Should You Get an Online MBA Degree?:

by on July 2nd, 2011

People looking to earn an MBA degree online can find hundreds of programs on the Internet. Such choice, students have learned, can be both a blessing and a curse.

Yes, a choice of schools is nice. But prospective candidates for online MBAs now have to sift through a deluge of university options, both for-profit and non-profit, the legitimate as well as those that could be termed “diploma mills.” Sham schools continue to operate two years after the well-publicized incident of Chester the dog earning an MBA online, and they pose challenges both to people seeking serious programs and to genuine distance-learning programs trying to establish their credibility.

Institutions across the board offer more MBA degrees—the total number of graduate business degrees increased by 47% from 2000 to 2009, according to U.S. Department of Education data, and more and more of those degrees are offered online.

The sound of “online MBA” inspires many reactions—and more importantly, raises many questions. How does the quality of an online program compare with a traditional one? Do employers judge an MBA differently if they know it was earned online? What are the advantages and disadvantages? Should a potential MBA candidate hope to pay less for a degree online—and when should they be prepared to dole out more? How does accreditation play a role?

And just how typical is “Rochville University,” the institution that graduated a pug for zero coursework and a few hundred bucks—and was quite ready to grant this author an MBA within a week or two (see related story)? What’s the real landscape of the online MBA?


In the last 10 to 15 years, there’s been a surge of online degree programs, many directed toward MBA candidates. Aspen University claims to have offered the first online MBA degree in 1987, and enrollment in such programs has only grown since. Growth in online MBA programs seemed to spike, many statistics report, starting in 2000. Much of the growth has taken place among for-profit universities.

A range of institutions have attempted to cobble together an online MBA program—education coaching and test service Kaplan and Newsweek tried offering an online MBA together in 2006 and 2007, and in 2010, the London School of Business and Finance Global M.B.A. even offered its degree through a Facebook application. The omnipresent for-profit University of Phoenix now boasts upwards of 150,000 students, alumni, and faculty who have passed through its web pages.

Many online MBA programs, though, amount to “paper mills,” according to Vicky Phillips, CEO of, a consumer-awareness organization focused on online MBAs. Phillips’ organization earns money from ad and sponsorship revenue from universities recognized by the non-profit Council for Higher Education Accreditation or the Department of Education, but she makes a point of keeping advertising sharply separate from editorial content. Phillips, who famously succeeded in getting her dog Chester an MBA from Rochville University, also says she refuses to sell ads to dubious programs.

Phillips estimates there are over 300 questionable online MBA programs—more than triple the number of online MBA programs accredited by the Association to Advance Collegiate Schools of Business, the oldest and most widely recognized sign of legitimacy.

Data from British-based screening agency Verifile Limited illustrates which U.S. states contain the most questionable schools and accrediting agencies, with California (134), Hawaii (94), and Washington (87) topping the list. Verifile also suggests that Phillips’ estimate about the number of questionable institutions is low. “The database now includes 2,615 known bogus education and accreditation providers [globally],” states Verifile’s March 2011 report on diploma mills, “an increase of 48% in just one year.” In North America, Verifile reports there are 1,095 that “operate or claim to operate,” a jump of 23%, and the U.S. holds the crown for the most in the world at 1,008. These fake diplomas, Verifile notes, are offered “mostly online.”

Even high-level federal employees may have these “bogus” degrees paid for at the government’s expense, according to a 2003 report by the U.S. Government Accountability Office. The possibility that government officials may have fraudulent MBAs continues today. Scott Farnam, the mayor of Wildomar, California, claims a Rochville bachelor’s in business administration on his LinkedIn profile.

One natural lure of these diploma mills is their low cost—perhaps a few hundred to a couple thousand dollars for a diploma in a week. Prices for more legitimate online MBA programs vary wildly—ranging from $7,000 to $119,000, according to GetEducated’s 2009 survey of 90 online business programs. Regionally accredited programs ran an average of $22,924 while AACSB programs averaged $32,926, according to GetEducated.

Despite their cut-rate prices—or perhaps because of them—diploma mills may be lucrative to their operators. Distance-learning author John Bear once suggested a mill can earn $10 to $20 million a year and that the aggregate earnings top $200 million. Their success also depends on aggressive marketing. Phillips says the people behind the MBA fraud business tend to be masters of search-engine optimization. MBA applicants doing a Google search on b-schools have to wade through a host of sketchy programs to find sound ones. Consider the ads that show up when searching the phrase “online MBA program”—three of the seven I see explicitly say “no GMAT required,” which doesn’t inspire much confidence in their programs’ rigor.

In addition, a host of web efforts, from fake accreditation to fake employer verification to waves of PR, exist in order to make diploma mills appear more legitimate than they really are.


But those efforts fall apart against closer scrutiny. The woman behind a consumer awareness site called recounts sending one-line, resume-free applications to places like Rochville. She was accepted to at least one program based on basic contact information and her often-repeated application pitch: “I work real hard for long time at Dairy Queen.”

The quality of more-legitimate programs also has come under scrutiny. Columbia University b-school professor Henry Levin dismissed the University of Phoenix’s MBA option when talking to the New York Times in 2007: “Their business degree is an M.B.A. Lite…I’ve looked at their course materials. It’s a very low level of instruction.” In that same article, William J. Pepicello, president of the University of Phoenix, retorted that, “the university takes quality in the classroom seriously.”

Widespread concerns about quality and sometimes fraud create problems not only for prospective students and employers, but also for those trying to run high-quality online programs.

