HBS Hits New $36M High In Scholarships

    Harvard Business School’s fellowship spending grew by $2 million in 2017, to $36 million total

Harvard Business School has done it again. According to its recently released annual financial report, HBS topped its previous record total for annual scholarship giving by means of filling in the sample scholarship recommendation letter and following the procedure, in fiscal year 2017, giving out $36 million in fellowships, up $2 million from the year before. The increase brought the average annual fellowship per MBA student to a record $37,312, up about 5% from $35,571 in 2016.

Yet that $36 million is only for MBA students — throw in support of doctoral students and some aid for executive education participants, and Harvard Business School paid out $48 million in fellowships in 2016, a $1 million increase from a year earlier. Moreover, the school said it anticipates another 6% rise in fellowship aid in fiscal year 2018, an increase that will offset a planned 4% rise in MBA tuition — and help during an expected uncertain global economic outlook, when the school anticipates a leveling-off of revenue.

“The prospect of entering or returning to the workforce with high levels of education debt can deter strong MBA candidates from applying to HBS and restrict their career choices upon graduation,” reads the report, written by Chief Financial Officer Richard Melnick. “This is particularly true for younger students, women, those from outside the United States, and students whose early career paths have not enabled them to reduce their undergraduate loans. Consequently, the school strives to assist students in minimizing their debt at graduation by ensuring that fellowship support keeps pace with tuition and fees.”

By design, HBS keeps its combined tuition and fees near the midpoint among a group of peer schools. In fiscal year 2017, which ended June 30, 2017, first-year MBA tuition was $63,675, compared with $61,225 in 2016. In the five-year picture, annual tuition has increased more than $10,000 since 2013, while annual aid has increased just under $7,000 (from $30,725 in 2013). Overall last year, student tuition and fee revenue from the MBA program grew to $133 million, from $127 million the year prior.

The 2017 HBS financial report


In 2016, Harvard’s endowment fell by $100 million to $3.2 billion, after the net impact of distributions and the addition of new gifts during the year — its worst performance since the Great Recession. The good news for the school: that appears to have been a one-time occurrence. Last year the endowment recovered, rising $200 million to $3.4 billion. The return on the school’s endowment increased to 8.1%, from -2% in fiscal 2016.

The figures were disclosed in HBS’ annual report for fiscal 2017, which reveals 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 once again makes clear how no other business school in the world 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 approximately $1.39 billion endowment, while outside the U.S., the closest comparable school is INSEAD, which has a comparatively puny endowment of $213.9 million.

Harvard Business School now employs 1,680 full-time equivalent professional staffers, up from 1,631 a year earlier, and 233 FTE faculty, same as the number in 2016. HBS has been holding its faculty positions stable in the past six years, with a net add of only six FTE since 2013. Meantime, professional staff has grown by 26% over that timeframe, from 1,335 to the current 1,680.


HBS’ largest revenue growth drivers were Harvard Business Publishing, publisher of its case studies, books, and the Harvard Business Review, which accounted for 28% of revenues at $221 million; the annual endowment distribution and current-use gifts ($220 million, 27% of revenue); and Executive Education tuition (24% of revenue at $191 million). The school’s publishing revenue reached a new high a year after notching a record $217 million. HBS sold 14.8 million case studies in 2017, up from 13.5 million a year earlier, and HBR.org, the website for the Harvard Business Review, averaged more than 7 million monthly visitors, up from 5.5 million in 2016.

HBS’ executive education revenue also established a new record, up 8% from the $176 million a year earlier. Enrollment in the school’s exec ed programs totaled 11,400, up about 5% from 2016. The school attributed the growth to custom program participation: “In addition to introducing several new one- and two-day custom offerings,” the report reads, “the group played a key role in launching the school’s Client Solutions Council, a strategic effort to create high-impact engagements that integrate Executive Education residential learning modules with HBP courses and HBX modules for single corporate clients.”

Among the major areas of expense growth at HBS were salaries and benefits (up $18 million to $327 million, or 45% of all expenses) and space and occupancy (up about 10%, or $6 million, to $68 million).

Another area of expense was, once again, the school’s digital learning platform, HBX, which brought in $12 million in revenue — up from $10 million in 2016 — but had an operating deficit of $11 million despite a big (but smaller than expected) leap in participation from 6,431 to 8,143 students. “Growing enrollment in new individual courses such as Disruptive Strategy, Leading with Finance, and Negotiation Mastery was partially offset by slower-than-anticipated growth in CORe (Credential of Readiness) course participation,” the report reads. “HBX is envisioned as an academic program that will develop over the long term, joining Executive Education and HBP (Harvard Business Publishing) in contributing to the school’s earned revenue and income from operations. HBX remains in startup mode, however, and is expected to require continuing investment for the next several years. …

“HBX plans to introduce several new courses, and the group’s revenue is expected to grow 50% from fiscal 2017, but it will take several more years for HBX to become a surplus-generating activity.”

Questions about this article? Email us or leave a comment below.