Online MBA Programs: What to Know Before Applying and How Much They Actually Cost
A master’s of business administration or “MBA” is one of the most versatile and marketable degrees you can earn. In fact, 89% of U.S. corporate employers that participated in a recruiting survey by the Graduate Management Admission Council (GMAC) said they plan to hire MBA talent next year.
MBAs combine multiple disciplines, ranging from economics to entrepreneurship. As a result, graduates are able to find jobs across different industries, including finance, consulting, healthcare, management, and IT operations. Degrees can be general or specialized, with STEM-certified programs being the most sought after right now.
While it is true that residential programs have seen a decline in applications for the past few years, interest in online MBAs is surging. The council's latest survey found that, last year, most online MBA programs in the U.S. saw a 50% increase in applications compared to the previous year — outgrowing all other types of MBA programs.
One of the most recent success stories has been the University of Illinois’ iMBA program, which started with just 114 students in 2016, and last year had nearly 3,000 students enrolled. Boston University’s Questrom School of Business also doubled its spots for its online MBA program this year, going from 200 to 400 students. It expects to enroll as many as 1,000 students by 2023.
Stacey Koprince, lead of content and curriculum at Manhattan Prep, a test preparation agency, says this is a trend that will likely continue. “Even pre-pandemic, people had already been choosing these alternative kinds of programs that aren't the traditional full-time,” says Koprince.
Now that the coronavirus pandemic has shaken the economy, prospective students could be even more hesitant to quit a job or relocate to enroll in a graduate degree program. “Those two things are hugely, financially impactful,” says Koprince, which is why more people are choosing online programs that make it easier to keep their jobs as they study.
Emerging technologies have also played a big role in the growth of online MBAs. When online MBAs first emerged, there was a stigma that they weren’t as valuable or as high quality as residential programs. This was mainly due to the lack of interaction with peers and professors.
But a lot has changed in the last few years, with schools investing in digital tools that allow students to attend both live and pre-recorded sessions and participate on message forums and videoconference discussions. Some schools have also incorporated residencies, internships, and other networking opportunities as part of their online curriculum for a richer experience.
“This not only breaks the stigma for students, but it also breaks the stigma views of the recruiters,” says Idie Kesner, dean of the Kelley School of Business at Indiana University. “And, so, we're seeing recruiters who value the online MBA, as much as they do the full-time residential MBA,” she adds.
The improvement in course delivery and available experiences have also caused a shift in demographics at some colleges. Typically, online students used to be older than their residential counterparts, and were more interested in advancing their careers rather than switching industries. Now “the profile of the online MBA student is very similar to that of the full-time residential program,” says Cindy McCauley, executive director of Online Masters Programs at Carnegie Mellon's Tepper School of Business. “Our students average around 6 years of work experience, and most have undergraduate degrees in engineering, business, or economics,” she adds.
Why Get an Online MBA?
Pursuing an online MBA has many advantages. One of the biggest ones is that you may save money. Although some online programs have the same tuition costs as their residential counterparts, others are cheaper. You also don’t have to worry about relocation costs, or finding housing in a new city.
And of course, if you’re currently employed, you’ll likely be able to keep your job while you study, rather than taking a two-year break and living without a salary. Many employers in the U.S. also provide tuition reimbursement for their employees, ultimately reducing your out-of-pocket costs.
Besides the likelihood of a lower cost, online programs offer flexibility like no other: you can take many of the classes at your convenience, and learn at your own pace. Some institutions offer both asynchronous and synchronous courses. This means that you can watch a pre-recorded class on your own time while having breakfast or participate at the same time as your peers in an evening class.
Acceptance requirements tend to be less strict than with residential programs, especially when it comes to scores, says Linda Abraham, CEO of Accepted, a company that prepares students for the college admissions process. That’s mainly due to the fact that the typical online student is “older and has more work experience under their belt” than the average residential student, she says. And, so, a high GMAT or GRE score is not as crucial to the admissions process.
