The Rise Of The Accelerated MBA

When the University of Arizona’s Eller College of Management announced in November that it’s launching a one-year master of business administration program next summer, it joined a growing number of business schools responding to prospective students’ worries about the return on investment of a traditional two-year MBA.

While the two-year MBA has long been considered the gold standard of graduate business education, data suggests that may be changing.

Between 2019 and 2024, the number of one-year MBA programs in the United States, Canada and Latin America accredited by the Association to Advance Collegiate Schools of Business increased from 131 to 210.

Declining enrollments over the past several years have also pushed other big public universities—including Pennsylvania State University, Virginia Polytechnic Institute and State University, and the Universities of Iowa, Connecticut and Illinois at Urbana-Champaign—to move away from offering traditional two-year MBAs and toward a mix of online, hybrid, part-time and accelerated options.

“People are really noticing the cost of staying in school one year longer,” said Stephanie Bryant, the AACSB’s executive vice president and chief accreditation officer. “There’s also a real desire for more flexibility, especially for people who are working full-time and getting their MBA on the side.”

SHIFTING MARKET DEMANDS

The availability of other specialized one-year master’s degrees—such as marketing or accounting—has also created stiff competition for more generalized two-year MBA programs. Additionally, some of the major business management consulting firms, such as McKinsey & Company, no longer require applicants to hold an MBA.

“No longer do you have the market demanding an MBA The market may demand a master’s degree, but a one-year specialty master’s might do just fine,” Bryant said. “So the MBA program now has to compete with that.”

In spite of tuition waivers and graduate assistantships for the majority of its admitted students, all of those market factors contributed to Arizona’s years-long struggle to attract students to its traditional two-year MBA program.

“Applicants continued to tell us that living without an income for two years was increasingly challenging,” said Pamela Jorden, assistant dean of MBA operations at UA, noting that enrollment had been declining since the late 2010s. “As the economy has changed, we keep hearing that the return on investment for the two-year program isn’t good enough.”

When the pandemic forced Arizona—and most other colleges and universities—to temporarily move toward online learning in 2020, it crystallized the demand for shorter, more flexible options to earn an MBA. In 2022, 53 percent of full-time two-year programs across the U.S. reported a decline in applications, according to data from the Graduate Management Admission Council (GMAC).

“COVID made the online MBA something [students and schools] felt a lot more comfortable with,” said Jayanthi Sunder, vice dean for programs and strategic initiatives at the Eller College of Management. “Some of that declining interest in the two-year MBA shifted into the online space, as people wanted to still get an MBA but didn’t want to commit to the two years.”

But an online version of a two-year MBA isn’t necessarily what every business school applicant is looking for, either.

“There’s still a sizable group of students who want that immersive, full-time experience and the benefits of networking and face-to-face connections with faculty, peers and alumni. They still find value in dedicating that one year of their life,” Sunder said. “This was a market demand that was still not being met.”

In its first attempt to enhance its two-year MBA program’s value, Arizona launched a dual-degree option a few years ago that lets students earn an MBA along with a second complementary master’s degree within two years.

Although students could get a second master’s in the time it once took to earn just one, “it was still two years out of their life,” Sunder said. “That met the needs of a subset of students, but we were still missing out on the large group of students who wanted the one-year, immersive, full-time experience but weren’t getting it through an online or part-time MBA.”

Reaching those students is what led the university to put its two-year MBA program on an indefinite pause (though it will still offer the dual degree) and launch its new 10-month program this summer. After making the announcement Thanksgiving week, it has already received a steady stream of applications even though the new program—priced at $32,620 for Arizona residents and $54,874 for non-Arizona residents—won’t offer nearly as much financial assistance as it once offered students in the two-year program.

“They’re saving on tuition and living expenses for one year as well as the opportunity cost of lost income,” Sunder said. “Schools that are still doing extensive scholarshipping are doing that because they have a product that’s not entirely desirable.”

‘A FINANCIALLY VIABLE MODEL’

That was one of the realities Penn State acknowledged when it discontinued its two-year residential MBA. program in 2022.

A generous financial aid package offered to most students—including tuition and a stipend—hadn’t been enough to maintain robust enrollment amid the shrinking overall pool of people interested in earning an MBA.

“In our last class, we couldn’t give enough slots away,” said Brian Cameron, associate dean for professional graduate programs and executive education at Penn State’s Smeal College of Business. “We couldn’t find enough qualified students to take the free tuition. If that isn’t a sign to get out of something, I don’t know what is. Many schools are facing this—it’s a widespread problem.”

Part of that is because the people who still want an MBA are increasingly pursuing top-ranked programs, many of which also offer financial aid packages. That makes it harder for the next tier of programs, such as those at Penn State and Arizona, to attract top students and move up in the rankings.

While GMAC’s 2024 Application Trends Survey highlighted growth in applications to two-year MBA programs in the U.S. after years of pandemic-era decline—72 percent of programs reported an increase compared to 49 percent in 2023—the top-ranked programs were most likely to see the biggest surges.

“When the Ivy Leagues offer more scholarships, they take the students that would normally come to the next tier down—the Penn States and the Big Tens—so it’s become cost-prohibitive to stay in the two-year MBA space for many schools,” he said. “When you’re paying everyone to be there, it’s not a sustainable financial model.”

That’s why Penn State transitioned its two-year residential MBA to a one-year MBA with a STEM designation aimed at early-career professionals.

Since launching the one-year MBA in fall 2023, Cameron said, “It’s taken off like a rocket,” with enrollment increasing from the lower 40s in the two-year MBA program to around 110 students in the new program.

And since the university is no longer fully subsidizing those students’ cost of attendance—and collecting $31,096 in tuition from in-state students and $51,596 from out-of-state students—it’s netted a savings and new net revenue of approximately $6.5 million a year.

“It’s a financially viable model,” Cameron said. “Many students would rather pay tuition and only be out of the workforce for one year versus getting two years for free.”

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