US: The link between public funding and international student recruitment

With international students paying up to three times as much in tuition as in-state residents, public research universities in the United States are increasingly turning to foreign student recruitment to offset cuts in state support for higher education. The number of international students in the US has increased more than 40% in the last decade. In 2015/16, international student enrolment in America surpassed the one-million mark for the first time. With foreign student numbers now at an all-time high, international education has become a big business in the US. NAFSA estimates that international students contributed US$33 billion to the US economy in 2016, while supporting more than 400,000 jobs. Another recent analysis found that foreign students paid more than US$9 billion in public university tuition and fees alone, accounting for about 28% of total annual tuition revenue for such institutions in the US. Even as international enrolment has grown, however, state budgets for higher education have decreased. State appropriations per full-time equivalent student have fallen from around US$12,000 in the mid-1980s to less than US$7,000 per FTE in 2015. The most recent decline in state appropriations for education was precipitated by the 2008 global economic crisis. And as state support for higher education has declined, public institutions have become increasingly reliant on tuition revenue. In 2003/04, state and local appropriations made up 39% of the revenue base for public colleges in the US, while net tuition revenue contributed 29%. Ten years later, these figures had reversed, according to data from the College Board. Many universities have pursued a variety of strategies to offset public funding cuts, including tuition hikes for in-state students. The College Board reports that the average published tuition and fee price of full-time study at a public four-year institution is 40% higher in 2015/16 than it was in 2005/06. Prices at public two-year and four-year private colleges have also increased, but not to the same extent. In addition to across-the-board tuition hikes, many institutions are doubling down on out-of-state and international recruitment as non-residents often pay much higher tuition rates. In-state tuition at Arizona State University, currently the top US public school hosting international students, is US$10,370, compared to US$26,470 for non-residents. At highly selective institutions such as University of California, Berkeley, in-state tuition is US$13,510, whereas non-residents pay US$40,192. Jeff Riedinger, vice provost for global affairs at the University of Washington (UW), says that a lot of public universities in the US have changed their business model, particularly after the economic downturn in 2008/09. "Many publics turned to out-of-state and international students, who pay double or triple the amount charged to non-residents," he says. "Enrolment of additional out-of-state residents and international students has helped create a more international and domestically diverse campus, but it is also a way of significantly augmenting tuition." According to Mr Riedinger, enrolment of Washington residents has remained roughly the same at the main UW campus in Seattle over the last decade, but the international student population has increased significantly. "Ten years ago, we had 2,600 international students on campus. Now we have roughly 7,000, with more than half of those undergraduate students," he says.

New study provides a wider view

Developments at UW are mirrored more widely at public institutions across the United States. A recent National Bureau of Economic Research (NBER) study, A Passage to America: University Funding and International Students, found that public universities were able to take advantage of the expanding pool of potential students from abroad to provide a stream of tuition revenue that partially offsets declining state support. The study finds that an overall reduction of 10% in state appropriations was accompanied by a 12% increase in international enrolment at public research universities and a 17% increase at the most resource-intensive public institutions. NBER points out that while the pool of highly qualified out-of-state residents has remained relatively stable, international demand for US higher education continues to grow, especially from China. Foreign students are also more likely to pay the full costs of study, with most international students self-funding their programmes rather than receiving financial aid. The study concluded that most of the growth in foreign enrolment between 2007 and 2012 was concentrated at public research universities, which experienced a 112% increase in foreign undergraduate commencements over that period. Private research universities experienced a 61% increase over the same timeframe. In addition, the institutions that have most aggressively pursued international student recruitment are those that do not necessarily have name-brand recognition with out-of-state students. For example, cuts in state funding in Michigan produced little change in international enrolment at University of Michigan, but contributed to a significant boost in foreign student numbers at Michigan State University. The NBER study concludes that foreign student enrolment has allowed many US universities to avoid significant cost cuts and additional tuition hikes:

"Expanding foreign enrolment at the undergraduate level is an important channel through which public research universities buffer changes in state appropriations. While additional revenue from in-state tuition increases appears to recoup a large fraction of the fall in appropriations, research universities would have had to navigate reductions in resources per student or yet larger increases in in-state tuition in the absence of the large pool of foreign students."

With international students now making up a growing proportion of the student body at institutions across the US, the question remains whether universities are developing the capacity and services necessary to meet the needs of diverse students from abroad and integrate them into the wider campus community. Other analyses have expressed concern that international students are “crowding out” domestic students and making university admissions even more competitive. Public universities, in particular, have to balance their commitment to providing quality education to the local population, with the need to keep university studies affordable. On one level, international tuition subsidises programmes for in-state students. At the UW, for example, international and non-resident domestic tuition make possible programmes such as the Husky Promise, which guarantees that full tuition and standard fees will be covered by grant or scholarship support for eligible Washington State students. Mr Riedinger, who was previously dean of International Studies and Programs at Michigan State University says that institutions have a few ways they can approach their enrolment management, which can also be impacted by the demographics of the state. When he was at MSU, there was a declining number of high school graduates, and so a smaller pool of in-state applicants. "Do we lower our admissions standards and keep bringing in the same absolute number of in state residents," he asks "Or do we keep admitting the 5% to honor our historic commitment to the local population, and recruit more widely?" As Mr Riedinger puts it, "The bargain we strike is that we increase our funding [through international and non-resident enrolment], in return for lower or no tuition hikes for residents." For additional background on international student trends in the US, please see:

• “More than one million international students in the US”
• “Affordability a key factor for US-bound international students”
• “Fastest growth in 35 years for international enrolment in US”