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Growth In Part-Time MBA Programs Driven By Innovation In Learning Technology

Innovation in technology and the changing nature of the workforce have chipped away at the traditional degree's appeal – driving the popularity of part-time MBAs.

Thu Jan 1 2015

The future of the MBA degree is in part time study. Innovation in technology and the changing nature of the workforce have chipped away at the traditional degree’s appeal.

Managers are under increasing pressure to progress. Since the financial crisis they have been less willing to push the stop button on their careers. Wage growth is still weak in some economies and many workers are unwilling to face lost earnings.

“Flexible study can be very attractive for some, especially those who do not want to leave their full-time employment to avoid losing momentum,” says Paula Robles, associate director at global business school INSEAD.

The cost of business education has risen. The Association to Advance Collegiate Schools of Business estimates that total MBA tuition has surged by at least a third in the US since 2007.

Students must pause their careers, miss out on salary and promotions, and take on debt to fund traditional MBA studies.

“These factors together conspire to make it extremely difficult to attend face-to-face MBAs and Executive MBAs,” says Federico Frattini, director of the Flex EMBA at MIP Politecnico di Milano, an Italian business school.

“This sure is the elephant in the room,” says Alyssa Shadinger, a senior management consultant at Protiviti – a consultancy firm whose clients include Fortune 500 companies – who is applying to MBA programs at several leading academic institutions.

As the co-founder of a non-profit company that seeks to raise money for disadvantaged women to gain an education, she knows better than most the financial challenges that prospective students face.

She has been forced to pool various funds together to finance her degree. Alyssa has been putting cash away for four years. “[But] with the rising cost of MBA programs, that still would not cover all of it,” she says. She will turn to student loans to foot the rest of the bill. This is a fast growing market in the private sector.

More than $7 billion has been loaned to students in 2014, up 25% from 2011, according to student loan tracker MeasureOne. In the US alone there is roughly $1.1 trillion in capital owed in total in federal student loans.

“For us as there has been a [funding] void over the past years because of the financial crisis,” says Ashley Arnold, director of MBA recruitment at Henley Business School. “Even though the economy is improving, it’s still tough out there,” he says.

There is increasing demand in flexibility from students – a result of frequent business trips, unpredictable schedules, and family commitments, according to Federico at MIP.

“The market of university and post-graduate education has recently witnessed a steep growth in digital learning MBAs,” he says.

Approximately 80% of the Flex EMBA is taught through online channels. “This innovative teaching approach enables students to keep pace with the program,” says Federico.

A fall in applications has pushed business schools to close full-time MBA programs altogether.

Virginia Tech last year made the decision to go fully flexible – offering just executive, evening and weekend programs – for instance, while Thunderbird announced that following its merger with Arizona State University it will no longer teach MBA students.

Wake Forest recently announced it would move to part-time MBA programs, some of which are taught through digital channels, and Miami University has similarly moved away from the two-year model that is the bedrock of US business education.

These new formats allow students to avoid losing career momentum, a huge slice of their bank balance as well having to gamble on the strength of the jobs market at a later date.

Business schools are often reluctant to turn to online formats for fear of losing market share and the large fees associated with traditional MBA programs, but there has been a huge increase in the provision of distance learning and short executive courses.

“Now [that] the competition has increased – and more companies are offering programs to their employees – universities are growing their programs and class offerings,” says Peter Methot, managing director of executive education at Rutgers Business School.  

There has been a preference for nurturing talent inside companies and this is fuelling a boom in executive education. Many banks in Europe, for example, are bringing in more analysts through graduate programs for in-house training.

Businesses are funding managers through specialist degrees that focus on one or two functions, such as marketing or finance.

“It’s a matter of specific goals and backgrounds,” says Alessandro Arbore, co-director of the Executive Master in Marketing and Sales, taught jointly by SDA Bocconi School of Management and ESADE Business School.

The course tends to bring in savvy executives but at the other end of the spectrum, pre-experience degrees are also catching on.

Masters in Management programs, long popular in Europe, are gaining ground globally and the US is one of the fastest growing markets. Usually one year in length, they aim to fast-track fresh college graduates into careers.

“MiM programs are becoming more popular in the US because of demand from both students and employers,” says Derrick Boone, associate dean for the MA in Management program at Wake Forest.

The pace of innovation is driving this trend. Rapid changes in technology are spurring more managers to study from a distance. Education marketing consultancy CarringtonCrisp forecasts that three-quarters of prospective business students would prefer to shape study around their current careers. 

Education tech companies – such as Coursera and FutureLearn – believe that the future of business education is in the online world, and part-time study is increasingly taking this form.

“Both our domestic and international students appreciate the opportunity to undertake self-paced learning of foundational and technical content in [an] online [format],” says John Shields, deputy dean at the University of Sydney Business School.