Online Programs Could Erase Half of U.S. Business Schools by 2020

Online Programs Could Erase Half of U.S. Business Schools by 2020

Richard Lyons, the dean of University of California, Berkeley’s Haas School of Business, has a dire forecast for business education: “Half of the business schools in this country could be out of business in 10 years—or five,” he says.

The threat, says Lyons, is that more top MBA programs will start to offer degrees online. That will imperil the industry’s business model. For most business schools, students pursuing part-time and executive MBAs generate crucial revenue. Those programs, geared toward working professionals, will soon have to compete with elite online alternatives for the same population.

Lower-ranked business schools, rather than recognized names such as Harvard Business School and Wharton, are most vulnerable to this phenomenon. When the big players start offering online degrees, they’ll draw far-flung students who might otherwise have opted for the convenience of a part-time program close to home.

Part-time and EMBA programs are a financial engine because they award less financial aid than full-time programs. Since most of their students are corporate strivers already living near campus—and because competition for those students is limited by geography—part-time programs can count on a steady stream of high-quality attendees.

Say you’re a consultant with young kids in Phoenix who wants to boost her career with a business degree. You’d probably choose a part-time MBA program at the University of Arizona or Arizona State University because committing to a long stint away from home is impossible. Education technology “has the potential to make the proximity factor go away,” says Lyons, taking some high-margin students with it.

While most schools don’t publish the total amount of financial aid they award MBAs, Lyons estimates that the average full-time student at an elite school gets a 25 percent discount on tuition. At part-time and EMBA programs, the average student pays something much closer to the sticker price.

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Source” Businessweek | 

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