what does a waitlist mean?

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It's the second. It basically means that they've reviewed your application and aren't able to offer you an acceptance because they feel that there may be more qualified people after everything's all said and done. You may be awarded an acceptance later, after the cycle winds down, or not. The amount of waitlist movement depends on the school.
 
Or you could be like me and have 2 waitlists last year, with neither school interviewing me this year. 😕 Le sigh.
 
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