Penn State Smeal College of Business announced Monday (Aug. 22) that it will close its two-year residential MBA program in 2024. The cohort admitted in fall 2022 will be the program’s last.
Instead, the business school will transition to a one-year MBA with a STEM designation beginning in fall 2023. The new program will also replace Smeal’s one-year program master’s degree in management and organizational leadership.
It is the latest prominent school to close its two-year residential MBA program in recent years. The University of Iowa’s Tippie College of Business announced in 2017 that it was accepting its last full-time cohort in 2019, focusing instead on growing its part-time program and specialized master’s offerings. University of Illinois at Urbana-Champaign Gies eliminated both his full-time and part-time MBA programs in 2019, devoting more resources to its groundbreaking online MBA program. Wake Forest exited the full-time market in 2014 after registrations there fell from 144 in 2009 to 114 five years later. Thunderbird School of Global Management, Virginia Tech and Simmons College have also closed their full-time, on-campus MBA programs in recent years.
FOR SMEAL, ‘FINANCIALLY RESPONSIBLE’ DECISION
Smeal’s full-time program accepted 98 students in 2021, while enrolling 55 for the class of 2023. Its yield (number of students accepted and enrolled in the program) fell from 67.1% in 2019 to 56.1% in 2021.
Its domestic applications were also down for the group that arrived this fall, with enrollment falling to 42. Enrollment has been capped at about 60, according to figures provided to Poets and Quants.
While it was still early, a spokesman for Smeal wrote to him P&Q that “Some students are excited about potentially switching to a 1Y MBA instead of a 2Y program. Others are wondering what this change might mean for future prospects. The reception of the faculty has been mostly positive.”
In a releaseSmeal Dean Charles Whiteman attributed the closings to declining interest and demand for more flexibility, pointing to closed programs at Tippie, Gies and Wake Forest.
“For years, the number of students interested in committing to a two-year, full-time residency program has steadily declined as other, more flexible learning options have proliferated across the country,” says Whiteman. “At Smeal, we carefully evaluated our program over several years and arrived at a solution that leverages the power of our integrated portfolio of professional graduates. We considered many factors and, in the end, made a financially responsible and forward-thinking decision.”
food, ranked 32nd in the latest P&Q rankings, is facing the same challenges as other top 50 schools that are not in the first or second tier and without the world-renowned brands to support them. MBA observers have recently speculated about the overall health of full-time programs at schools without international reputations. (See: Who should and who should not apply for an MBA AND Q&A with Scott Galloway: How Healthy is the MBA?)
In his release, Smeal notes that more than half (54%) of the top 50 US schools (as ranked by US News & World Report) reported declining enrollment in their full-time MBA programs in 2021. That number rises to 67% when considering programs at schools ranked 51 and below. Meanwhile, the number of GMAT takers has dropped 30% from 2017 to 2021. hitting a new low of just 38,509 in the US
INTEREST IN ONLINE AND HYBRID PROGRAMS CONTINUES TO GROW
Meanwhile, interest in online MBAs and other leaner, more contracted and specialized programs is growing. In fact, in the academic year 2020-2021, the number of Online US MBA students eclipsed the number in traditional full-time programs for the first time, with about 45,038 students enrolled in Online MBA options in the US, compared to 43,740 in full-time programs, according to AACSB (Association to Advance Collegiate Schools of Business).
Case in point: Enrollments in Smeal’s online MBA have grown 167% in the past three years while enrollment in the one-year specialty master’s has grown 87%, the school reports.
The school notes that the move to a one-year program will allow it to reallocate resources to programs with unmet needs, including its Ph.D. program.
A NEW DEFINITION BEGINNING
Smeal characterizes the move to a one-year MBA as part of a decade-long transformation of its graduate business offerings, designed to better meet student demand for flexibility, on-demand upgrade and customization. This includes the creation of an executive doctorate in business administration, a master’s degree in accounting analytics and a redesign of its executive MBA in Philadelphia. The college also offers 14 online and resident specialty master’s degrees and 14 online certificates.
The STEM designation also places the school in an elite but growing group of MBA programs. In a survey of 100 admissions officers, global education services company Kaplan and its sister company Manhattan Prep found that 22% of full-time MBA programs were assigned STEM in 2021, from 13% a year ago. STEM designations help candidates stand out in certain fields, and also help international students obtain work visas for the United States. (See: All major STEM programs at US business schools.)
Smeal’s STEM designation will help it attract top international and domestic students, particularly those seeking leadership positions in information technology, architecture, engineering and other fields, the school notes.
MBA ONE YEAR NEW SMEAL
Smeal plans to start with two sections of the new MBA, each with about 55 to 60 students. It is aimed at early career professionals. Tuition will be $29,888 for in-state students, $47,704 for out-of-state students. By comparison, tuition for its full-time program was just under $60,000 for in-state and just over $96,000 for out-of-state, not counting fees.
“We’ve long believed it’s time to think differently about graduate business education in America, and we’ve been committed to leading the way,” says Whiteman. “Today’s business leaders expect to acquire new skills as needed and within a curriculum that can be tailored to the specific needs of their role, company, industry or life stage.”
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