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If the acceptance rate of a university is 90%, does that mean it accepts 90 out of every 100 students that apply? Does a university's acceptance rate indicate its quality? Most top universities have low acceptance rates, however some good universities have high acceptance rates.

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If the acceptance rate of a university is 90%, does that mean it accepts 90 students from 100 that applied?

Yes.

Does the acceptance rate of universities indicate the quality of them?

No, not particularly. For example, it's possible to get a good education at an institution with open admissions. It's true that low acceptance rates are correlated with quality, for at least two reasons. A university that is perceived as being of high quality will often receive more applications than it has space available for students, and being able to choose high-achieving students will help create an academically stimulating atmosphere and enable the university to offer more demanding courses. However, this correlation is far from perfect. Acceptance rates are essentially a popularity contest: you are measuring a combination of how many students apply and how many accept an offer of admission. Like most popularity contests, they only tell you so much.

It's also worth noting that these statistics can be intentionally skewed by universities. Because college rankings in the U.S. often involve acceptance rates, some schools have adapted by deliberately advertising to try to attract applications from students they have no interest in admitting (increasing the total number of applications decreases the acceptance rate). This makes the acceptance rate even less meaningful than it used to be.

Added in response to Kimball's question about references:

I don't know of a definitive reference. It's widely believed to be happening, but it's difficult to prove since who would admit it? (Instead of saying "we're soliciting mediocre applications just to be able to reject them," any competent admissions director would say "we're casting a wide net to make sure talented students don't get overlooked.") Certainly schools that are concerned about their rankings are trying hard to get more applications; see, for example, this story about Northeastern, which suggests but doesn't explicitly say that Northeastern is more concerned about the number of additional applications than their quality (the closest it comes is "The more applications NU could drum up, the more students they could turn away, thus making the school appear more selective"). See also this NYT story, which discusses attracting more applications as a form of ranking manipulation (but attributes this information to unnamed admissions directors and doesn't mention any concrete examples). For comparison, seeking more applications is not so extreme: Clemson has been accused of far more dramatic forms of ranking manipulation.

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    some schools have adapted by deliberately advertising to try to attract applications from students they have no interest in admitting - Do you have any reference for this out of curiosity? – Kimball May 18 '15 at 5:45
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    An addition for your last paragraph: This goes both ways; in some countries, public university funding is partly based on acceptance numbers, in which case the statement "the more accepted students, the more money" is valid. In such places, universities are motivated to intentionally accept as many students as possible (just to try and kick as many of them out within the first two semesters by making the first few exams the most difficult throughout a whole major - with failure rates of 70 to 80% being normal). – O. R. Mapper May 18 '15 at 13:19

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