Virginia Tech’s Pamplin College of Business announced last fall it would shut down its full-time MBA program. Based in Blacksburg, Va., an Appalachian Mountain town of about 43,000, it lacks something business schools increasingly need to survive: proximity to a big city.
The program was losing students and money as competition intensified from online and part-time programs, says Steve Skripak, the school’s associate dean for graduate programs. He says an official at an accrediting agency told the school that plenty of other business schools outside major urban centers will be “making [the same decision] in five years, whether they know it now or not.”
“Full-time programs in any rural market have to be going through the same thing,” Skripak says. “It was a money-losing proposition.”
Full-time MBA programs typically fuel a business school’s prestige and attract faculty. B-school students, however, are starting to resist the time commitments that come with a full-time program, opting instead for online, specialized, and part-time alternatives.
MBA programs in small cities and towns have it toughest. Isolated from employers and alumni, they’re limited when it comes to job placement, prestige, and opportunities for grown-up fun, Skripak says. “Blacksburg doesn’t give you access to employers and frankly doesn’t give us access to guest speakers. Night life is dominated by stupid undergraduate behaviors. Those factors make us less appealing.”
Miami University’s Farmer School of Business, which has an undergraduate program ranked No. 23 by Bloomberg Businessweek, shut down its full-time MBA program in leafy Oxford, Ohio (population 21,371) three years ago with no plans to revive it, says Dean Matthew Myers. Instead, it put more money into a part-time program in West Chester, which is closer to larger cities such as Cincinnati and Dayton.
So far, B-school enrollment is still humming along but skewing toward more flexible programs. Business schools accredited by the Association to Advance Collegiate Schools of Business said about 25 percent of their total students were in full-time programs last year, compared with about 37 percent of students in part-time weekend or evening programs, according to the AACSB.
Business schools that aren’t highly ranked and are in smaller cities feel a squeeze because fewer American students are taking the Graduate Management Admission Test, and they have a wider range of B-school choices, says Andrew Ainslie, dean of University of Rochester’s Simon School of Business.
“We have demand dropping, supply increasing, so something’s got to happen. What no one wants to do is exit,” Ainslie says. “I think as a result that [lower-tier and small-town business schools are] getting a little desperate, and they’re doing some pretty strange things. I think that’s useful for the entire marketplace, because some of those experiments will work.”
Ainslie says his own school, whose MBA program is ranked No. 50 by Bloomberg Businessweek, is challenged by an exodus from the city of major employers such as Kodak (KODK). He plans to increase the size of Simon’s New York City offices so students can visit more employers. Demand is solid at top 20 programs like Dartmouth’s Tuck School of Business in remote Hanover, N.H., because of superior branding power, Ainslie adds.
It’s not just business schools that struggle without access to the perks of an urban environment. This month, Moody’s Investors Services (MCO) issued a negative outlook for the higher-education sector. The credit-rating agency cited the drop in net tuition revenue for public universities typically located outside metro areas as a reason for the downgrade. “Regional public universities will be most susceptible to local declines in the number of high school graduates and improving job prospects while the global/national universities will be able to attract more geographically diverse and, generally, more profitable students from outside of the state,” according to the Moody’s report.
The grandest experiment among small-town MBAs appears to be taking shape at University of Massachusetts at Amherst’s Isenberg School of Management. The school, situated in a town of 37,819, saw a 35 percent increase in applications this year by promising to give full rides, an $8,600 annual stipend, and health care to any full-time MBA student who studies on campus. Isenberg suffers from a “rural problem,” says John Wells, the school’s associate dean. “When students are weighing us vs. an urban campus, we lose out because they think professional opportunities at urban settings are greater.”
The payoff from Isenberg’s freebies might take a while: Enrolling more students will allow the school to qualify for national rankings, Wells says. That, in turn, will syphon people into its profitable 1,200-student online MBA program. The brand importance of keeping its full-time MBA is so vital that Isenberg would rather lose money on it than lose it, he says. “To recruit qualified faculty, you need to have a viable MBA program.”
That path won’t work everywhere. Virginia Tech lacks an online MBA, making a similar strategy less viable, Skripak says. “We’d be late to the online game. There are a lot of good programs out there already.”