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Are online MBA degrees worth it compared to traditional MBAs?

Published: Sunday, July 5 2015 9:30 p.m. MDT

MBA graduates file forward to receive their diplomas during commencement exercises.
 (Jeremy Harmon, Deseret News) MBA graduates file forward to receive their diplomas during commencement exercises. (Jeremy Harmon, Deseret News)

Carol Platt was born in a working-class family and was determined to graduate from college. However, after one-and-a-half years in college, she dropped out to start working. Years later at the age of 51, and right as the recession hit, Platt lost $6 million in real estate contracts and found herself out of work. As she began the job hunt she found that she was competing with people half her age, and many of them had MBA's. How was she supposed to compete? Platt turned to Kaplan University for its affordability and its flexibility, and earned her MBA online in two years, finally graduating from college decades after she dropped out.

Over the past 20 years the cost of higher education has risen 5 percent annually, and the threat of rising interest rates for student loans hangs in the balance as both President Barack Obama and Mitt Romney advocate to keep the rates low. People looking to advance their careers in this current recession with 8.2 percent unemployment are looking for smart and affordable options, hoping to avoid more debt and more bills as belts are already pretty tight.

Online MBA programs, such as those offered by Kaplan and the University of Phoenix, offer degrees for those who not only want to take advantage of relatively low tuition costs, but who do not want to leave their jobs for two years to enter a full-time program. In a time when many critics are questioning the value of higher education with its exorbitant costs and supposedly low outcomes, Dr. Tracey Wilen-Daugenti, vice president and managing director of the University of Phoenix, argues, “Job insecurity for the college-educated and the high cost of education are serious concerns. However, the evidence points to an overwhelming fact: The future belongs to the well-educated. The fastest growing jobs in the coming decade are expected to be jobs that require a college-level degree or higher.”

According to a recent Graduate Management Admission Council survey, 86 percent of 2011 MBA graduates were employed after graduation, and 93 percent of those found the job they were looking for. These results are good signs for anyone interested in obtaining an MBA with hopes of advancing their career, but will an MBA from any program — traditional or online — have the same results?

The advantages of an online MBA

According to recent research presented by The Journal of Online Educators, “convenience or flexibility in time management” is considered “to be of greatest importance in choosing online education in general ... while learning opportunities from interactions with other students were considered much less important.” The results from the latest Sloan Survey conclude that 67 percent “of academic leaders rated the learning outcomes in online education as the same or superior to those in face-to-face” programs, which is up from 57 percent in 2003.

Online programs cater to those who feel they cannot afford the time or the money for a full-time program. Deb Bushway, interim president of Capella University, reports that Capella's “average student is a 39-year-old female balancing family and work while trying to get the education she needs to advance her career. She has turned to Capella because (it is) an online institution that provides the rigor and access she needs in her chosen field.”

Not only are online programs recognized for their affordability and flexibility, but some research shows that online programs strengthen creativity. Oregon State University reported results of a MERLOT study revealing that “based on students’ feedback, it appears that taking online courses generally enhances (students') creativity. They are not only more inclined to be creative thinkers, but also more likely to be organized and exercise critical thinking. The students noted, however, that online instructors are largely instrumental in enhancing creativity.”

Online education enrollment growth continues to surpass growth at traditional higher education institutions. The Sloan Survey reports that online enrollments increased 10 percent last year contrasted with the less than 1 percent growth of the overall higher education student population. Online institutions are meeting the demand. Students’ busy lives require a thoughtful and skilled juggling act as they attempt to balance work, family and business travel. The online degree seems like the perfect solution for career advancement without having to give up a good job with its secure income.

Are all online MBA's equal?

Cost is a serious concern for most people considering an online MBA program. All of us have seen internet ads touting a $7,000 price tag for an online MBA degree. Too good to be true? Maybe.

The number of online MBA programs has grown in the past few years, but apparently, not all online degrees are cheap. They vary from the pervasive University of Phoenix with a $28,065 tuition price tag to the one-year-old MBA@UNC, which costs an unexpected $91,225.

The for-profit schools offer a significantly lower tuition rate and have looser admission standards. Kaplan only requires an interview and official transcripts for proof of a bachelor’s degree, and a GMAT score is not required. You can start as soon as you’re ready and tuition starts at $26,460.

