You’re selling a $47,000 product when, suddenly, a nearby competitor starts giving it away for free.
What do you do? Nothing if you’re the boss of the University of Arizona business school.
Jeffrey Schatzberg, dean of the UA’s Eller College of Management, says he isn’t worried about last week’s unprecedented announcement by Arizona State University that it will offer free MBA degrees starting next school year.
ASU’s MBA program, which has a list price of $54,000 for Arizona residents, already is larger and more highly rated than UA’s, which lists for $47,000 for in-state students.
The Tempe-based school’s program was ranked in a tie for 30th in the nation this year by U.S. News and World Report, while the UA’s program was in 56th place.
Even so, “I don’t expect to see an impact” from the ASU move, Schatzberg said.
That’s because relatively few UA students pay full sticker price for an MBA, he said. Almost all receive some aid and top students typically get full scholarships, he said.
Cost isn’t a primary factor for students choosing an MBA program, Schatzberg maintained.
“Most graduate students choose an MBA program based on the prestige of the program or the faculty, the excellence of the major, location and time considerations and so forth,” he said in an email interview.
ASU’s move comes amid mounting criticism nationwide that the cost of MBA degrees has been rising faster than the salaries those graduates are likely to earn.
At a recent national conference for college business school leaders, for example, Betsy Ziegler, associate dean of MBA programs at Northwestern University, warned that business schools may be “pricing themselves out of the market,” that school’s website says.
Jeffrey Pfeffer, a professor of organizational behavior at Stanford University’s business school, believes the industry is overcapacity.
“Everyone I know expects a substantial shakeout in the MBA industry,” Pfeffer recently told the national publication Inside Higher Ed, adding that changes are “long overdue.”
ASU is calling its new effort the Forward Focus MBA program. Officials say it will allow students from diverse backgrounds to earn a degree that might otherwise have been out of financial reach.
Without tuition payments, the MBA students will be better placed to consider public service work such as careers in the nonprofit sector, ASU said in a news release. Or they could use the money saved to launch startup firms that create jobs.
The cost of the program will be covered mainly by a 2003 endowment from William Polk Carey, the real estate investor whose foundation donated $50 million to ASU’s business school.
