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Will online MBAs boost diversity in business schools?

Lizette Melendez grew up in El Paso, one of the poorest cities in Texas, and was the first in her family to go to university. Now the American, who is Latina, is studying for an MBA at a top US business school.

She is not doing so in the conventional way. Ms Melendez is part of the first cohort in the [email protected], launched by Houston’s Jones Graduate School of Business at Rice University in 2018 on the 2U online learning platform.

Most of the course is delivered digitally. Flexibility was important for Ms Melendez, who could not afford to quit her job as policy adviser to a member of the Austin, Texas, city council because of undergraduate loan debt.

Experiencing financial hardship has inspired Ms Melendez to explore launching a social enterprise, possibly to raise financial literacy in public schools. She is therefore keen to hone her business skills.

Peter Rodriguez, dean of the school, claims that the [email protected] is a step towards democratising business education. The lowest and highest student incomes in the online cohort are below those in the executive MBA class, which is similar in age and experience, he says.

“It is not such a significant difference that they have blue-collar jobs. But online education helps combat the geographical and cost challenges of getting an MBA,” says Prof Rodriguez.

Enrolling a diverse intake is a priority for most business schools, including students from less affluent backgrounds. Diversity of thought improves classroom discussion, the schools argue.

Technology can lower the financial barriers to a full-time MBA, such as quitting a paid job and funding steep tuition and living fees. It can also improve access for people from poorer areas who do not live near top schools.

The most elite residential MBAs cost upwards of $200,000 — not including the lost earnings from full-time study. With schools incurring smaller costs for classroom facilities, digital degrees are often a fraction of the price.

The future is digital: Gies College of Business plans to phase out its on-campus MBA

The $22,000 iMBA from the Gies College of Business at the University of Illinois at Urbana-Champaign is about $61,000 cheaper than the campus version, which is being phased out, though Illinois residents get a hefty discount.

Jeffrey Brown, dean of Urbana-Champaign, says that larger online class sizes offset the substantial cost of paying faculty to teach. “Online learning is an economies-of-scale game.”

He adds: “We are making a high-quality MBA accessible to people who otherwise would not be able to afford it.”

But there are no agreed definitions of socio-economic status, or consistent standards for measuring progress on financial diversity.

Evidence is hard to come by; complicating matters is the fact that online MBA students tend to have significant work experience and a correspondingly decent income. However, some students are the main breadwinners supporting their low-income families, says John Colley, associate dean at the UK’s Warwick Business School.

Online MBA students also come from multiple countries with different income levels and purchasing power.

Some programmes are as expensive online as they are on campus, raising questions about their accessibility. North Carolina’s Kenan-Flagler Business School charges $125,589 for its online MBA, just shy of the full-time fee ($133,252 for those who do not reside in the state).

Kenan-Flagler’s dean, Douglas Shackelford, keeps online classes small to maintain interaction, which he argues is reduced in large groups and inflates the cost of faculty.

“It is a misconception that high-quality online education is easy and cheap to produce,” says Prof Shackelford, adding that his business school offers a limited number of scholarships based in part on a student’s financial need.

If costs are minimised, virtual study can be a vehicle for social mobility, according to Lisa Umenyiora, executive director of careers at Imperial College Business School.

Of the London school’s online MBA cohort that graduated in 2019, 67 per cent changed roles within four months and many were promoted, Ms Umenyiora says. The average salary increase was 32 per cent.

Imperial College, Business School, London
Onward and upward: Imperial reports that about two-thirds of last year’s online MBA graduates changed roles, with an average salary increase of 32 per cent

Ms Umenyiora adds that, unlike at some institutions, Imperial’s online students have access to all of the school’s career services, including individual appointments with careers consultants.

However, Prof Rodriguez at Rice: Jones says that online students may miss out on vital networking opportunities with students, professors, alumni and corporate recruiters.

While many business schools have built digital networking platforms, he says they require more effort and co-ordination to use. “Networking is more incidental and frequently available on campus.”

Ms Melendez concurs. She adds that recruiters remain wary of online learning. “There is still stigma that it is easy or fake. It sets off alarm bells,” she says. However, the stigma fades away when she name-drops Rice, a respected institution. “Then, they view it like any other degree.”

In order to recoup her tuition fees, Ms Melendez is interviewing for project management jobs in the public sector. “Before, I could only dream about these roles. Now I am getting calls back from recruiters.”