Penn State’s Smeal College of Business To Downsize Its MBA From 2 Years To 1

Penn State’s Smeal College of Business announced on Monday (August 22) that it will close its two-year residential MBA program in 2024. The cohort admitted in fall 2022 will be the program’s last.

Instead, the business school will transition to a one-year MBA with a STEM designation beginning in fall of 2023. The new program will also replace Smeal’s one-year master’s degree in management and organizational leadership.

It is the latest prominent school to shutter its two-year, residential MBA program in the last several years. The University of Iowa’s Tippie College of Business announced in 2017 that it was admitting its last full-time cohort in 2019, focusing instead on growing its part-time program and specialized masters offerings. University of Illinois at Urbana-Champaign Gies eliminated both its full- and part-time MBA programs in 2019, devoting more resources to its disruptive online MBA program. Wake Forest exited the full-time market in 2014 after enrollments there fell from 144 in 2009 to 114 five years later. Virginia Tech and Simmons College have also shut down their full-time, on-campus MBA programs in recent years.

FOR SMEAL, A ‘FINANCIALLY RESPONSIBLE’ DECISION

Smeal’s full time program admitted 98 students in 2021, while enrolling 55 for the 2023 cohort. Its yield (the number of students accepting admission and enrolling in the program) dropped from 67.1% in 2019 to 56.1% in 2021.

Its domestic applications were also down for the cohort that arrived this fall, while enrollment dropped to 42. Enrollment is capped at about 60, according to figures provided to Poets&Quants.

While still early, a Smeal spokesman wrote to P&Q that “Some students are excited about potentially transitioning to the 1Y MBA instead of the 2Y program. Others are wondering what this shift might mean for future prospects. Faculty reception has been largely positive.”

In a release, Smeal dean Charles Whiteman attributed the closure to declining interest and demand for more flexibility, pointing to the shuttered programs at Tippie, Gies, and Wake Forest.

“For years, the number of students interested in committing to a full-time, two-year resident program has steadily decreased while other, more flexible learning options have proliferated across the country,” Whiteman says. “At Smeal, we carefully evaluated our program over several years and arrived at a solution that leverages the strength of our integrated professional graduate portfolio. We considered many factors and, ultimately, made a financially responsible, forward-thinking decision.”

Smeal, ranked No. 32 in P&Q’s latest ranking, is facing the same challenges as other top 50 schools that aren’t in the first or second tiers and without the world renowned brands to back them up. MBA watchers have recently speculated about the overall health of full-time programs at schools without international reputations. (See: Who Should & Who Should Not Apply For An MBA and Q&A With Scott Galloway: How Healthy Is The MBA?)

In its release, Smeal notes that more than half (54%) of Top 50 U.S. schools (as ranked by the U.S. News & World Report) reported declining enrollments in their full-time MBA programs in 2021. That number rises to 67% when considering programs at schools ranked 51 and below. Meanwhile, the number of GMAT takers has declined 30% from 2017 to 2021, hitting a new low of just 38,509 in the U.S.

INTEREST IN ONLINE AND HYBRID PROGRAMS CONTINUE TO RISE

Meanwhile, interest in online MBAs and other leaner, more contracted, and more specialized programs is growing. In fact, in the 2020-2021academic year, the number of U.S. online MBA students eclipsed the number in full-time traditional programs for the first time, with some 45,038 students were enrolled in Online MBA options in the U.S., compared to 43,740 in full-time programs, according to the AACSB (the Association to Advance Collegiate Schools of Business).

Case in point: Enrollment in Smeal’s online MBA has increased 167% in the past three years, from 308 unique enrollments in 2018 to 823 in 2021. Enrollment in its one-year specialty master’s degree have increased 87%, the school reports.

The school notes that the transition to a one-year program will allow it to redeploy resources to programs with unmet need, including its Ph.D. program.

A NEW STEM DESIGNATION

Smeal characterizes the transition to a one-year MBA as part of a decade-long transformation of its graduate business offerings, designed to better meet student demand for flexibility, on-demand upskilling, and customization. That includes the creation of an executive doctorate degree in business administration, a master’s degree in accounting analytics, and a redesign of its executive MBA in Philadelphia. The college also offers 14 online and resident specialty master’s degrees and 14 online certificates.

The STEM designation also puts the school in an elite but growing cohort of MBA programs. In a survey of 100 admission officers, global educational services company Kaplan and its sister company Manhattan Prep found that 22% of full-time MBA programs were STEM designated in 2021, up from 13% the year before. STEM designations help candidates stand out in several quant fiends, and also helps international students get work visas for the United States. (See: All the Major STEM Programs at U.S. Business Schools.)

Smeal’s STEM designation will help it attract top international and domestic students, particularly those looking for management positions in information technology, architecture, engineering, and other fields, the school notes.

SMEAL’S NEW ONE-YEAR MBA

Smeal plans to start with two sections of its new MBA, each with about 55 to 60 students. It is targeted to early-career professionals. Tuition will be $29,888 for in-state students, $47,704 for out of state. For comparison, tuition for its full-time program was just under $60,000 for in-state and just over $96,000 for out-of-state, not counting fees.

“We have long believed that it is time to think differently about graduate business education in America, and we have been committed to leading the way,” Whiteman says. “Today’s business leaders expect to acquire new skills on an as-needed basis and within a curriculum that can be customized to the specific needs of their role, company, industry or life stage.”

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