What’s An Online MBA Degree Really Worth?

Published: Tuesday, 19 Jul 2011 | 12:46 PM ET

By: Stephanie Landsman
Stephanie Landsman, Producer, “Squawk Box”

Call it the Cadillac of online MBA degrees.

 Kenan-Flagler Business School at the University of North Carolina—Chapel Hill began its first ever online MBA program this month. The $89,000 price tag for the new online degree has been causing sticker shock. But, the concept has been around for a while.

Indiana University Kelley School of Business launched its online MBA program before YouTube, Facebook and iTunes dominated the web. Indiana’s “Kelley Direct” degree began its course load in 1999.

According to the university, the online MBA degree from Kelley Direct costs $60,000 compared to $32,000 when the program began. The cost per credit hour has almost doubled in the past 12 years. It’s now $1,145 versus $625.

Despite the tuition increases, enrollment has been growing steadily over the past five years. In 2006 it had 1,150 students. Last year that number grew to 1,630. The school says Kelly Direct has been getting a record number of applications. They were up by 20 percent last year.

“If a student is making $60,000 a year before they come back to school, then they lose $120,000 in income,” said Indiana University Kelley School Of Business Dean Daniel Smith. “Then, you add tuition for the in-residence program and the uncertainty of the job market and it becomes very expensive. You see why online education at leading business schools just like Indiana, for example, has really taken off.”


As the popularity rises, the worthiness of an online MBA degree has become more controversial.

“One of the questions a lot of employers have is that is this as good as a degree as an in-residence program? We say ‘yes’ because we use the same exact faculty as in our full-time program,” said Dean Smith.

Dean Smith adds most Kelley Direct graduates earn 20 percent more when they complete the program—or just shy of a six-figure-a-year salary.

The Graduate Management Admission Council does not track how many online MBA graduates are out there or how they fare in the job market.

Even though an increasing number of students are racking up MBA credits online, it appears job market acceptance rates are lagging.

Careers On The Move CEO Richelle Konian recruits talent for Wall Street firms and Fortune 500 companies. She said it’s important to remember that an MBA does not guarantee you a job.

Konian said, “The rate of success at traditional MBA programs as to an online MBA clearly shows employers’ preferences with traditional MBAs from tier one schools.”

She acknowledges there is a market for online MBA degrees for those who have already gotten in the door. Konian added that if your only option to move up the corporate ladder is by taking online classes, then it could be worth the time and money.

Careers on the Move