The Future of the MBA
How Enrollment Trends Are Changing Business Education
- Students are losing interest in traditional MBAs, which is driving business schools to innovate.
- Professionals are reluctant to leave their jobs to enroll in full-time programs.
- The MBA will have to adapt to changing times and preferences, otherwise it won't survive.
For business schools around the country, business is anything but usual. Since fewer Americans are willing to drop out of a strong economy to earn a graduate degree, enrollment in MBA programs is shrinking. Decades of declining job satisfaction also suggest that many professionals are tired of trading hours for dollars. Instead, they crave specialized, meaningful, and creative work -- aspirations not always prioritized by traditional business programs that emphasize the bottom line.
These trends invite an important question: Has the MBA lost its luster, or can business schools find new ways of attracting applicants who are both values-driven and cost-conscious? Fortunately for students, the MBA is still a highly regarded degree; in fact, the Graduate Management Admission Council (GMAC) reports that overall enrollment that includes international business schools remained steady between 2016 and 2017. Increasingly, however, American students are choosing nontraditional business programs with leaner, cheaper, and more flexible MBA options.
What's Behind Declining Interest in MBAs?
According to a 2018 survey conducted by GMAC, applications to MBA programs in the United States dropped by 7% in 2017, with 70% of full-time MBA programs reporting some level of decline. This trend began around 2014, and now even elite programs -- including Stanford, Harvard, and UPenn -- are feeling the effects.
- Relative Change Trends in MBA Application Volumes Over Time Vary by Program Type
This isn't totally surprising. For the average American worker or recent college graduate, the opportunity cost of dropping out of a strong economy to attend an expensive, full-time MBA program is enormous. On top of high tuition, students who can't continue working while in school face a loss of income for two years, a double whammy that hits young professionals hard -- particularly those contending with rising costs of living across the country.
Another issue is that young professionals increasingly want innovative and specialized degrees, but many business programs are old-fashioned, offering cookie-cutter curricula that don't prepare students for modern business challenges. "The business of business education is changing," said Prashant Malaviya, senior associate dean for MBA programs at Georgetown University's McDonough School of Business. "The MBA market has matured, meaning that it is seeing stagnant growth and little differentiation among programs."
[A] master of science degree in a niche business area, such as finance or business analytics, may be more economical than a generalized degree like an MBA.
In an interview with BestColleges, Malaviya explained that "there has been a shift in the business education industry to one-year specialized master's programs, which are a more cost-effective option for professionals earlier in their careers to gain an advanced degree." In today's job climate, this means a master of science degree in a niche business area, such as finance or business analytics, may be more economical than a generalized degree like an MBA.
While cost and specialization are primary considerations among many would-be applicants, some aspiring MBA grads in the United States are simply setting their sights overseas, according to U.S. News & World Report. Some international MBAs are shortened into an 18-month format, and the relative strength of the dollar can make these programs more economical. And while some Americans are heading abroad, competition from a growing number of international business programs in Asia and Europe has reduced the number of foreign applicants to American MBA programs.
The Wall Street Journal reported in November 2018 that enrollment of international students at American colleges and universities fell for the second consecutive year. In addition, GMAC reports that while U.S. applications are down, applications to full-time MBA programs in the Asia-Pacific rose by 75%. At the graduate level, new international enrollments in the United States decreased by 5.5% overall, although China -- the top exporter of international students to the United States -- contributed 2% more students than the previous year.
- Absolute Change Analysis by Total Application Volume
While the causes of shrinking international enrollment aren't fully known, Inside Higher Ed attributes part of the decline to the unpopularity -- and sometimes the direct effects -- of the Trump administration's policies. For example, the total number of students from countries affected by the president's travel ban decreased dramatically for the 2017-18 application cycle.
No matter the causes, prospective students should be aware of how these changes are affecting MBA programs nationwide. Some business schools have created bespoke online degrees for working professionals, innovated their curricula to be more cutting-edge and socially relevant, or lengthened or accelerated completion times to fit unique student needs. Other programs, however, may simply be falling behind the times.
The Future MBA: Flexible and Affordable
Decreasing enrollment has an obvious negative effect on U.S. business schools, but it may prove beneficial for newer applicants. For starters, the admissions process for even top programs may be less competitive the longer this trend continues. But more importantly, lower demand will incentivize programs to innovate their curricula, cost structures, and delivery methods. For example, GMAC reports that part-time, self-paced, and flexible MBAs have all weathered enrollment fluctuations better than full-time business degrees.
One surprising development is that some regional public universities have seen their MBA enrollment grow. The Washington Post reports that Fitchburg State University in Massachusetts, Louisiana State University at Shreveport, and the University of North Carolina at Pembroke have all bucked the larger national trend because they've embraced cheaper, accelerated, or online MBA options.
