Purdue Pauses Its Money-Losing, Rank-Sinking Residential MBA

Once among the top 30 MBA programs in the U.S., Purdue University’s Krannert School of Management today (June 15) effectively tossed in the towel on its two-year residential MBA offering. The decision to at least temporarily shut down the program comes after years of application declines, enrollment drops, red ink, and a freefall in U.S. News‘ rankings. The decision will not impact this year’s incoming class nor returning second-year MBA students.

The decision by Krannert Dean David Hummels follows the program’s plunge to its lowest rank ever, 80th, in U.S. News earlier this year from 50th just two years ago. In the year before Hummel assumed the deanship, Purdue’s MBA program was ranked 40th by U.S. News. In the early 2000s, Purdue’s MBA ranked 26th in Businessweek‘s MBA ranking and accepted just 26% of the candidates who applied to the school. Last year, the school admitted 59.4% of its 192 applicants, enrolling one of its smallest MBA classes ever at 46 students.

“We are pausing our recruiting efforts for the residential two-year MBA program, and will not enroll a class to begin in Fall 2021,” wrote Hummels in an email to the Krannert community. “We will use this pause to examine the residential MBA program and its long term feasibility, assess changing market demand in a post-COVID environment, and consider a radical reshaping of the degree. I have discussed this decision with Krannert faculty leadership, President Daniels, Provost Akridge and the Board of Trustees, and all agree that is the right move at this time.”

KRANNERT JOINS A GROWING LIST OF U.S. SCHOOLS THAT HAVE SHUT OR PAUSED MBA PROGRAMS

Krannert joins a growing list of business schools that have either walked away from their full-time programs or hit the pause button in the face of several years of declining applications. In April, the University of Missouri’s began informing applicants to its MBA program that it decided to temporarily “pause” it’s full-time MBA program at the Trulaske College of Business. Recently ranked by U.S. News & World Report as the 62nd best full-time MBA in the U.S., the program attracted a cohort of 32 students last fall from an applicant pool that was composed of only 64 candidates.

The University of Illinois at Urbana-Champaign last year announced that it was closing its full- and part-time MBA programs to focus more resources on its online MBA and specialty master’s programs. Along with the University of Iowa, it was the second top-50 U.S. school in the last four years to eliminate its residential MBA program. Purdue now becomes the third program in the top 50 to shutdown its two-year residential MBA based on its Poets&Quants‘ 2019-2020 ranking of 48th, ten places below its year-earlier ranking.

Hummels, an economics professor who took over the deanship five years ago in 2015, attributed Purdue’s decision to several factors, including a 70% plunge in application volume over the past ten years. “Nationwide, applications and admissions for full-time MBA programs are steadily declining as international students opt for study outside the U.S. and domestic students opt for online programs,” he explained. “Several other schools (including Iowa and Illinois in the Big Ten) have dropped their residential MBA programs, and many others have dramatically reduced the size of their MBA cohorts.

‘WE NOW SPEND CONSIDERABLY MORE TO RECRUIT A CLASS THAN WE GENERATE IN TUITION’

In recent years, the school has become increasingly dependent on international students, largely from India, China and Taiwan. With a current total residential MBA enrollment of 90 students, 58% are of the MBA candidates are from overseas.

“Following this national trend, applications for the full-time MBA at Krannert have dropped 70% since 2009,” added Hummels. “At the same time,  increased competition for applicants,  particularly domestic students,  has resulted in escalating financial commitments for marketing, assistantships and scholarships. We now spend considerably more to recruit a class than we generate in tuition revenue from that class. That is simply not sustainable, particularly in light of significant financial adjustments that are necessary in the wake of the COVID pandemic.”

Like other schools that have found it difficult to compete in the full-time MBA market, Krannert has found greater success with other programs, particularly specialized masters’ in business, an increasingly crowded field as well. “At the same time as demand for the two-year residential program has declined, market demand for other modalities and other graduate degrees has skyrocketed,” wrote Hummel.

KRANNERT WILL FOCUS ON A STRATEGY THAT INCREASES ITS ONLINE OFFERINGS

“Krannert has enjoyed great success with residential one- year programs, and we have launched a number of new online programs. Our Online MBA melds technology with business and has attracted excellent students to its initial cohorts. Our top-10 online MS-Economics program is now the largest graduate degree program in the Krannert School. In the coming academic year we will launch online counterparts to our highly ranked residential programs in Business Analytics, Human Resource Management and Global Supply Chain Management. These offerings will serve the large and rapidly growing market of working professionals who do not wish to leave their jobs and relocate to West Lafayette to further their education, and will enable Krannert to be resilient in the face of the pandemic.”

Hummel said the school would still enroll a class this fall and maintain its commitment to returning second-year MBA students. “I understand the concern this decision may present for our current students and alumni of the full-time MBA (formerly MSM) program. Let me assure you that this decision is not being made lightly. The MBA program has a proud history and has produced many of our most successful alumni. This program pause does not change that fact. We are honoring all outstanding offers of admission and aid, and are committing to our returning second-year students and our incoming class that your experience will not be affected by this decision. You will receive the same world-class teaching and experiential opportunities you anticipated and expected when you enrolled in the program.

“We teach our students to engage in rigorous analysis of data when making business decisions, and to recognize the world as it is, not how we wish it to be. The data are clear that the business education world is changing, and we must adapt with it. It is our belief that the decision to pause recruitment for the residential two-year MBA program is the best decision for our school and will allow us to best redeploy our resources moving forward.”

DON’T MISS: FOR PURDUE MBA STUDENTS, A HEARTBREAKING DECISION. FOR THE DEAN, AN UNFORTUNATE BUT NECESSARY STEP