For prospective MBA students who want to earn an MBA in the USA, the two-year degree was traditionally the only game in town. But several leading American business schools have started offering one-year MBA programs in recent years. And these shorter, sharper degrees are becoming increasingly popular in the world’s largest economy and around the globe, as a way to shave substantial costs off studying.
In fact, the one-year MBA has surpassed the two-year degree in popularity, according to the 2023 Prospective Students Survey from the Graduate Management Admission Council (GMAC), which runs the GMAT entrance exam.
According to business schools that run these fast-track MBA programs, this reflects two short-term trends: a growing focus on affordability amid high inflation and economic uncertainty, as well as the enduring strength of the labor market.
“The shorter duration of the MBA program means that students invest less time and money in their studies,” says Urs Peyer, dean of degree programs at INSEAD, which runs a 10-month MBA in France and Singapore. “This is very attractive to students looking to minimize their time away from the workplace and reducing their financial burden.”
The rise in interest in one-year MBAs comes as many two-year programs suffered a drop in demand last year, especially in the USA, because of the high opportunity cost of leaving the workforce at a time of wage inflation. With a potential recession around the corner, many schools expect a rebound in demand for their two-year MBAs this year, but the job market remains resilient.
“I think that the hot US labor market is responsible for the drop in demand for US MBAs – most of which are two-year programs,” Peyer says.
One-year MBAs: a rapid return on investment
One-year programs usually provide a faster return on investment, since students can get back to gainful employment sooner, often with a substantial increase in their post-MBA pay.
“I often hear from candidates that they would like to be in and out faster, so that they can continue on with their career,” says Brandon Kirby, director of admissions at Rotterdam School of Management in the Netherlands, which offers a 12-month MBA.
He also points to the rising cost of MBA degrees in general in recent years, especially since last year’s rise in inflation, as reasons for the growing popularity of shorter MBAs. “Not only is there the cost of living and tuition, but also lost wages,” Kirby says.
But one-year options can be more intense, as they seek to provide a similar student experience, just in less time. “It really expand a student’s resilience, ability to work under pressure and adapt to change,” he adds.
One-year MBAs gaining ground in the USA
The Kellogg School of Management at Northwestern University is one of the small number of US schools that run one-year MBAs alongside their two-year options.
Steve Thompson, the senior director of full-time admissions at Kellogg, points to generational divisions. “Gen Z is most interested in the two-year MBA and millennials
are most interested in the one-year MBA,” he says. “This could be an indication of where each generation is in their career journey.”
The two-year MBA may be perceived as inaccessible: “Some professionals may not be able to be out of the job market for two-years and may have familial responsibilities or other commitments that influence their decision to pursue a shorter program,” Thompson says.
More widely, one-year programs are a good fit for those students who want to return to the same employer or industry, armed with a new credential that can help them advance quicker or become a stronger leader. However, those seeking a significant career change may prefer a two-year program, because it allows room for a summer internship -- a good opportunity to try out a new job before fully committing.
“In the US, the hiring of MBA students is often done via a summer internship,” says Peyer at INSEAD. “But during hot labor markets this is less needed from the company’s perspective.”
Indeed, Kellogg’s Thompson adds: “The one-year MBA could become increasingly popular now due to increased competition in the workforce.”
Kellogg actively tries to “debunk” misperceptions about the one-year MBA, he adds -- including that employers look down upon these shorter degrees. “The one-year MBA carries all of the benefits of the traditional two-year MBA program,” he insists. Students on this shorter program are “acutely aware” that it does not require an internship.
At Rotterdam School, Kirby finds that candidates are far better informed on what they want from their career, and the second year of an MBA “to figure it out” isn’t needed as much as in the past.
But one-year MBA students at the school can still do a summer internship, either in the latter part of the program during the elective period or after MBA ends, but before they graduate, which is a period of two months.
Looking ahead, Kirby believes that it will become harder for business schools to attract students to longer degree formats given the enduring strength of the job market. “Now more than ever, schools are not only competing with other schools for candidates, but also companies themselves who are offing attractive packages for the employees to stay,” he says.