HBS Sets New Record For MBA Scholarships

Harvard Business School sets up for Class Day on Baker Lawn

In the ongoing arms’ race to get the best and brightest MBA students, Harvard Business School continued to up its game last year. Scholarship support to MBA students at the school hit an unprecedented $34 million, up from $32 million a year earlier. That increase brought the average annual fellowship per MBA student to a record $35,571, up 8% from $32,919 in 2015.

Yet, the $34 million figure is only for MBA fellowships. Once you include support of doctoral students and some scholarship aid for executive education participants, Harvard Business School paid out $47 million in fellowships in 2016, a $3 million increase from a year earlier. The school, moreover, said it anticipates another 4% rise in fellowship aid this year, an increase that will offset a planned 4% rise in MBA tuition.

The massive amount of scholarship support reflects the school’s strategy to price its prestige MBA program at the midpoint of peer business schools. In the past five years, the school’s average two-year MBA fellowship award has grown from $53,563 for the Class of 2012 to $69,000 for the Class of 2017. Roughly half of the school’s MBA students currently receive fellowships, which now cover more half the cost of the annual tuition of $61,225.


Harvard Business School’s annual report for fiscal 2016

The increase, moreover, occurred in a year when the value of HBS’ endowment fell by $100 million to $3.2 billion, after the net impact of distributions and the addition of new gifts during the year. Harvard said the downturn in endowment reflected the worst performance since the 2008–09 financial crisis. And although revenue at the school’s digital initiative HBX doubled to $10 million, Harvard said the operation was still in the red to the tune of $12 million last year.

The figures were disclosed in HBS’ annual report for fiscal 2016, ending June 30th. As always, the report lays open the extraordinary resources of the world’s most successful business school and its ability to generate massive revenues from publishing, executive education, MBA tuition, fundraising, and its formidable endowment.

The report also makes clear how no other business school in the world even approaches the size, scope and influence of HBS. The gap between Harvard and Stanford University’s Graduate School of Business is almost $2 billion, given the GSB’s $1.392 billion endowment. Outside the U.S., the comparisons are even more staggering. INSEAD, with the largest endowment of any non-U.S. business school, only has under $200 million.

Harvard Business School, moreover, now employs 1,631 full-time equivalent professional staffers, up from 1,541 a year earlier, and 233 FTE faculty, roughly the same as the 231 in 2015. HBS has been holding its faculty positions stable in the past five years, with a net add of only one FTE since 2012. Meantime, professional staff has grown by 36% over that timeframe from 1,198 to the current 1,631 staffers.


HBS–the most transparent of all the business schools when it comes to its finances and operations–said its operating revenues grew by $54 million, or 7.6%, to $761 million last year, while expenses increased 6.7% to $704 million. The largest revenue growth drivers were Harvard Business Publishing, publisher of its case studies, books and the Harvard Business Review, which was up $14 million, the annual endowment distribution (up $11 million), and current use gifts to the School (up $9 million). The major areas of expense growth were salary and benefits (up $15 million) and professional services (up $13 million).

The school’s publishing revenue reached a record $217 million, up $14 million from the $203 million in 2015. HBS sold 13.5 million case studies in 2016, up from 13.2 million a year earlier largely due to what the school called “broader global distribution.” The school said HBR.org, its website for the Harvard Business Review, averaged 5.5 million monthly visitors last year, up from 4.6 million in 2015.

HBS’ executive education revenue also established a new record of $178 million, up $11 million from the $168 million a year earlier. Enrollment in the school’s exec ed programs totalled 10,915, up from 10,614 in 2015. The school attributed the grwoth to an additional offering of an existing program in its leadership program portfolio, as well as higher custom and global program participation. The school, however, noted that enrollment in its focused programs was lower than in fiscal 2015.

The school also said that someday it expects its online learning initiative to be a major source of revenue. For now, however, the annual report described HBX as in “start-up mode,” expected to require continuing investment for the next several years. The business school reported that 4,879 students took HBX’s CORe (Credential of Readiness) online program of business basics last year, a 39.1% increase over the 3,508 participants. HBX also doubled its corporate customers to 43, up from 21 in 2015, and had 16 collaborating colleges or universities, up from 13.

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