Upping an arm’s race on MBA scholarship aid, Harvard Business School said it is handing out a record $32 million to MBA candidates this year, up 10% from $29 million in fiscal 2013. It is the fifth year in a row that HBS has increased fellowship spending.
Dean Nitin Nohria disclosed the number to Poets&Quants in a recent appearance in San Francisco. The increase in fellowship payouts to MBA students this year will grow at twice the pace of the 5% increase in annual tuition, which is now $56,175. Only four years ago, fellowship spending on MBA students was $25 million. If fellowship spending to doctoral candidates and executive education participants are included in the number, it is even higher: $40 million last year.
No other business school in the world provides more fellowship support than Harvard, though its reputation and prestige means that most applicants would gladly go there even if it meant borrowing more than $100,000 to get their MBA. In contrast, most other U.S. and European business schools have fellowship aid that is generally in the single digits. INSEAD, with an annual intake of 1,024 students vs. HBS’ 932, has $4.1 million in annual scholarship aid, with the average grant at $18,350.
AVERAGE TWO-YEAR MBA FELLOWSHIP AWARDS ARE $59,000 FOR THE CLASS OF 2014
Many schools have struggled to close the gap in recent years, setting aside significant fundraising for scholarship support, but HBS keeps changing the game. “Over the past five fiscal years, the school’s average two-year MBA fellowship award has grown from $44,482 for the Class of 2009 to $59,000 for the Class of 2014,” according to Richard Melnick, chief financial officer of HBS. “About half of the school’s MBA students currently receive fellowships, which cover an average of more than 50 percent of a student’s total tuition. Average fellowship support per student increased three percent to $30,725 in fiscal 2013, from $29,843 in the prior year.”
Melnick said the comments in the school’s annual report, published online on Feb. 7. “Welcoming the most talented applicants, regardless of their country of origin or their financial resources, is a long-standing goal of the school,” he added. “HBS also endeavors to attract strong MBA candidates who, because of financial constraints, might not otherwise consider a degree in business.”
HBS, of course, can afford its generosity. Harvard Business School achieved strong financial results in fiscal 2013, with revenues, operating margins, and gift income all coming in higher than expected. HBS reported record revenue of $587 million, up more than seven percent from $546 million in fiscal 2012 (See chart on following page). Most of the revenue gains occurred in the school’s publishing and executive education units which account for nearly 56 percent of its revenue and an even larger percentage of its operating income.
HBS ENDOWMENT NOW EXCEEDS $2.9 BILLION
The school’s publishing revenue for fiscal 2013 increased by $15 million, or nine percent, to $180 million from fiscal 2012, exceeding the school’s forecast by three percent. HBS said it sold a record 11,448,076 case studies last year, a significant increase over the 10,603,000 a year earlier. Driven primarily by tuition increases, Executive Education revenue grew by $4 million to $146 million, or three percent, from fiscal 2012, exceeding the school’s fiscal 2013 budget by four percent.