The Online MBA Salary Blues

If the Kelley Direct online MBA program is any guide, graduates of Kenan-Flagler's new MBA@UNC program shouldn't expect a salary windfall

The rap against online MBA programs has always been that the benefits, in terms of career advancement, can't compare to those enjoyed by students in full-time MBA programs. Critics of online programs say that recruiters consider the programs educationally inferior and that as a result, the job offers, salaries, and other benefits that derive from the programs are smaller.

Most online MBA programs offered by top business schools cost less than the institutions' full-time programs, so a salary at graduation that's a few thousand dollars less is not the end of the world. But all this changed in November, when the University of North Carolina Kenan-Flagler Business School announced MBA@UNC, an online program with an unquestionably full-time MBA price of $89,000,

Can an online program, even one offered by a top-ranked business school such as Kenan-Flagler, ever prove a bargain at that price? What can the inaugural class of 19 students in the MBA@UNC program expect when they graduate in two years and begin looking for jobs?

Predicting is always dicey, especially when it comes to MBA salaries, which are influenced by the fates of national and regional economies, industries, and even the fortunes of specific companies. But information can be gleaned from online MBA programs with a bit more track record.

Consider the Kelley Direct online MBA program at Indiana University's Kelley School of Business. Launched in 1999, it has graduated nearly 1,300 MBAs, making it one of the longest-running online MBA programs offered by a top-ranked business school. The schools' full-time MBA programs are comparably ranked: Sixteen for UNC and 19 for Indiana. Each online program is taught by faculty members who instruct in the full-time programs, and both include on-campus experiences, in addition to the online component. Students in both programs have nearly twice the experience of their full-time MBA counterparts"a little less than 9 years. Both attract applicants from a wide range of industries: One-fifth of Kelley Direct's 2010 class comes from manufacturing, while the inaugural class of MBA@UNC hails from such companies as Bank of America (BAC), Lockheed Martin (LMT), and Pfizer Pfizer (PFE).

So what can the experience of Kelley online MBA grads tell us about what the MBA@UNC grads can expect?

For starters, they shouldn't expect huge pay raises"at least not by full-time MBA standards. At Kelley Direct, the average salary of the MBA class of 2010 was about $70,400 at enrollment, with 2 percent of students earning $120,000 or more, according to Kelley data. By graduation, the average salary had risen to $89,100, with 26 percent of students earning at least $120,000. The increase in average salaries was $18,700, or about 26.5 percent. In dollar terms, that's about half the increase achieved by Kelley's full-time MBAs, whose salaries increased by nearly $37,000"or more than 70 percent"to $89,144.

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