by Mica Schneider

Will McKendree is hoping to finish up an MBA from Indiana University's Kelley School of Business by August, 2005, and then earn a master's of finance the following year. The 26-year-old mid-Atlantic regional assistant for J Crew hopes the two degrees will make him more marketable as he moves up in the retail world.

But unlike most MBAs-in-training, McKendree is attending lectures about 520 miles from his professors, in Indiana's Kelley Direct Online MBA program. Were it not for the Net, a master's would be out of reach for McKendree, whose bills include monthly payments on his BMW. "I can't afford to stop living the way I'm used to just go back to school," he says.

QUIET-TIME STUDY.  McKendree is among a growing number of workers who are turning to the Net for commute-free online business-degree programs. In a survey by BusinessWeek Online in 2001, 81 schools reported MBAs studying via the Net or correspondence. In 2003, the number of schools with MBAs studying online rose by about 10, and the average number of students in each distance program increased to 81 MBAs, up from 45 in 2001.

More flexibility is the No. 1 reason professionals are choosing the Net for B-school. Instead of racing from work to an evening class, online MBAs can attend class and study wherever they are and whenever they have free time. "It's challenging enough to have a full-time job and to do additional classroom work," says 41-year-old Robert Miller, chief of clinical medicine for air education and training command in the U.S. Air Force. When his children are asleep, Miller logs on from Texas to study with the University of Massachusetts' Isenberg School of Management.

Corporate America's embrace of distance learning is giving these degrees more credence. General Motors (GM ) has about 150 people studying for online MBAs. At United Technologies (UTX ), more than 30 employees are earning online MBAs at Kelley Direct, and a dozen have already graduated. Stephen Bieglecki, director of technical education at United Technologies, estimates it will spend $12.9 million on business master's programs in 2004, of which 28% will completed via distance learning. That percentage should grow a couple of percentage points per year, he adds.

PROVEN SUCCESS.  Corporate backing also has fueled enrollment at many Net-based programs over the last couple of years. Kelly Direct, which started with 14 MBAs in 1999, now enrolls about 500 students. An additional 250 students study through corporate MBA programs or other master's of management degrees.

Revenues from the program topped $7 million in 2003, up from a few hundred thousand in 1999, says Richard Magjuka, faculty chair of Kelley Direct. The online MBA at U-Mass has seen enrollment more than double since 2003, to 240 students. U-Mass now counts 10 applications to the online program for each application to the on-campus part-time program. And around 400 part-time MBAs at U-Mass have signed up to take some MBA courses online, up from 235 last summer.

As a result, the school has been able to reduce the number of night classes it offers around the state. "You respond to the demands of the market, and that's what online education is demonstrating," says Erik Berkowitz, associate dean for professional programs at U-Mass.

QUESTIONS OF QUALITY.  But not all online programs are the same. Programs with a for-profit model like the University of Phoenix, which is owned by Apollo Group (APOL ), usually rely on regional education accreditations. Academic programs, such as U-Mass, seek more stringent, management-specific accreditations, including AACSB-International. AACSB-approved schools must employ a certain number of qualified faculty, which some for-profit centers view as unnecessary. "A school with a nontraditional model has a harder time justifying that the model meets our quality standards," says Milton Blood, managing director of accreditation services at AACSB.

Accredition isn't everything, though. The University of Phoenix doesn't have AACSB certification, but it's performing quite nicely. With a stamp of approval from The Higher Learning Commission, an organization for educational institutions, the university has enrolled 15,047 MBAs online in 2003, up 65% from 2002. For-profits also are more adept at meeting higher growth rates because they can hire easier-to-find working professionals to teach classes, instead of professors, which saves schools money.

"Practitioner faculty...have a lot of benefit for our students," says Daniel Hamburger, president and COO of DeVry University's Keller Graduate School of Management, a for-profit with about 680 MBAs studying online. That way, he says, the MBAs get a "real-world education."

TOUGH ACT TO FOLLOW.  Academic programs say they're less willing to sacrifice classroom quality to boost their numbers. They also must contend with requirements that are imposed on them by the university and accreditation boards. As a result, enrollment suffers.

At the University of Florida Warrington College of Business, the 150-student Internet MBA is profitable, but limited. "We can only start one [new class of MBAs] per year," says John Kraft, dean of Warrington. Also, the Internet MBA runs over two years and requires two days on campus per semester for testing and presentations. To raise interest in its program, Kraft he says the school may soon launch a new cohort of students based in Asia or Europe.

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