Bad Bets: The High Cost of Failing Programs
Future-oriented business schools should structure MBA programs around three imperatives: data-fluency, necessary hard skills, and core foundational skills.
When looking to demonstrate the value of earning an MBA, business schools can point to three core areas that show MBAs as the key to unlocking career goals.
Every new program launched by a college or other institution in higher education is a bet that the idea will resonate with students and grow enrollments—and too many of these bets don’t pay off.
Roughly half of the programs that first graduated students in the 2012-13 or 2013-14 academic years reported five or fewer conferrals in 2018, according to an analysis of federal data by Burning Glass Technologies. Some 30% reported no 2018 conferrals at all. In other words, not a single student that year marched in commencement to receive a degree from these new programs.
When you widen the aperture, the picture doesn’t improve. A staggering two-thirds of new programs produced 10 or fewer graduates in 2018. That figure roughly holds true across public and private institutions, two-year and four-year, and for undergraduate and graduate programs.
That doesn’t mean these programs produced no graduates at all during those five years. Even the 30% of programs that produced no graduates at all in 2018 reported some 48,044 degrees conferred since they were launched. On average, that works out to about 15 conferrals per program, or three per year. Under the broader lens of programs with under 10 conferrals five years after launch, the average increases to about four per year.
Not every program will produce large numbers of graduates, in the same way that not all products succeed in the market and not all movies become summer blockbusters. But the stakes are high for U.S. higher education, which is in an unprecedented financial crisis that was brewing even before COVID-19 struck.
Many colleges and universities are rushing new degree programs into place, hoping to draw in new students and the revenue they bring. But that strategy will only work if those new programs cover their costs, which we estimate can conservatively run to $2 million over four years. A program that grants no conferrals cannot be paying for itself—and in fact may be dragging an institution closer to the brink.
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