Part-time MBA programs take off

By Kurt Badenhausen and Lesley Kump

updated 1:34 p.m. ET Aug. 19, 2005

This story has been corrected from an earlier version.

After eight years as a marketer at a small financial planning firm, Diana Awed wanted to speed up her career. But the 34-year-old wasn't interested in taking on the $100,000 of debt that often comes with getting a full-time MBA. She turned to the part-time program at the Stern School of Business at New York University. Tuition was going to total $75,000 over three years, but by keeping her job she wouldn't go into debt. Halfway through her degree program she leveraged her network of contacts at Stern into a higher-paying job as a marketing manager at Swiss banking giant UBS. On track to graduate next spring, Awed says, "I didn't want to to take any time out of my career, but I wanted to accelerate the pace of it."

Only 20 percent of business school students are enrolled in two-year, full-time programs. Part-time evening and weekend programs account for half of current students; the rest are enrolled in executive, distance-learning and other smaller programs. The cost of full-time studying, in forgone salary as well as tuition, is just too great for a lot of prospects. And then they don't have the confidence their predecessors did that when they get out they can breeze into high-paying jobs that will liquidate the debt in short order. In 2000 Goldman Sachs hired 46 graduates from Columbia Business School. Last year Goldman took only 18.

Our fourth biennial ranking of business schools shows why students are embracing part-time programs. Our survey ranks schools based on return on investment — meaning compensation five years after graduation minus tuition and the forgone salary during school. The top part-time school, Stern's Langone Part-time MBA Program, had a median five-year gain of $166,000, greatly helped by the absence of forgone salary. That sum beats the $134,000 gain of our top-ranked full-time program, Tuck School of Business at Dartmouth College. In a combined ranking of part-time and full-time U.S. programs, Tuck and the University of Pennsylvania's Wharton School are the only full-time schools that would make the top five. (For the first time Harvard Business School is not the top-ranked school.)

"Part-time programs are the staple now," says John Fernandes, president of the Association to Advance Collegiate Schools of Business, the MBA accreditation group. "Growth in these programs is reflective of society at large. Everyone is too busy to stop their careers and go through a concentrated two-year program."

The Graduate Management Admissions Council, which issues the GMAT exam, found that 46 percent of part-time programs reported an increase in applications this year versus 20 percent of full-time programs. For the 90 full-time programs that completed our MBA survey, only 3 saw an increase in applications (HEC School of Management-Paris, the University of Alabama and the University of Connecticut), and there was an average decline of 33 percent between 2002 and last year. Top-ranked schools like Tuck and Kellogg at Northwestern saw declines of 47 percent and 44 percent, respectively. Harvard, the gold standard of MBA programs to many people, saw a 31 percent drop in applications. (The number of MBAs awarded in the U.S. has increased 6 percent annually over the past 35 years, to an estimated 130,000 last year.)

Many business school deans blame demographics for the drop in full-time applications. The 25-to-29 age group (the most popular for full-time applicants) has been flat in the U.S. since 2000. A bigger issue is the decline in students from overseas. In the Class of 2006, 28 percent are from outside the U.S. Four classes prior, 31 percent of students came from outside the U.S. In the last five years hundreds of programs have started outside of the U.S., in places like Germany and China (for foreign schools, see "Brain Drain"). Students outside the U.S. have also had to struggle with getting student visas as a result of the Patriot Act. Applications for student visas to the U.S. fell from 323,000 in 2002 to 289,000 in 2003.

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