Eliminating the full-time MBA programs at some schools was a rational decision. But when people get emotional, they don’t always think logically.

Business school leaders saw the changes coming. The number of U.S. residents taking the graduate management admission test, commonly referred to as GMAT, had been declining for years. International students had more options as programs in other countries began to move up in the world rankings. Substitute products, such as online and part-time master’s of business administration programs, were growing in popularity.

Leaders at Wake Forest, Virginia Tech and University of Iowa decided to discontinue their full-time MBA programs. Wisconsin was considering it, until plans leaked. Alumni balked, a dean stepped down and the industry took notice.

“Other schools looked at that and everything stopped,” said Idalene “Idie” Kesner, dean of Indiana University’s Kelley School of Business.

This has left too much capacity in the MBA market, increasing competition. Schools that want the top students must ante up with more and more scholarship money. With the exception of highly ranked schools, such as Harvard and Wharton, many full-time MBA programs are merely breaking even, Kesner said.

There are no plans to end the full-time MBA program at Kelley. The school is safely among the top 50 business schools in the U.S. Still, the school has not been immune to changes in the market.

Kesner led Kelley’s full-time MBA program in the early 2000s, when it was reduced from four cohorts to three.

“We’re not chasing numbers,” she said, “we’re staying with quality.”

That’s been difficult in recent years as the pool of applicants has shrunk. Higher education enrollment typically runs counter to the economy, with more people going back to school during downturns. As the economy has recovered from the Great Recession, fewer people in the U.S. have been taking the GMAT. In 2014, nearly 112,000 U.S. residents took the test, compared with less than 96,000 in 2018.

U.S. schools are also facing more competition for international students. In 2000, about 40 of the Financial Times’ top 50 global MBA programs were in the U.S. and none were in Asia, said Geoffrey Basye, director of media relations for the Graduate Management Admission Council. Now, the U.S. has 24 and Asia has 10.

“There has been a significant increase in the quality of business schools emerging around the world,” he said.

On top of all that, there is competition between programs within business schools. In the U.S., full-time MBA programs last two years. To complete that degree, working adults often have to quit their jobs and relocate. Those sacrifices aren’t required for online or part-time programs.

“It may take a little longer, but you don’t have to give up all those things in the meantime,” Kesner said.

The Kelley School entered the online MBA market 20 years ago and its program is now No. 1 in the U.S. News and World Report rankings. Keeping that ranking will become increasingly challenging as other schools put more resources into their online programs.

The University of Iowa’s Tippie College of Business is one of those places. The school announced in August 2017 plans to phase out its full-time MBA program.

“The truth is, we needed to move with the market,” said Sarah Gardial, dean of the Tippie College.

Reallocating resources to programs with higher demand and more growth opportunity made sense strategically, but communicating that reasoning to constituents wasn’t easy.

Faculty are reluctant to close down programs, especially those that have stood as flagship programs for a college or school. Fortunately for Gardial at Iowa, she was the third dean to float the idea, so several initial concerns had already been addressed when the decision was made.

Alumni took the decision hard. Early on, emotional attachments to the program seemed to overpower any rational arguments the school presented.

“Your alums will be distraught,” Gardial said. “And I don’t know any other word. They feel betrayed. They fell like you’re walking away from an identity they feel very strongly about.”

Three months before the college’s last full-time MBA students will graduate, Gardial said she has no regrets. The college realized financial benefits almost immediately, and focus has shifted to new programs, such as specialty master’s degrees.

External noise has quieted down as well. Gardial said she still encounters alumni who are unhappy, but transparency about why the decision was made has helped ease the pain.

Things did not go as smoothly at Wisconsin. In October 2017, the UW-Madison School of Business announced it would consider halting admission to its full-time MBA program, according to the Wisconsin State Journal. Students and alumni immediately voiced concerns about decreasing the value of their degrees.

The school backed away from the plan one week later. In December 2017, Anne Massey, who had been dean of the school just one semester, announced plans to step down.

Massey spent more than two decades at IU, in roles such as associate vice president for all campuses and vice provost for the Bloomington campus, before taking the Wisconsin job. She plans to take over as dean of the Isenberg School of Management at the University of Massachusetts Amherst in August. Massey declined to be interviewed for this story.

Every college or school will have to make their own decision about how they deliver graduate management education going forward, Gardial said. At the same time, they’ll need to find how to provide that education in ways that meet people’s needs.

“None of us have the luxury of continuing to do things the way we’ve always done them,” she said.
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