Cheap MBAs: Costly for some

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THERE’S no such thing as a free lunch. That maxim should be ingrained in the minds of business-school students, attuned to the notion of opportunity cost or Milton Friedman’s economic theories. Yet to believe the American non-profit University of the People (UoPeople), run by Shai Reshef, an Israeli entrepreneur, something close to a free lunch could soon be available to prospective MBA students. On March 15th the university opened applications for an MBA without tuition fees that it plans to launch in September 2016.

That much is admirable, and certainly should be applauded. But don’t prepare to burn Friedman’s 1975 tome yet: there’s still no such thing as a free lunch. One hundred successful applicants will be enrolled onto the 15-month distance-learning course, and will be asked to pay just $200 for each of the 12 courses they will take as part of the programme. That is still a pittance, and a minuscule fraction of the cost of an MBA at the sort of business schools ranked by The Economist. “The cost of an MBA today is so expensive that many people who are qualified to achieve it cannot afford it,” Mr Reshef said when announcing his plans.

Certainly, business schools can be rarefied places. So the development of a legitimate MBA at a low cost could be beneficial. Russell Winer, professor of marketing at NYU Stern and the leader of the MBA programme at UoPeople, told The Economist that the establishment can offer a cheaper programme than most by being online-only and lean-staffed.

It also has the backing of faculty members from other big business schools, including INSEAD, Wharton and Oxford, all of whom have helped develop the curriculum. And yet the devil is in the detail. Some fine minds are drawing up the cut-price curriculum, yes, but they are too busy teaching at their main employers actually to impart the knowledge they put to paper. Mr Winer, the head of the programme, won’t be teaching his course on marketing, and doesn’t know who will be, or what their qualifications are. “I tend not to be that involved that much in the day-to-day aspects of the running of the programme,” he explained.

Mr Winer does not believe course material being drawn up by one person and taught by another, perhaps less-qualified instructor, is a hindrance: what is taught is more important than the way it is administered, he reckons. And “there’s no question about the academic legitimacy of our programme,” he says. But hobnobbing with lecturers and their associates is a big part of most MBAs’ appeal, and could well be found lacking in UoPeople’s delegated and peer-led programme.

Then there is perhaps the bigger question of whether employers will take it seriously. Well-resourced business schools fight hard to attract the most prestigious employers. Employers, in turn, are impressed by big academic names. Many see MBA admissions officers as an important filter: if students are impressive enough to get into a top-ranked programme, then that cuts down the need to broaden their search when it comes to hiring. (UoPeople is not accredited by one of the three big global business-school agencies, meaning it wouldn’t be considered for many rankings.) A cut-price education should be applauded, but a cheap MBA that employers do not view as credible is still costly in relative terms, particularly for those who can least afford it.