Another advantage of online MBAs is that some programs can be completed in as little as 12 months, instead of the average two years it takes for a full-time program. However, these accelerated MBAs require students to juggle more classes at the same time.
Still, online programs do come with some challenges, such as balancing work and family life, along with studying, often at home. “Many of our students have spouses, kids, and parents to take care of,” says Douglas A. Shackelford, dean of the Kenan-Flagler Business School at the University of North Carolina-Chapel Hill. “So, it takes a lot of self-discipline,” he adds.
Because of the lack of in-person classes, most online programs require students to engage frequently on message boards and discussions, so you will have to be very intentional about establishing priorities in order to succeed.
Additionally, if you choose a completely online program, you may not be able to get the same networking opportunities, like internships at recognized companies and access to summits where students interact with job recruiters. This is a big factor to consider, especially if you’re looking to switch to an entirely new industry where you may not have existing professional connections.
Another challenge is that consumers have had little insight into the range of financial outcomes from earning an MBA or other graduate degrees, and it’s even harder to find the information that’s necessary to compare a crop of online programs specifically. This means that you’ll have to do your due diligence and request the information from the universities directly. Even then it can be difficult to assess how transparently colleges are displaying their program data.
How to Choose a Good Online MBA Program
There are currently over 300 MBA programs accredited by the Association to Advance Collegiate Schools of Business (AACSB) in the United States, of which almost half of them are offered primarily or exclusively in an online format. With so many options available, how do you choose the right one?
Abraham, from Accepted, says that the first step is to reflect on what your end goal is. “It sounds obvious, but you’d be surprised at how overlooked this is,” she says. If you want to get an MBA to switch careers, for example, she says it’s important to choose a program that allows you to complete an internship or some sort of capstone project. This will help you build leverage in that particular industry, making you more attractive to recruiters.
Once you know what you want to get out of your degree, Abraham recommends checking out the program’s curriculum, to see if the core and elective courses offered align with your chosen career path. She also tells students to look at the faculty and their fields of expertise, as well as the career support available. This will allow you to determine whether the combination of tools provided is worth the investment.
If possible, look for an institution that offers both residential and online programs where you’ll have access to the same courses, faculty, and resources as those enrolled on campus. This will ensure you don’t get a “watered down version” of the MBA program, McCauley says.
Another important factor is the program’s format. Some of these MBAs feature a mix of online classes, along with more interactive components, like live sessions and in-person networking weekends, while others are 100% online. Those that are fully online are usually cheaper, but you’ll miss out on experiential learning opportunities.
Abraham also recommends checking the school’s credentials, especially if the program isn’t affiliated to a recognized institution. Business schools in the U.S. are typically accredited by the Association to Advance Collegiate Schools of Business (AACSB), which is the oldest and largest accreditor of business schools in the country. Other schools may also be accredited by the Accreditation Council for Business Schools and Programs (ACBSP), or the International Assembly for Collegiate Business Education (IACBE).
Finally, look at the numbers. “I encourage students to really dig deep before they make the investment,” says Abraham. “Yes, the investment is less than with the full-time (residential) MBA program, but it’s still significant,” she adds. Abraham says to check the university’s website to look at graduation rates and average career earnings reported by alumni, and see how these compare to those of well-known programs. She also says to ask the school what companies are actively recruiting from that particular program.
If the information isn’t readily available on the program’s website, she recommends calling the university to request it, as well as looking for current students and alumni on networking sites like LinkedIn to ask them about their experience. If you can’t find this information, then you may be better off staying away from that institution.
What’s Required to Apply
Although each school has its own admission requirements, here are some of the main things you’ll need to apply for an online MBA:
- A bachelor’s degree in any major
- GMAT or GRE test scores (some schools, like UNC's Kenan-Flagler, may waive this requirement if you have five years or more of work experience, or if you have another graduate degree that’s closely related)
- A personal statement or essay in which you discuss why the particular program you’re applying to would be beneficial for your career
- Two letters of recommendation (these should align with your personal statement)
- Transcripts
- A copy of your resume
- Personal references
- Some work experience (especially if you’re applying to an executive program or for a program at a top business school)
How Much Does an Online MBA Cost?
