Is An Online MBA Worth The Money?
More business schools are offering online MBA degrees, but do they offer the same value as a traditional, full-time MBA?
Business schools are taking more of their learning online. In the past five years, the number of AACSB-accredited business schools offering online MBA programs has increased by 69%, from 97 to 164 schools.
In 2019, the University of California Davis, University College London, and Michigan Ross join the ranks of big-name schools offering online MBAs.
For business schools, going online is a way to reach a global market and diversify program portfolios to meet demand.
According to the Graduate Management Admission Council’s (GMAC) latest Application Trends Survey, 36% of online MBA programs recorded increased applications in 2018 compared with 32% of full-time, two-year MBAs.
For students, it is about flexibility; the opportunity to work, travel, and study at the same time.
Patrick Gettleman, a student on Birmingham Business School’s 100%-online MBA program, says he could not have studied an MBA without that flexibility. “Online was the only option that would work for me outside of quitting my job to become a full-time student.”
Patrick is one of 300 students who have enrolled on Birmingham’s online MBA—the first fully-online MBA to be accredited by the Association of MBAs (AMBA)—since its launch in September 2015. AMBA accreditation requires at least 120 real-time contact hours.
Birmingham splits its online MBA class by time zone, delivering fortnightly ‘live sessions’ to groups of up to 25 students, to meet this requirement.
While online MBAs have been seen as secondary to campus-based courses, such advances in technology—bringing more interactive learning experiences—mean schools are increasingly offering online MBAs as direct alternatives to the traditional, full-time MBA.
Birmingham promotes the idea of the ‘One MBA’. Whether studying online or on-campus, students cover the same content. For the 2019-20 academic year, Birmingham’s 100%-online MBA will cost over £20,000 ($25,500). Birmingham’s full-time MBA costs £27,000 ($34,400).
Dan Chicksand, the online MBA’s director, says the program offers students the same quality of learning experience as the on-campus course with a different mode of delivery. The online MBA is a program in its own right, he says, developed for the online space and priced with the global reputation of the university in mind.
Birmingham’s online MBA is more affordable than most. Both the online and full-time MBA offered by Carnegie Mellon University’s Tepper School of Business cost $132,000 in tuition alone. Tepper’s online MBA includes a residential component with ‘Access Weekends’ held several times a year.
But with students largely missing out on the campus element of the full-time MBA, is paying the same price for an online MBA worth it?
One way of considering a program’s worth is by calculating return on investment (ROI): the money paid for a program and the salary earned after it. By this calculation, online MBAs are typically less ‘worth it’ than full-time MBAs.
At Warwick Business School, full-time MBA students can expect a 77% boost on their salaries three years after graduation, according to data from the Financial Times Global MBA Ranking 2018. Online MBA graduates can expect a 34% increase. The programs cost £40,000 ($51,000) and £32,000 ($40,800) respectively.
But comparing the ‘worth’ of an online MBA in this way is misleading. First, online MBAs tend to attract an older, more experienced student, who earns more and is less likely to experience the salary jump of an early-career professional.
Second, most online MBA students continue to work, and earn a salary, alongside their studies. According to GMAC’s 2018 Prospective Students Survey, 75% of candidates for professional MBA programs (including online and standard part-time MBAs) plan to stay in full-time employment.
That means no ‘opportunity cost’ for students from taking a year or two off work to pursue the MBA. And why GMAC say it takes alumni of online MBAs two and a half years on average to recoup their investment compared with three and a half years for full-time MBA alumni.
Check Out: The 10 Best Online MBA Programs In 2019
There is more to the worth of an online MBA than money. GMAC’s Alumni Perspectives Survey of 2018 asked 11,000 business school alumni whether they found their degree personally, professionally, and financially rewarding.
79% of alumni from full-time MBAs found their programs financially rewarding compared with 69% of alumni from professional MBAs. However, alumni opinion on the personal and professional value of their MBA was similar whether they took a full-time MBA or a part-time, online program.
Leila Guerra, associate dean of programs at Imperial College Business School, says the school’s full-time and online MBAs are equivalents but not replicas—learning on the online MBA is tailored for the online space while full-time students pay more for more time and, she says, the increased networking opportunities available on campus. Imperial’s online MBA costs £35,600 ($45,400); its full-time MBA £52,000 ($66,300).
GMAC research suggests online MBA students are more likely than full-time MBA students to be motivated by career advancement—a promotion or salary increase—rather than a disruptive career change.
Yet Leila says a similar percentage of online MBA students at Imperial find new jobs after graduation. 68% of the most recent graduates changed role; 30% changed company; 22% changed location.
Despite the programs’ differences, Leila says full-time and online MBA students can get the same kind of personal and professional return:
“Every time I have seen an MBA student a few years after graduation and asked them: Was it worth it? I’ve not yet met anyone who has told me it was not. The transformation is similar whether they’re from an online or a face-to-face program.”
READ MORE: The Pros And Cons Of Online Learning
Launched in December 2017, Vlerick Business School’s 100%-online MBA—like Birmingham’s—is positioned as equivalent to its full-time program. Vlerick’s online MBA costs €35,500 ($40,400); its full-time MBA costs €38,000 ($43,200). “We don’t want an A and a B product,” says Steve Muylle, the program’s academic director.
However, Steve says the programs serve different market segments with different needs. Vlerick’s 21 online MBA students have an average age of 37, compared with 30 for the 43 students on the full-time MBA.
33% of Vlerick’s online MBA students are international, compared with 80% on the full-time MBA. Most online MBA students come from a 100-mile radius of the Brussels-based school, working locally, familiar with and attracted by the school’s brand. Around 40% of them are sponsored by their companies.
Vlerick has developed Impact Learning Indicators to understand how the program is helping students reach their goals. Students are asked about their expectations from the program, whether it has delivered on them, and whether they feel it is delivering value.
Whether they study online or full-time, the worth of the MBA for students, says Steve, is decided by their individual career goals.
The outcome of the Impact Learning Indicators is not just a financial, salary story.
“People are looking for a purpose,” Steve explains, “for something they believe in.”