Published on 2020/08/27

International Student Revenue Drop: The Financial Impact on Higher Education

Michelle Caron | Associate Dean, Southern New Hampshire University Global Zuzana Buzzell | Associate Dean of Business Programs, Southern New Hampshire University

Last year, the U.S. set an all-time high in international student enrollment, surpassing one million students and injecting $44.7b into the economy¹. International students often pay full tuition and account for approximately 6% of the total post-secondary student population. As academic institutions struggle with their bottom lines, international students are considering deferring until next year, reevaluating their destination countries, and assessing the true value of a hybridized model to fit their unique needs.

Originally the primary destination of approximately one-third of prospective international students, the U.S., is now only preferred by 9% of these students. This is clearly evident in the F1 visa application issuance, with 644,233 visa application issued in 2015 compared to 364,204 in 2019, a decline of over 40% in four years². Other dominant countries attracting them were the United Kingdom and Canada, with renewed interest in Australia and India. These countries have seen an increase in their respective international student populations, with their governments putting forward comprehensive plans to attract and support their higher education recruitment efforts. For example, as the U.S. has seen a decline in student visa issuance, Canada has seen a 185% increase in its international student population from 2010 to 2019.³ This increase has put additional pressure on American colleges and universities and created unprecedented competition, leading U.S. academic institutions to market more specialized programs that are in high demand.

Student perspectives by level of education and subject area may inform how colleges and universities tailor their recruitment strategies, tuition fees, retention predictions, and financial forecasts.

Level of education

Part of the draw for international students is the ability to interact with people from different cultures throughout their learning experience and provides an opportunity for domestic students to be exposed to international perspectives, as only 10% study abroad prior to earning their bachelor’s degree. Recent findings from QS, indicate that a significant portion of undergraduate (38%) and graduate (43%) students said they would not at all be interested in online learning. An overwhelming majority of international students felt that their tuition fees should be decreased, which speaks to the greater financial value in the campus/on-ground learning experience.⁴ The drop in enrollments at the graduate level also negatively impacts the number of patent applications as well as university patent grants.

Programs of study

According to QS, students majoring in business and management (61%) were most likely to defer their studies until next year due to the coronavirus, while 7% were considering changing their destination country, and 4% no longer wished to study abroad at all. Business and management majors accounted for a majority of the survey responses. Engineering and technology students were the second largest group by major and had the highest percentage of students no longer wanting to study overseas (7%). Over a quarter of prospective engineering & technology majors anticipate higher discounts of over 50% compared to other majors having to study online. Medicine & dentistry majors were the least likely to defer despite the likely transition to online learning environments, and they also had the largest number of students changing their destination country (11%).⁵

Programs offered should favor the various governmental scholarships offered by different countries that send their students abroad to gain new viewpoints and frames of reference. Th governments of Saudi Arabia, Brazil, China, Russia and India invest into their tertiary education, and these countries have seen graduates return with higher value-added skills to contribute to their economies.

Economy

Optional practical training allows international students to gain practical field experience through temporary work in the U.S. According to NAFSA, these students supported over 450,000 jobs during the 2018-2019 academic year and have helped stimulate our economy. For every seven international students, three U.S. jobs are created and supported.⁶

Int’l Students	U.S. Dollars	Jobs
CA 161,693	CA $6.8 billion	CA 74,814
NY 124,277	NY $5.3 billion	NY 59,586
TX 81,893	MA $3.2 billion	MA 38,799
MA 71, 098	PA $2.1 billion	PA 27,530

https://www.nafsa.org/sites/default/files/media/document/isev-2019.pdf

Students specializing in science and engineering fields, in particular, help employers fill critical positions for which qualified workers can be more difficult to locate.

Conclusion

The budget boost stemming from international student tuition will negatively impact the profitability of colleges and universities on a global scale, as expenses from the COVID-19 outbreak mount. NAFSA estimates a $3 billion hit this fall. While financial strain stretches some academic institutions to their breaking point amidst declining retention and fewer prospective international students, forecasted enrollments for the next academic year from the American Council on Education anticipate a 25% decline in the number of international students.⁷ The U.S. is no longer the top-ranked world destination for international study but has dropped to 5^th place.⁸

It’s time to reimagine how to make the U.S. a more attractive study destination and try to recapture the immeasurable academic and cultural value international students bring to the classroom wherever that may be.