The cost of online MBAs varies greatly depending on the institution and the features that are offered as part of the curriculum. For example, Georgia Southwestern State University’s online MBA program, which is one of the more affordable programs, costs under $10,000 per academic year, but it is strictly online and shorter than most.
UNC Kenan-Flagler’s online MBA program, which is one of the nation’s top online programs, has a price tag of more than $100,000, and that doesn’t include textbooks or other materials. However, this program offers personalized coaching for students, in addition to in-person networking experiences (in normal years), like annual summits, where students can participate in seminars as well as connect with faculty and industry leaders. UNC alumni also report a high return on investment, with average earnings of $159,557 one year after graduation, according to the university.
Besides tuition costs, most schools charge a non-refundable deposit between $1,000 and $1,500, and a technology fee between $75 and $250. You also have to factor in registration and application fees, in addition to the cost of the GMAT or GRE, if the school requires you to submit standardized test scores.
On the plus side, even if an online program is pricey, you won’t have the same opportunity cost that on-campus students experience, meaning that you will still be able to work and make money while completing your degree.
How to Pay for an Online MBA
Most schools have scholarships or other forms of financial aid available to help you cover some of the costs of your degree. For example, Indiana University’s Kelley School of Business has merit aid scholarships, ranging from $10,000 up to the full cost of tuition. The school also has a few fellowships that award students thousands of dollars, with some of them offering a full-ride scholarship.
Still, most master’s degree students have to use student loans to cover at least some of their program expenses. In fact, graduate students account for 40% of all federal loans issued each year, according to the Center for American Progress. For MBA grads, the average student loan balance was $66,300, according to the latest latest numbers reported by the National Center for Education Statistics (NCES).
But graduates of some programs borrow much more. Data from the federal College Scorecard show the average debt taken on for several well-known programs tops $90,000, including at Northwestern’s Kellogg School of Business, Cornell’s SC Johnson College of Business, and University of Virginia’s Darden School.
If borrowing to pay for school is your only option, you should start by checking out federal student loans, since those usually have lower interest rates and better repayment terms than private ones.
To apply, you’ll need to fill out the Free Application for Federal Student Aid (FAFSA). Graduate students are eligible for two types of federal loans: Direct Unsubsidized and Direct Graduate PLUS loans. Direct Subsidized loans have a $20,500 limit per academic year and currently have a fixed interest rate of 4.3%. Direct Graduate PLUS loans can be taken out for the full cost of attendance and currently carry a 5.3% rate.
If you’re currently employed, you should also check with your human resources department about whether your company offers tuition assistance, either in the form of reimbursement or by helping you repay your student loans.
What Jobs and Salary Can Expect When You Graduate?
The job market is hot (or, at least, it's hot considering we're in a recession) for MBA graduates, especially in the consulting, finance, and technology industries, as per GMAC’s September hiring trends report.
Some of the most common job functions graduates are hired to handle are strategy, finance, and business intelligence. Additionally, more than 9 in 10 Fortune 100, Fortune 500, and for-profit public companies were planning to hire MBA talent in the U.S. last year.
How much you earn will depend on several factors: your location, industry you work on, years of experience, and the school you went to. Most schools award the same diploma to all students, meaning that recruiters won’t know whether you completed your degree online or on campus.
However, Koprince points out that the return of investment is typically higher for those who attend prestigious schools. For instance, the median salary for MBA holders in the US is $88,494, according to PayScale. Alumni from the Kelley School of Business, which is amongst the most recognized in the country, reported average earnings of $115,000 last year, with those working in consulting earning the most, with a median salary of $145,000.