Not only do top-end online programs like MBA@UNC cost substantially more than for-profit university programs, but according to a Financial Times interview with Douglas Shackelford, associate dean of MBA@UNC, “The admission standards, the quality of the faculty, and the breadth and depth of the curriculum equal our residential MBA program.” In addition to the online application, MBA@UNC applicants must submit official transcripts from an undergraduate degree, a GMAT or GRE score, three letters of recommendation, and complete an online interview.

In the same Financial Times interview, Mark Taylor, dean of Warwick Business School in the UK, argues, “Clearly, not all online MBA's are of an equal quality. So always choose one that is accredited and that preferably has an on-campus MBA also. Always seek out information about the student experience, preferably by talking to current students and alumni to get their views.” The accredited online schools that have an on-campus MBA as well usually carry a higher price tag, but make every effort to make up for the usual shortcomings of an online education. MBA@UNC holds weekly live sessions with classmates and professors, professors keep office hours where they are available via webcam to converse with students, and students congregate for three-day immersions four times a year.

Traditional or online? Define your career objectives

Despite all the technological advances that an online degree can use to overcome inherent weaknesses, there are still many critics of online MBA degrees. In her Bloomberg Businessweek article, “The Online MBA Salary Blues,” Tori Stilwell reports that MBA graduates of the online Kelly Direct program experienced only “half the increase (in salary) achieved by Kelley’s full-time MBA's, whose salaries increased by nearly $37,000 — or more than 70 percent — to $89,144.” Wilen-Daugenti affirms that MBA graduates are likely to obtain a significant salary increase, according to multiple studies, but for-profit schools like the University of Phoenix are careful with reporting their internal statistics.

Deb Bushway, interim president of Capella University, an online institution, defended her university’s decision not to participate in the US News & World Report Education Survey because “there aren't a lot of institutions that look like us, so it's difficult to make comparisons.” Capella provides its own statistics on its website, reporting that only 51 percent of its graduates experienced satisfaction of career growth potential, and only 63 percent were satisfied with salary and benefits upon graduation — much lower than the national average reported in the GMAC survey. Where the online MBA results are published, they appear unequal in both career advancement and salary to their full-time counterparts.

If online MBA’s don’t usually have the same earning power that accompanies a traditional full-time MBA, is it worth it to leave a secure job for two years and go into debt without knowing the outcome? Cynthia Barlow, an MBA graduate of Brigham Young University who is now working in the financial sector, left her job a few years ago for two years to obtain a full-time degree. She affirms that it was “worth it to take two years off” because her “earning potential is so much greater,” and her “return on investment has been phenomenal.” Barlow feels that the most important aspects of her education were the recruiting opportunities presented to her, and the network she was able to establish and interact with. Companies routinely send recruiters to full-time MBA programs whereas online programs do not offer the same opportunities. In addition, full-time programs provide a vital social network with daily interaction with both professors and peers with a wide range of experience. Barlow feels that the informational content of her degree was “secondary to networking.” She continued, “The Content is not rocket-science. You can read a book, or take a course” to learn the same things.

Corey Walker, a Harvard MBA graduate, agrees that you can learn the same “fundamental principles of business from school to school.” Although Walker is passionate about his MBA experience, he is also emphatic that an “MBA is not right for everyone.” He advises that on-the-job experience or enrolling in a couple of useful classes at a local community college can be just as beneficial, if not more so, than an MBA degree. It all depends on what your career objectives are. For Walker, his experience in a full-time MBA program provided him with a priceless network of professors and peers that created a depth in the learning experience that extended beyond the basic content of his education.

For those who want to continue and advance in a similar career path, an MBA may or may not be the only solution. Asking industry experts and peers questions about how to advance a career can prevent unnecessary time and money spent on a degree that might not get you anywhere, whether online or traditional. Executive MBA’s allow people to continue working while obtaining their degree, and many programs will waive their GMAT score requirements in lieu of work experience. These programs tend to have better results than online programs, and might be worth the extra dollar investment.

If an MBA is appropriate for a certain career change or advancement, the school does matter. In the GMAC’s recent study, “Understanding the Value of the MBA,” it is reported that both the MBA degree and the school/program (brand-level) “contribute to predicting the overall value of the MBA.” However, the study reports, “the school/program variable is slightly more influential ... than the MBA degree variable.”

The school’s “brand” plays an important role in the value of your MBA degree. Quoted in a recent New York Times article by Laura Pappano, Kenneth C. Green, founding director of the Campus Computing Project, says, “No one would confuse Phoenix with Princeton,” and warns that there is “stigma in various industries about whether an online degree is ‘as good as.’”

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