The MBA Market: Just Another Cyclical Downturn Or A Major Reset?

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Face-to-face MBA programs experienced an 11% decline, while exclusively online MBA options soared by 40% and blended online MBA programs increased by 10%, according to an analysis of AACSB data by Everspring, a firm that assists schools with their online initiatives (see table below). “The well-documented move to online or hybrid modalities is a sign of things to come, not only for MBAs but for all fields of study,” according to Everspring. “This is especially true in graduate education, where prospective students are often working adults who put a premium on flexibility.”

THE MIGRATION TO ONLINE & HYBRID MBA SOLUTIONS

When Everspring segmented the MBA market into four parts: giant programs with between 420 and 1,500 enrolled students; scaled programs with 225 to 420 students; mid-sized programs with 110 to 220 students, and finally what it termed “room to grow” programs with fewer than 110 enrolled students, the analysis revealed some fascinating conclusions.

“Between 2016 and 2021, programs in the Room to Grow quartile have been in a continuous state of decline, with enrollments decreasing by a 5.8% on a compound annual growth rate (CAGR),” according to Everspring. “During the onset of COVID in 2020, enrollment declines of Room to Grow programs slowed but persisted. At the opposite end of the spectrum, we found that programs in the Giant quartile grew over the last five years and after the onset of COVID. Programs within the Giant quartile were more likely to be online and at a public institution.”

‘THE MBA PROGRAM LANDSCAPE HAS SHIFTED SIGNIFICANTLY IN THE LAST 24 MONTHS’

The online education firm also found that programs with the largest numbers of enrolled students were more likely to have increased their enrollments more than the smaller programs. “For example, programs in the Giant and Scaled quartiles had a five-year CAGR of 3.8 percent and 3.4 percent, collectively, adding nearly 10,000 students over the last five years,” according to the study. “Conversely, the CAGR of programs with less than 110 students collectively shrank by 4.8% over that period.”

“The MBA program landscape has shifted significantly in the last 24 months,” notes W. Brooke Elliott, executive associate dean of  academic programs at the University of Illinois’ Gies College of Business. “The pandemic inspired many individuals to re-evaluate their personal and professional choices and to take action, often through education, to change their current path.”

The bottom line is that the MBA is very much alive and well but the mode of delivery has changed dramatically and for the long-term.  But the current decline in MBA applications, particularly among domestic candidates, is not likely to recover to historial levels, especially for the lower-ranked business schools.

‘PROGNOSTICATIONS OF THE DEMISE OF THE U.S. MBA ARE PREMATURE’

Yale’s Jain puts it this way: “Despite economic dislocations of the last three decades and technological disruptions such as the growth of online MBA options and the advent of MOOCs, full-time MBA programs at top-tier U.S. business schools have continued to grow and gain market share with respect to enrollments and applications. They continue to attract the very best MBA aspirants, and the academic quality of their matriculating classes remains unrivalled globally. Few schools outside the U.S. can match the top-tier schools’ student quality and selectivity. It is not surprising that their graduates remain greatly sought-after by employers. Top tier US schools also remain intellectually vibrant.”

He does add an important caveat. “While no school can be complacent about its current status, historical data suggests that prognostications of the demise of the U.S. MBA are premature, especially at the top end of the sector. But competition remains fierce, giving rise to relative movement among schools both within and across tiers.”

DON’T MISS: MBA IN DECLINE: NOT AT THE TOP-TIER SCHOOLS or POETS&QUANTS’ 2021-2022 TOP 100 MBA PROGRAMS IN THE U.S.

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