Are Online MBA Programs Worth the Investment?

There’s a recent story in Bloomberg BusinessWeek, titled “The Online MBA Salary Blues,” which discusses the idea that graduates of distance learning MBA programs may not see as much of a salary increase as those who finish traditional, class-based programs.

The story is mainly based on the entrance salary data for the inaugural cohort at University of North Carolina Kenan-Flagler Business School’s new online program, [email protected] BusinessWeek essentially posits that since incoming students already make substantially more than the class-based students ($128,500 vs. $55,000 per year,) it will be very hard for the online grads to see the same increase that the traditional students see. Although this hypothesis is mostly speculative and ostensibly limited (after all, the online program at UNC has just begun, and there are only 19 students in the inaugural class) it will be a fascinating case study for distance learning programs generally, seeing as how UNC’s online program offers the exact same curriculum as its class-based program, for the same price.

This curriculum parity is particularly interesting given the difference between entrance salaries for each cohort. Indeed, the $128,000 pre-enrollment salary is high for an MBA program, but this discrepancy seems to be par for the course for distance learning MBA programs, and the BusinessWeek story notes data from a more established online MBA program at Indiana University’s Kelley Direct:

At Kelley Direct, the average salary of the MBA class of 2010 was about $70,400 at enrollment, with 2 percent of students earning $120,000 or more, according to Kelley data. By graduation, the average salary had risen to $89,100, with 26 percent of students earning at least $120,000. The increase in average salaries was $18,700, or about 26.5 percent. In dollar terms, that’s about half the increase achieved by Kelley’s full-time MBAs, whose salaries increased by nearly $37,000—or more than 70 percent—to $89,144.

This data shows that, here also, the starting salary for the class-based cohort must be substantially lower than the online one – somewhere around $50,000.

So, the big question: do the online programs provide a good bang for the buck? The answer is that it depends on who you are. The discrepancy in entry salaries for both of these programs, if anything, show that the two distinct formats draw two different kinds of students – the class-based formats are good for students earlier in their career, whereas the online students are usually more advanced. In fact, Indiana’s 26.5 percent salary growth actually fits nicely into those of comparably-ranked EMBA programs (graph data from the Financial Times):

So, it appears that simply in terms of salary growth, there may be some overlap in terms of students looking for EMBA programs. Which makes UNC’s decision to use the same curriculum for their online program as their class-based program all the more interesting. We’ll wait and see how that program progresses, but in the meantime make sure you read up on distance learning MBA programs at this Find MBA article.


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