When San Diego State University investigated launching a virtual business degree more than a decade ago, officials surveyed 550 traditionally enrolled MBA students and found skepticism. “My perception (however wrong) is that Internet programs are primarily for people that can’t get accepted into a ‘regular’ MBA program,” one respondent wrote, according to the Online Journal of Distance Learning. “It is very difficult for me to imagine that such a program could have the same quality and interactions as a ‘regular’ MBA program.”

The glut of for-profit programs, some more legitimate than others, blows out the airwaves, web, and print with advertising, and many traditional directors grapple with how to construct a credible online program—and what to underscore.

Kenneth Heischmidt, the director of Southeast Missouri State University (SEMO) in Cape Girardeau, Missouri, emphasizes the school’s AASCB accreditation. SEMO’s online MBA is also especially affordable, at a little over $8,000 for in-state residents and $14,000 otherwise. Heischmidt emphasizes that at SEMO, the management MBA’s online option simply comes with a “different delivery mode.” The school offers the same assignments with the same requirements, as well as the “same instructors teaching online as face-to-face.” Its online MBA program has run for around eight years, according to Heischmidt, and was launched in part to serve a region he calls “sparsely populated.” Cape Girardeau has under 40,000 people, he observed, and SEMO would benefit from targeting the broader Missouri region. He recalls one of the first students: a single mother from a rural town, who couldn’t have completed the degree if not for its online option.

A focus on standards is a common theme among the more legitimate online degree programs. Their directors emphasize faculty, requirements that don’t waver for any applicants, the GMAT, the institution’s history of traditional MBAs, and of course legitimate accreditation. AASCB, not the sole marker of quality but a strong one, accredits 485 institutions of higher learning in the field of business, including both undergraduate and graduate level as well as traditional as well as online options. The agency identifies around 70 online MBA options that it considers strong enough to get its stamp of approval.

Susan Cates, one of the architects of the online MBA at the University of North Carolina’s Kenan-Flagler B-school, echoes Heischmidt’s concerns. UNC’s online program has been marketed as a particularly rigorous option comparable to any conventional route—and at $89,000, it should be. The program stresses peer engagement more than perhaps any other online program, with forums and connection to faculty constantly strengthened by new technology that, Cates stresses, couldn’t have been done 10 years ago. Students and professors will meet in live sessions online, all faces visible and voices heard. Professors can hold virtual office hours. The technology strives to resemble the social media world of today as well as allows students to review materials they’re struggling with.

The digital component, entitled MBA@UNC, kicks off with its first cohort this July. The first crop of students is still being finalized, according to Cates, but the number will likely be relatively small, perhaps three or four dozen. Cates is president and associate dean of executive development at Kenan-Flagler and understands the sensitivity surrounding online program standards. The students admitted so far, Cates says, have been “outstanding,” with GPA and GMAT scores equivalent to those in the traditional full-time program. She points to the program’s quality, its convenience, its credibility, and the fact that, in its first cohort, it has already attracted “top-notch candidates” as signs of how online programs have evolved into an experience that can be no different from traditional face-to-face education. MBA@UNC also pays special attention to career services and the way the degree will be perceived in the marketplace of education.

“We definitely had conversations with some major companies before moving down this path,” Cates, the executive director of MBA@UNC, explains.


B-school directors like Heischmidt and Cates don’t believe people should determine a program’s quality by the presence or absence of the word “online” in the title. Look to program rigor instead, they say. “If you get good inputs, you get good outputs,” Heischmidt says.

And sure enough, Phillips notes that for employers, it’s not whether a degree is earned online or not that makes much of a difference—it’s whether the employers recognize the university’s brand, according to GetEducated’s data. In surveys of Fortune 500 managers with hiring authority, GetEducated reports show that the perception of online programs has changed over the years. In 1989, the first year GetEducated surveyed corporations, fewer than 50% of the managers viewed a distance-learning degree “as good as” a traditional one. By 2009, more than 90% of managers surveyed did—but, Phillips points out, only if three conditions are met. These employers respect an online degree as long as 1) the online college also operates a traditional campus, 2) the name of the institution is known regionally or nationally, and 3) accreditation.

Despite the myriad choices out there, most people understand whether the MBA they pursue is legitimate or not, from a diploma mill or valid academia. GetEducated does receive some calls from people who “have no idea they’re being ripped off,” but also many who call to simply ask, “Is it illegal?” In some states, purchasing a fake degree counts as a misdemeanor.

Take out the fraudulent schools, and students wanting an online MBA program are left with the basic choice of for-profit and not-for-profit schools. The noise of for-profits generally wins out against non-profit universities, which typically forgo advertising and are content with smaller classes of perhaps 60 or so students. But Phillips cautions against a polarizing view that uplifts non-profit programs and condemns for-profit universities. The reality, she says, is not-for-profits are often more expensive, not less. Phillips also points out that non-profit universities can seem indifferent to student needs.

What Phillips laments most, amid all the choices, is lack of transparency from the institutions (public or private, for-profit or not), and a Congress rushing to catch up to the rise of Internet colleges. Senators initially called for a crackdown in 2004 after the GAO report about federal employees’ resumes came out, and other efforts followed. Congressman Tim Bishop (D-New York) has criticized the rise of diploma mills in recent years and has introduced, multiple times, the Diploma and Accreditation Integrity Protection Act, most recently as H.R. 1758 on May 5, 2011. The act proposes that the government prohibit the issue of diplomas not recognized by the Department of Education if the issue distorts “material fact concerning the course of study” as well as tackles deceptive advertising and unrecognized accreditation. The bill is currently referred to committee and it remains to be seen whether it will become law.

In the meantime, prospective MBA students simply have to do their homework as best they can, doing everything from looking up accreditations to gauging employer perceptions of programs. It ain’t easy, Phillips says.

“Consumers know how to buy toasters,” she says. “They don’t know how to buy college degrees.”


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