In the ongoing scholarship wars among elite business schools, Harvard Business School upped the ante yet again last year, discounting tuition by a record $37 million in fellowship aid for its MBA students in fiscal 2018. While the year-over-year increase was modest–up only $1 million–the $37 million in scholarship support is $6 million more than the $31 million HBS spent only four years ago in 2014.
Approximately half of the school’s 1,870 MBA students currently receive fellowships, which cover an average of more than 50% of a student’s total tuition. Average fellowship support per student increased 4% in fiscal 2018 to $38,959, from $37,312 in the prior year. Over the past five fiscal years, Harvard Business School’s average two-year MBA fellowship award has grown from $59,358 for the Class of 2014 to $80,000 for the Class of 2019. Annual MBA tuition at Harvard is now $73,440, which will not increase this year (see HBS & Chicago Booth Hold The Line On MBA Tuition). When you include the school’s fellowship spending on students in doctoral programs and executive education courses, the total support balloons to $50 million, up from $48 million a year earlier and $43 million in 2014.
The record level of MBA scholarship support was disclosed in Harvard Business School’s recently released annual financial report, a document that makes transparent the enduring strength and enviable resources of the world’s top business school. The total net assets of HBS increased to $4.9 billion, from $4.5 billion at the end of fiscal 2017, primarily reflecting the impact of growth in the market value of the endowment which saw an annual return of 10%, up from 8.1% a year earlier.
HARVARD BUSINESS SCHOOL ENDOWMENT ROSE TO $3.8 BILLION, UP FROM $3.5 BILLION
The school’s endowment, the largest of any business school in the world, rose to $3.8 billion, from $3.5 billion a year earlier, after the net impact of $150 million in distributions from the endowment and the addition of new gifts. Harvard Business School generated an operating surplus of $90 million, compared with $69 million for the prior year. Operating revenues grew 7% to $856 million while operating expenses increased 4.8% to $766 million. In fact, HBS reported that revenue grew faster than expenses for the fourth straight year.
HBS said the largest revenue growth drivers in the year were Harvard Business Publishing, Executive Education, and HBS Online. Total revenue in the school’s publishing group, which sells HBS case studies, business books, and the Harvard Business Review, rose by $19 million, or nearly 9%, to $240 million, from $221 million a year earlier, exceeding the school’s forecast by $16 million. International sales were up nearly 15%, comprising 36% of the publishing group’s total annual revenues. Harvard sold a record 15,062,000 case studies last year, up from 14,859,000 a year earlier.
Executive Education tuition revenue increased by $16 million, or more than 8%, from fiscal 2017, to $207 million, exceeding the school’s forecast by 10%. The school said the growth was made possible by new and newly renovated facilities, including Tata Hall, Esteves Hall, and the Chao Center. “Together, they enabled HBS to increase total enrollment more than 6% to approximately 12,100 by offering an expanded range of higher-priced custom, focused, and global programs,” according to the report. “These included seven new focused programs in fiscal 2018. Additionally, the group continued to diversify its custom portfolio across industries and geographies, as well as program type and size, driving strong enrollment growth.”
HARVARD BUSINESS SCHOOL ONLINE GREW 58% BUT REMAINS IN THE RED
Still, the school’s online initiative remained in the red, despite a whopping 58% jump in revenue in fiscal 2018. The school reported a loss of $5 million on Harvard Business School Online, much less than the $11 million deficit a year earlier. Online revenues grew to $19 million, from $12 million. “This year’s revenue growth was driven by continued portfolio enhancement and expansion,” according to the report.
“HBS Online unbundled its flagship CORe program, offering each course as a stand-alone option. Additionally, the group added three new course offerings—-Entrepreneurship, Becoming a Better Manager, and Sustainable Business Strategy—-and leveraged sales resources at HBP and Executive Education to help them reach a wider audience.” The school reported that HBS Online students jumped by 38.4% in fiscal year 2018 to 11,995, up from 8,665 a year earlier, 6431 in 2016, 3,899 in 2015, and 670 in the year the school launched its online programs in fiscal 2014. The HBX Live Studio, HBS Online’s virtual classroom, hosted 101 synchronous sessions in fiscal 2018—a 63% increase year over year.
Even so, the school isn’t predicting that its online initiative which has been losing money from the start will go into the black. “HBS Online remains in startup mode,” wrote Richard Melnick, the chief financial officer of HBS. “Although we expect its revenue to grow nearly 50%, the group is not likely to become a surplus-generating activity in the year ahead.”