“The traditional M.B.A. market is extremely competitive, particularly for public institutions,” Elliott said. “We were trying to think about how we could be innovative.”

Elliott emphasized the accessibility of online programs compared to more expensive, less flexible residential ones. Tuition for the iMBA costs roughly $23,000 a year—barely a third of the average price of full-time residential M.B.A. programs. As a result, Gies saw its online M.B.A. applicant pool make significant demographic shifts.

“About a quarter to a third of our applicant pool is still the typical M.B.A. student … the rest of them are outstanding students with great stories, but graduate education just wasn’t normally accessible to them,” Elliott said.

Cost wasn’t the only factor that expanded applicant pool for Gies. The program’s flexibility attracted a slew of students whose mitigating circumstances would otherwise prevent them from pursuing a residential M.B.A., from mothers with young children to those serving in the military. Elliott said they even had applicants living on submarines.

“That’s one of the coolest things about online education … if you look at the learners that you draw, they’re diverse in ethnicity, gender, background and experiences, in where they live in the world,” Elliott said. “You would never see that at a traditional M.B.A. program.”

Gies’s iMBA program has grown substantially every year since its launch, from an initial cohort of 116 students in 2016 to over 4,600 students this academic year. In fact, it proved so successful and cost-effective that Gies stopped offering a residential M.B.A. entirely in 2019.

If the online M.B.A. was on the rise before COVID-19, the pandemic put it into hyperdrive. When Gies stopped offering residential M.B.A.s, about 2,600 students were enrolled in its iMBA program. Over the course of the pandemic, its enrollment grew by another 2,000 students—thanks in part to Gies laying the groundwork early for a successful online-only business education, Elliott said.

“The education market was changed dramatically by the pandemic,” she said. “Even the strongest residential programs with the greatest reputations … didn’t have the expertise or the capacity to, on the fly, develop and deliver a high-quality [program] that was designed to be online.”

Top Business Schools Move Online

In 2010, Harvard Business School dean Nihit Nohrita was asked whether the top business school in the country would ever explore online degree programs. His answer was curt and definitive: “Not in my lifetime.”

That attitude was shaped by an assumption that online M.B.A. programs were inherently lower quality, Gallagher said, in part because of their association with for-profit institutions without AACSB accreditation, like the University of Phoenix and DeVry.

“If you go back almost 20 years, there were very few top-ranked business programs offering online degrees,” Gallagher said. “A couple of years later, the market had shifted in such a way that they began to embrace it.”

By the mid-2010s, schools like Harvard and Stanford began offering some online classes toward business degrees. But it was only after the pandemic, when expanding into online learning became a temporary necessity, that top-10 business schools started exploring flexible options to earn most or all of an M.B.A. online.

One of those new offerings comes from the Haas School of Business at the University of California, Berkeley. The school’s new Flex option, which will enable a cohort of students to earn their M.B.A.s online part-time while offering optional in-person opportunities, is in the process of enrolling its inaugural class.

Jaime Breen, Haas’s assistant dean for M.B.A. programs, said that applications for the Flex option were “as strong or stronger” than the normal pool for the part-time program, and that applications from women and active military members increased significantly.

At a top business school like Haas, concerns about diluting the school’s brand or offering lower-quality education could be expected to arise over online program offerings. But Breen said support for Flex was widespread among faculty, alumni and current students—partly, she believes, due to the pandemic.

“A lot of people were forced to have that [online] experience, and that challenged their inherent biases” about online learning, she said.

The Flex option is part of the Haas school’s weekend and evening M.B.A. program, and it is meant to offer more flexibility to a population of students already in need of it. Gallagher, the center director, said these part-time in-person programs are the ones most likely to be replaced by online options in the near future.

“There will always be a market for a full-time, in-person experience,” he said. “The working professional, part-time audience has mostly shifted online.”

Breen said that while there are no concrete plans for a full-time online M.B.A. program at Haas, the school is not ruling out those conversations. They’re looking closely at the growing online M.B.A. market, and the Flex program’s upcoming inaugural year, for signs that they should have them.

“This is a way for us to learn and gain experience,” she said. “Part of the rationale behind [Flex] is that we need to have this capability in order to meet the market where it is.”

Ahead of the Curve?

Business and business-adjacent programs have long been on the leading edge of online education. In 2016, there were nearly 7,500 online programs in business, management or marketing—nearly 3,000 more than the closest competing field, according to a 2019 study by the Center for the Future of Higher Education and Talent Strategy.

Elliott, from Urbana-Champaign, said that the launch of the iMBA program inspired other online graduate degree programs across the university, including one at the Granger School of Engineering.

“Business schools are a leading indicator of what might happen in other areas of graduate education,” Gallagher said, adding that other graduate programs, especially professional degrees, are likely to follow the same trends as M.B.A.s.

In many cases, they already are. According to 2019 data from the National Center for Education Statistics, almost a third of all graduate students were enrolled full-time in exclusively online degree programs before the pandemic.

“When all of these online programs began many years ago, the narrative and the strategic assumption was that distance learning was for students who couldn’t otherwise come to campus,” Gallagher said. “That has since been proven untrue.”

For Elliott, the fact that hesitancy and stigma around online program offerings is dissipating means more opportunities for disadvantaged and nontraditional students to earn graduate degrees—and subsequently, to become more socially and economically mobile.

“Going online is a way to make higher education accessible,” Elliott said. “There are millions of people that we don’t serve as academic institutions. And I think if we come together and change the way we think about education, we can do a real social good.”