Will you be among the more than 10,000 people expected to apply to Harvard Business School this year? If so, you’ll likely be facing the toughest odds of admission into the MBA program in 15 years.
Last year, 10,351 candidates applied for the 941 seats. That’s 11 applicants for every available seats, resulting in an acceptance rate of about 11%. It was the highest number of applicants to HBS since 2002 when 32 more people applied for a total of 10,382 candidates. The acceptance rate that year was 10%.
What history shows is that the best year in recent times to have applied to HBS was 2005 when only 6,559 candidates sent in applications and the acceptance rate hit a modern high of 16%. In the past 12 years, MBA hopefuls to Harvard jumped by 58% to more than 10,350 applicants and the acceptance rate fell by five full percentage points.
THE REASONS FOR THE 2002-2005 CRASH IN HARVARD APPLICATIONS?
What caused the crash in applications at Harvard from the peak of 2002 to the low point of 2005?
Well, there was the 2002-2003 recession following the collapse of the Dot-com bubble. Business scandals at Enron, Arthur Andersen and WorldCom in 2001 and 2002 didn’t inspire many to pursue a career in business.
Indeed, after the 2002 high point, applications plunged 17.7% in a single year in 2003 to 8,540 from 10,382. People wanting to go to Harvard Business School declined for three straight years until stabilizing in 2006. Obviously, it took a few years for all of the bad economic and corporate scandal news to have its full effect. It didn’t help when economic growth weakened unexpectedly in the fourth quarter of 2005, perhaps causing more people to decide to stay put in jobs they already had.
“MBA applications tend to always run a little bit ahead of the economy,” explains Jeremy Shinewald, founder and president of mbaMission, a leading admissions consulting firm. “In some cases, they can almost foretell a crash. They build and build as people realize that in a hot economy an MBA facilitates a transition to a job they may not get in a weak economy. Suddenly, the policy analyst is a product manager at Facebook! Then, when the economy crashes, there is a final surge in application volume, because a huge number of people are dislocated by layoffs.
‘THE MBA HAS MOVED TO A NEW LEVEL OF PERCEIVED SECURITY & PRESTIGE’
“You can see that in the numbers around the financial crisis – there was a spike after the crash. Right now, what is different, is that in this post-financial crash cycle, the application volumes never fell to the extent they did after the dotcom bubble burst. We have been building and building and if the economy were to crash, the application numbers could shoot into the stratosphere – you could see 11,500 applicants for a year or two or three before they fell back down to a new normal. Maybe applicants will look back at this year and realize that this wasn’t such a bad time to apply.”
How come? Shinewald believes the market has changed. “I do think that with the anxiety around being on the wrong side of the economic chasm, combined with the decline of law as a leading professional degree and the rise of tech salaries and perks, the MBA has moved into a new level of perceived security and prestige. It is the ‘safe’ choice for those who want to secure their future now. So, I don’t see the MBA waning anytime soon. The ROI is there and the employers are still waiting at the gates when the students arrive – both sides smiling.”
The chart below tells the whole story and will probably make applicants wish it was 2005 again.