UNC Makes Risky Online Bet

The University of North Carolina’s Kenan-Flagler Business School is taking its brand online.

While online programs are still mostly seen as the purview of for-profit schools, like the University of Phoenix and Capella University, UNC is hoping to change that image.

The business school this Monday launched an online M.B.A. program with 19 students, dubbed MBA@UNC, that will offer the same core curriculum as its regular full-time M.B.A. program. It is the first online program of its kind from a top-20 U.S. business school.

Other universities, including Indiana University, Northeastern University and Howard University, offer or will soon offer online M.B.A. degrees.

UNC school officials believe that in 20 years most business schools will want to get into this space and see the program as an opportunity to give the school the global reach viewed as particularly critical in today’s business environment. The school is also betting that some companies will pay for employees to attend classes virtually if a good local option isn’t available.

Still, "the concept of online education does not have a sterling image," said Doug Shackelford, associate dean of the online M.B.A. program. So, when administration officials first announced MBA@UNC last year, proponents went on a full court press, holding town halls with alumni and students, and faculty meetings to try to show that the online M.B.A.’s quality would be just as high as UNC’s regular M.B.A. On paper, the online M.B.A. will be indistinct from the brick-and-mortar degree earned by students.

Jeff Tucker, a managing director with private equity firm Century Bridge Capital and member of UNC’s alumni council, said "There were vigorous discussions" about the online program. Mr. Tucker added he would have no problem hiring an MBA@UNC grad.

However, not everyone is convinced. "There’s a stigma that’s causing students to not be excited about the program," said class of 2012 student Louis Reavis, 30 years old, referring to negative perceptions that some online M.B.A. programs are of low quality or aren’t as competitive as a regular full-time program.

Deborah Bushway, interim president of Capella University, said employers have been impressed with the quality of graduates the university has put out and that she thinks they will continue to attract the same quality of students even in the face of increased competition from schools such as UNC.

Because UNC’s online program offers its live online classes in the evenings, as an executive M.B.A. program would, university officials believe it will draw in mostly working professionals who don’t live near a school with a well-known executive M.B.A. program.

UNC officials say that admissions standards for the new program are just as high as for an on-campus M.B.A. UNC students in the class of 2012 had a median Graduate Management Admission Test score of 700 and a grade point average of 3.3.

Incoming online student Jamie DeMaria, 38, is an executive director of strategic development for Medscape, a part of WebMD. He said he chose UNC’s program in part because he didn’t believe there was a well-known program near his Annapolis, Md., home, and he didn’t want to leave his job. Mr. DeMaria said he looked at both on-campus and online programs, but only applied to UNC’s program. "When you look at how people lead their lives today," he said. "It’s a great thing to do."

Students such as Mr. DeMaria will foot MBA@UNC’s $89,000 price tag over two years, just shy of the traditional program’s $98,000 price for nonresidents. (Residents pay $52,000 for the brick-and-mortar degrees).

For that price, students spend two years working through essentially the same core curriculum as their on-campus counterparts, though sometimes through documentary-style lectures posted online. The first crop of online students, the class of 2013, will take 20 courses, but they won’t be able to pick electives or concentrations as on-campus students.

Class discussions occur via Web cam. Students can raise their hand to talk just like they would in a regular classroom. For group projects, students link up via a similar program.At the end of most quarters—the school year runs over 12 months—the school will host face-to-face sessions in various cities, starting in Chapel Hill in December. Students must attend at least two sessions.
UNC developed the program in conjunction with 2tor, a New York-based start-up that helps universities design and implement online programs. UNC declined to give specifics on the financial arrangement, but said their investment totaled in the millions. 2tor invested more than $10 million in the program. The start-up will receive a share of the tuition UNC receives from students for the 10-year life of the UNC contract.

2tor has helped start online programs in nursing at Georgetown University and in teaching at the University of Southern California

So far, other top schools, including Harvard and the University of Chicago, say they don’t have formal plans to create their own programs.

While the Anderson School of Management at the University of California, Los Angeles, has offered "a handful" of hybrid or fully online versions of short electives in recent months, they’re still "experimental at this stage," said Carla Hayn, senior associate dean for the fully employed M.B.A. and executive M.B.A. programs. "We’re wading very gently into these waters."

Ms. Hayn said "there are other aspects to education"—such as networking and learning to read social cues, "that are kind of hard to get online."


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