The decision by the Tippie College of Business to phase out its full-time Master of Business Administration program was a strategic move, not a financial decision to kill a money-losing program, its dean said today. 

"I've been asked if this was simply a cost-cutting measure," Tippie Dean Sarah Gardial said on a conference call today. "Nothing could be farther from the truth." 

Gardial said the decision rather came down to: "Do we stay in a shrinking market with ever-decreasing payouts, or do we move out to areas that represent growth?" 

The University of Iowa college announced last week that its full-time program will end when the current incoming class graduates in May 2019. Phasing out the full-time program will allow Tippie to introduce several specialized master's programs over the next three years and allow the college to increase investments in MBA programs that serve working professionals such as the Professional MBA and the Executive MBA.

Nationwide, 53 percent of full-time MBA programs reported declining applications last year, Gardial noted during the call. In the same period, 60 percent of Midwest universities showed a decline in MBA applications. Declining international student applications have also reduced MBA enrollments by 64 percent year-over-year, she said. 

Among undergraduate UI alums recently surveyed, just 7 percent expressed a preference for enrolling in a full-time MBA program, whereas 82 percent said they would be interested in a hybrid or specialized MBA program, she said. 

"What people are looking for are more 'stackable' credentials that they can get over time rather than all in one chunk," she said. 

Gardial said that the full-time MBA program at UI has lost money "for years" and that the shifting demand toward specialty programs made it clear it was time to reallocate resources to the new programs the college has introduced. 

Despite the trends, the college has been "proactively tweaking" the full-time MBA program and has spent $2 million to $3 million annually in operating expenses in addition to faculty pay, she said. The program also represents the highest concentration of tenure-track faculty in the Tippie College. 

Gardial said the quality of the MBA program has been maintained despite the trends, with GMAT test scores increasing year-over-year and a top 10 ranking for incoming test scores by Poets & Quants magazine. 

Gardial noted that Virginia Tech has a No. 7 ranking nationally for its part-time MBA program, despite discontinuing its full-time program. "There doesn't appear to be an impact from discontinuing the full-time program," she said.