The Exploding Demand for Online MBA Programs

Demand for online graduate management education is definitely booming and has been for some time. But now, based on recent research, one could argue that demand for online MBA programs may be starting to explode.

About two years ago, articles started to emerge with headlines about surging demand for online MBA programs. One such article appeared on the website of London’s Imperial College Business School in September 2017. The essay led with this quote:

The demand for online MBAs is increasing. The Graduate Management Admissions Council (GMAC) reported a seven percent increase in demand last year from 2015. Two-thirds (63 percent) of institutions offering online MBA programs were expected to increase their class size last year and three new online MBAs were introduced worldwide.

But these weren’t the only statistics frequently cited during this period. Another was the famous “47 percent” figure. Another analysis in GMAC’s 2017 Application Trends Survey Report shows that 47 percent of online MBA programs disclosed application volume growth during 2017.

The Financial Times Reports on the Online MBA Boom

In March 2018, the Financial Times reported persuasive statistics both from the Association to Advance Collegiate Schools of Business (AACSB) as well as GMAC.

The FT announced that the number of accredited schools offering fully online degree programs grew by 54 percent worldwide between the 2012-2013 and 2016-2017 academic years. AACSB-accredited MBA programs overall grew by 44 percent during the same period. In that article, the FT additionally described GMAC’s data showing that worldwide, online MBA programs that reported growth in applications soared from 39 percent in 2013 to 50 percent in 2017.

The publication also noted that enrollment at Indiana University’s Kelley Direct Online MBA program skyrocketed by 33 percent in 2017 over the previous year, during which time applications climbed by 12 percent. Kelley Direct currently holds the #1 ranking from U.S. News and World Report.

Furthermore, next came the “70/70” percentage pairing that the Financial Times reported in March 2019. First, between 2013 and 2018, the number of business schools worldwide offering online MBAs accredited by the AACSB climbed 69 percent, with the Asia-Pacific region demonstrating the most growth.

Second, AACSB’s statistic surfaced just after GMAC reported that 70 percent of United States business schools reported a decline in applications for their two-year full-time, on-campus programs during 2017-2018. (For more on that applications drop among residential programs, see our 2019 trend report, The Buyer’s Market for MBA Programs.)

The University of Illinois Shifts to a 100 Percent Online MBA Program

Then the story broke in June 2019 that set off shockwaves throughout the graduate management education industry. The University of Illinois at Urbana-Champaign had decided to shift resources away from on-campus MBA programs to concentrate exclusively on the school’s online iMBA offering. And sure enough, along with that coverage, another story about the growth in online MBA programs appeared.

This time the story was written by Top MBA, the global MBA fair promoter, under the headline:

5 Reasons Why Online MBAs Are Exploding in Popularity

Based in London, Top MBA’s coverage reflects British and European perspectives, but generally appears credible. Yet this was the first time a term like “explosive” had appeared in a headline about the growth in online MBA programs. Is an online MBA explosion underway?

Because the Wall Street Journal and so many other outlets have devoted so much coverage to Illinois’s controversial announcement and the subsequent reaction, it’s worthwhile to more closely analyze the demand for the university’s online program, the iMBA. Incidentally, we profile this program in detail in our BSchools guide to Illinois business schools with online MBAs.

Before we present this analysis—which involves a comparison with the top full-time, on-campus programs—it’s useful to acknowledge a pseudo-secret characteristic of graduate management education about which few speak.

The market for MBA degrees has transformed into a highly concentrated, “winner-take-all” industry. In this respect, it resembles the markets for many technology, software and e-commerce products and services dominated by “big tech” firms like Amazon, Apple, Google, Facebook, and Microsoft.

In the applications data for 50 top schools that Poets & Quants presents in this table, only a handful of large research universities receive the lion’s share of full-time MBA applications. In fact, of the top-tier business schools that received the most applications during the 2017-2018 academic year, only the top nine schools received half of all applications. Furthermore, the top fifteen schools received 71 percent—and the top twenty account for a staggering 83 percent of all applications.

It appears from the data that these few schools enjoy commanding market positions. But in a 101-year-old industry like this one that’s ripe for disruption, that competitive landscape may not last much longer.

The Illinois iMBA: a Demand Barometer for Online MBA Education

Arguably, one can interpret demand for the online iMBA program at the University of Illinois as a proxy for the overall growth of high-quality online graduate management education when cost is not a factor. That’s because Illinois is a top 40-ranked business school research faculty, with traditionally one of the world’s 30 most powerful university brands, and claim to 24 Nobel Prizes—and all for the low price of only about $22,000.

During the program’s first year in 2016, 1,100 candidates applied. Since then, the iMBA program’s application volume has grown on average by about 700 candidates each year. The school estimates volume for the most recent year at 3,200 applicants, with over 2,000 students currently enrolled.

Let’s assume that the iMBA’s volume of applications will continue to grow at the same rate during the coming academic year, resulting in about 3,900 applicants. Meanwhile, let’s also assume that applications at all other MBA programs will be flat—unchanged from last year. That’s a charitable assumption given the recent reports about how applications during the past nine months have been significantly lower throughout the industry, even at the top 20 residential MBA programs.

Next year, Illinois won’t come close to the application volume of the world’s most popular MBA programs at Harvard Business School, the Graduate School of Business at Stanford, and the University of Pennsylvania’s Wharton School. That’s because more candidates apply to these business schools than any others worldwide; last year 10,351 MBA candidates applied to Harvard, 7,797 to Stanford and 6,692 to Wharton. Nor will Illinois match the application volume of the next two most popular M7 schools: Columbia with 6,029 candidates and MIT with 5,560.

But here’s where the analysis becomes interesting. That 3,900 iMBA applicant estimate skirts very close to the number of candidates who applied to two residential M7 MBA programs. Those programs are Northwestern’s Kellogg School of Management with 4,471 applications—and the program ranked third (tied with Harvard) by U.S. News and fourth by Poets & Quants: the University of Chicago’s Booth School of Business with 4,289 applicants.

In fact, the 3,900 projection beats the number of applicants to every other full-time, on-campus MBA program in P&Q’s top 50 ranking. These schools include the University of California at Berkeley’s Haas School of Business (3,821 applicants), the Yale School of Management (3,785), the University of Michigan’s Ross School of Business (3,188), and the Tuck School of Business at Dartmouth College (2,621). Furthermore, that forecast amounts to two-and-a-half times the applicant volume of Cornell University’s Johnson Business School and Carnegie Mellon University’s Tepper School of Business, and almost seven times that of Rice University’s Jones Graduate School of Business.

The iMBA’s applicant projection also tops that of the three online MBA programs, those highest ranked by U.S. News and World Report. It’s four times that of the University of North Carolina at Chapel Hill’s Kenan-Flagler Business School (1,086 applicants), almost seven times that of Indiana’s Kelley Direct offering (572), and 22 times that of Carnegie Mellon’s Tepper School (175).

An Explosion in Online MBA Programs?

So, can one convincingly argue that online MBA programs are exploding in popularity? On balance, when one considers the recent industry-wide statistics in publications like the Financial Times along with the consistently strong demand growth for the Illinois iMBA online degree, one now can argue a compelling case for that characterization. Had demand not exploded, we would have witnessed four years of much lower and more erratic application volumes coming out of Urbana-Champaign, but we’ve seen quite robust and consistently increasing values instead.

Indeed, there can be no question that in 2019 it’s now beyond dispute to call this growth an online MBA boom.