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September/ October 2013 International Students: Separate but Profitable

A boom in foreign undergrads is shoring up the finances of America’s flagship universities, but at a price.

By Paul Stephens


Economics 101: Two Chinese undergraduates at Purdue University protested the school’s decision last year to increase international students’ tuition, a popular source of revenue for cash-strapped state colleges.

When Luodan Li told his parents he wanted to go to college in the United States, his mother teased him, saying he was just running away from the gaokao, China’s high-stakes, famously anxiety-inducing national entrance exam for domestic universities.

Luodan, who is from Shanghai, relented and did well enough on his exams to be placed at East China Normal University, a nationally renowned research institution in his hometown. But Luodan was disappointed that “all the emphasis was just on getting in,” and it wasn’t long before his parents changed their mind. “They saw all their friends’ children were going to America,” Luodan said, “and they thought that I was falling behind.”

Now that he had his chance, Luodan realized that he didn’t know where to start with the complex process of applying to an American college, so he contacted an agency in Shanghai, one of thousands across the country that have made an industry of helping wealthy Chinese students apply to American colleges. For anywhere from $5,000 to $15,000, the agency takes care of every detail of the application process, from assisting students in writing their essays to providing letters of recommendation. The agency gave Luodan a list of schools based on rankings from the U.S. News & World Report and told him to choose six. Luodan’s parents paid the agency, half up front and half a few months later when he got his acceptance letter from Purdue University.

In the fall of 2010, when Luodan got to Purdue, in West Lafayette, Indiana, he was part of an enormous wave of new Chinese undergraduates arriving on campus. In the past five years, the number of Chinese undergrads at Purdue has grown from just 127 to 2,755, mirroring a similar trend at colleges and universities across the U.S.

Since 2006, the total number of international students at U.S. colleges and universities has ballooned by roughly 200,000—growing to more than 764,000 in less than six years, according to data collected by the Institute of International Education and the Department of State. The biggest single group of new international students is from China, which now sends more students than any other country to the U.S. In a trend that is expected to continue, China has increased the number of students it sends to the U.S. by 20 percent every year since 2008, reaching 194,029 last fall.

These new Chinese students have enrolled at American institutions large and small, public and private, with the greatest numbers going to the public, flagship campuses of state universities like the University of California, Los Angeles, the University of Texas at Austin, the University of Washington, or the Big Ten. Big state schools, like Purdue, already had sizable international student populations, but they have increased their undergraduate Chinese student enrollment dramatically, doubling or even quadrupling their total international enrollments in just a few years.

While administrators promote the diversity and global perspectives these new students bring to campus, it’s clear that such high-minded goals are not the only motivation for enrolling large numbers of foreign students. With state spending on higher education declining sharply over the last five years—it’s down an average of 28 percent nationwide—out-of-state and international students who pay full tuition (and sometimes even additional tuition) have kept these institutions in the black. As state assemblies have cut back, the people of China have picked up the tab.

Colleges mostly see this as a win-win situation, solving budget woes and adding to the value of the school’s education at the same time. But with the impact of the boom still reverberating, pockets of dissent are emerging. In states like Washington and California, there are growing complaints that the influx of foreign students is crowding local students out of their own state schools. Meanwhile, at least some Chinese students are complaining that American universities exploit them by charging extra fees. It’s difficult to argue against the valuable opportunities for cultural exchange and public diplomacy that international education provides. But at the current scale, Chinese students have become so concentrated on some campuses that in many ways it’s as if they were attending separate schools within schools.

International students bring a lot of money into the United States, contributing roughly $22 billion to the U.S. economy in 2012, according to one estimate. Francisco Sánchez, the undersecretary for international trade at the Commerce Department, has said the U.S. has “no better export” than higher education, and Larry Summers, former secretary of the treasury and former Harvard president, lists “exporting higher education”—bringing more international students to American institutions—as a key part of his recommendations for economic growth. Many business interests also argue in favor of reforming immigration policy to allow more foreign-born students not only to come to the U.S. but also to remain and work after their studies are complete.

As government support for state schools declines, the tuition paid by foreign students is ever more important. In Indiana, international students bring $688 million in economic benefits, equivalent to 40 percent of what the state spends on higher education every year. At Purdue, the tuition paid by international undergraduates since 2007 accounts for almost half of all the new revenue it has raised through tuition. This is partly because of the expanding enrollment of international students, and partly because of the tuition hikes Purdue has specifically levied on students from abroad. Two years ago, Purdue decided that on top of the $27,646 it already charged all out-of-state students in tuition each year, it would charge incoming international students another $1,000. Last spring, they doubled that fee to $2,000, which will soon add up to an additional $10 million per year for the university.

After the fees doubled last year, the Chinese Students and Scholars Association organized a protest on campus, unfurling banners that read, “We are not cash cows!,” “Education is not a business!,” and “Increase our voice, not our fee.” But the applications from China have continued to roll in. Chinese parents who have spent years saving nest eggs to send their child to university see highly ranked American public schools as a great value compared to private colleges. With growing wealth and a lack of educational infrastructure in China—and millions of single children reaching college age—Chinese parents are willing to pay the price for an American education, which they consider the best in the world.

immigrant education visas chart
Up, up, and away: Undergraduates from China account for a large part of the rapid increase in international student visas in recent years.

In the win-win situation that many universities envision, these Chinese families are subsidizing the education of in-state students while enriching the college experience for everyone. But the numbers tell a more complicated story.

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