"The only way to survive is to adapt to the shifting climate," according to C. Tad. Brinkerhoff, director of MBA programs for the University of Illinois Gies College of Business. "That is hard for universities who are used to a system that sometimes does not encourage innovation. ... Schools are going to have to be very good at knowing their mission and competitive advantages and then executing in those areas. Otherwise, they won't survive."
“The very nature of work is changing … so the way we educate and train future leaders and employees will have to change in parallel.”
Brinkerhoff described to BestColleges how Illinois Gies launched an iMBA program with Coursera at a reasonable price point compared to the average MBA. Total tuition is just $22,000, significantly more affordable than the $180,000 price tag some schools charge. Brinkerhoff suggested that business schools are innovating programs in response to shifts in the overall economy. "The very nature of work is changing … so the way we educate and train future leaders and employees will have to change in parallel."
For its part, Georgetown is recruiting its first class of "flex MBA" students. Malaviya explained that the program will "better allow [business] students to manage full-time work, family time, and their education. Through new formats, including hybrid classes, the addition of Saturday electives, and the ability to shrink or stretch the duration of the program from 2.5 to five years, our students can build a program that works for their individual needs."
The rise of regional public universities, as well as the expansion of nontraditional MBA programs like Georgetown's "flex MBA," are both positive outcomes for students who want to take advantage of high-quality business programs without the cost or rigid structure of full-time programs. These MBAs may also foretell a future in which business education actively adapts to the needs of a cost-conscious, tech-savvy, and socially conscientious generation of business professionals.
Toward a High-Tech, Socially Responsible MBA
Other than providing more affordable and flexible MBAs, some business programs are trying to make their concentrations more high-tech and cutting-edge. To compete with one-year specialized master's degrees, for example, many schools are beefing up their concentration options by offering MBAs in areas such as business analytics, cybersecurity, and financial technology.
Since cross-disciplinary expertise is a valuable asset in business, the so-called "tech MBA" may be the model for the future, developing skills that target specific industries in technology hubs like Silicon Valley. The Cornell "tech MBA," for instance, teaches students about data science, the fundamentals of modern software, and designing data products in an intensive one-year format.
“The only way to survive is to adapt to the shifting climate ... Schools are going to have to be very good at knowing their mission and competitive advantages and then executing in those areas. Otherwise, they won't survive.”
A tech upgrade may not be enough to assuage doubts about the value of MBA degrees, however. Some of the latest shifts in the business education landscape may stem from criticism -- some of it from the inside -- concerning issues such as corporate responsibility. Martin Parker is a professor of organization studies at Bristol University in the United Kingdom and has taught at business schools for more than 20 years. In an interview with The Conversation, he pointed out how disconnected business schools are with some of the challenges society faces today:
"They rarely engage with the challenges of a low-carbon economy, of the shorter supply chains that we need to encourage localisation, and the need to address social justice and inclusion."
In an age of extreme wealth inequality, an overriding worry may be that business programs do little to thwart the attitude that "greed is good" or to promote leadership values that do more than protect the bottom line. Business operates in a larger social ecosystem, and many rightly argue we should demand more from corporate and financial leaders in the 21st century.
“The skill set required for our leaders has changed ... [It] is increasingly important that MBA graduates are able to approach problems with an innovative mindset.”
Fortunately, some university administrators recognize the need for change and innovation. Among them is Barbara Bickart, the senior associate dean for MBA programs at Boston University's Questrom School of Business. In an interview with BestColleges, she described the qualities needed in today's leaders:
"The skill set required for our leaders has changed," Bickart explained. "[It] is increasingly important that MBA graduates are able to approach problems with an innovative mindset … and to understand and assess the consequences of organizational decisions for the workforce and society at large."
Many business schools have started thinking along these lines, developing their programs to be more socially responsible and ethically minded -- largely through new concentrations, coursework, and research centers. At BU Questrom, Bickart described the school's "social impact" MBA and additions related to energy and sustainability:
"The Social Impact MBA offerings are tied to the Questrom Susilo Institute for Ethics in the Global Economy, as well as the Boston University Institute for Sustainable Energy, which is housed in the Questrom School of Business. Students with an interest in social entrepreneurship can also take advantage of the programs offered by Innovate@BU and the BUild Lab, a workspace for new ventures."
So Is an MBA Worth It?
Change is a principle not lost on business schools, to say nothing of laws like supply and demand. From a certain point of view, the MBA has proven remarkably adaptive to shifting preferences and economic conditions. From another, significant progress still needs to be made to temper the MBA into a sharpened tool for the modern age -- one that business leaders can use to encourage a more inclusive, equitable, and greener future.