An Admissions Bet Goes Bust

For a time, the University of Central Missouri appeared to be defying the laws of gravity: Its international enrollments went up and up and up. In just a few years, from 2012 to 2015, the university went from having about 600 international students to nearly 2,800.

But just as quickly, gravity reasserted itself. By 2018, its numbers were again hovering around 600.

Central Missouri’s rise and fall was especially precipitous, but it was not alone in this cycle of boom and bust. Over the past dozen years, the number of overseas students coming to study in America rose by 90 percent, to 1.1 million. Colleges across the United States embraced international recruitment as a way to increase revenues, rebrand their institutions, or raise their academic profiles.

One college sought to jump-start its international enrollments in order to underwrite an ambitious building project. Another hoped going international would give it a distinctive edge amid other small, struggling liberal-arts colleges. In many cases, colleges signed contracts with private student-recruitment companies, offering lucrative fees if enrollment targets were met.

But what once looked like a smart strategy now seems like less of a sure thing. Since 2015, the number of new students from abroad has fallen 10 percent amid the travel ban, shifts in visa policy, and increased competition from other countries.

True, one-time commuter schools like Northeastern University and New York University have parlayed their popularity with students from around the world to climb national and global academic rankings. But for every NYU, there are a lot more Central Missouris — institutions that have had to tighten budgets, cut staff, and even shutter programs when their international appeal proved transitory.

“A lot of campuses have gotten into international recruitment and are doing a good job,” says John K. Hudzik, a senior fellow at NAFSA: Association of International Educators and a former vice president for global engagement at Michigan State University. “And a lot have stepped off a cliff and asked, How deep is this hole?”

With the coronavirus outbreak halting travel from top-sending China, the fear is much deeper. For colleges that went all in on international, can they dig their way out? And how can they avoid making similar missteps in the future?

Central Missouri has long had international students, of course, attracted by its close-knit campus environment and links with local employers. But its strategy was recruitment by word of mouth — graduates telling cousins and classmates about this regional public an hour’s drive from Kansas City.

In 2010, university administrators decided to try more-deliberate outreach, focusing on India; there were a number of Indian-born faculty members who had maintained ties. Delegations traveled to India for college-recruitment fairs and other events, and the university contracted with India-based recruitment agents as on-the-ground representatives.

The efforts paid off more quickly, and in greater numbers, than anyone had anticipated, says Charles M. Ambrose, who was then Central Missouri’s president. “It felt like a tidal wave,” says Ambrose, who is now president of KnowledgeWorks, an educational nonprofit. At one point, 60 percent of graduate students, where most of Central Missouri’s enrollment increases were concentrated, were from abroad. In fact, nearly all of the growth was in just two master’s-degree programs: computer science and computer information systems. And much of it came from one particular region in India, the technology hub of Hyderabad.

Growth had its challenges, says Roger J. Best, Central Missouri’s current president. For one, the influx of students required the university to hire additional instructors and support-staff members in admissions and international-student services.

The initial declines, in 2016, took the university mostly by surprise, though Best, who was dean of the business college at the time, says he was skeptical that the programs could sustain such outsize growth rates. In a meeting with the then-provost, Best says, he warned that a falloff in enrollments was inevitable. Asked about a potential timeline, he suggested that they might increase for another half-dozen years. Instead, the cycle of boom and bust lasted just that long in total.

“As fast as it started to increase, it slowed,” Ambrose says. “As soon as we hit a balance, it started to slip away.”

Ambrose says Central Missouri had never counted on international-student tuition as part of continuing revenue, but with cuts in state funding, it became more central. “It was not a financial strategy for the future,” he says. “It was an incredible gift. If there’s any lesson to be learned, it’s that we should have anticipated how fragile the surge was.”

To absorb the loss of tuition revenue, the university was forced to cut faculty and staff positions, including some instructors in the affected graduate programs who were not tenured. Some 180 positions were cut, Best says, with many of the reductions coming through a voluntary-retirement incentives, a hiring freeze, and administrative restructuring. In all, the university had to whittle nearly $14 million from a general-fund budget of $149 million.

Katie Jacobs, an associate professor of psychology, was president of the Faculty Senate when the sharpest cuts took place. She praises administrators for their transparency but says the losses have been difficult to absorb. As workloads doubled or even tripled, “it made it increasingly difficult to educate our students, which is the primary focus for us as a teaching institution,” she says.

Once Central Missouri administrators were able to come up for air, they sought to understand what had led to the abrupt decline in international enrollments, Best says. Some of the factors were outside of the institution’s control, he says, such as the broader political climate, mounting visa-denial rates, and devaluation of the Indian rupee. The February 2017 killing of an Indian-born, American-educated engineer in the nearby Kansas City suburbs also led some Indian families to see the United States as unsafe.

In hindsight, however, it is clear that Central Missouri had a hand in its own undoing. One of the university’s original selling points had been its value. Students could earn a 30-credit degree for about $12,000, and international students paid the same rates as did those from Missouri. In 2015, administrators made the decision to raise tuition rates by about 25 percent per credit hour, making Central Missouri suddenly more expensive than its most-immediate competitors. Alice Greife, dean of the College of Health, Science, and Technology, says administrators did consider how such an increase might affect Indian students, who typically borrow or use family savings to pay the costs of college and therefore tend to be price-sensitive. But the “extent of the effect was not anticipated,” she says.

When administrators realized the impact of the increase, they attempted to readjust the price, but it was too late. The students were gone.

Central Missouri isn’t alone in experiencing significant swings. During the same three-year period, the University of Tulsa increased its international-student numbers by more than 25 percent. This was a deliberate strategy, part of a broader effort to globalize the campus. Tulsa contracted with Kaplan Inc., the education-service company, hoping to tap its vast network of education agents to recruit students from around the globe, and started academic programs, such as a master’s in law for foreign lawyers, that could appeal to prospective international students.

Despite its efforts, Tulsa found itself going in reverse. The share of the student body that is from abroad has sunk to about 10 percent from a high of more than 20 percent in 2015. This past fall, the university enrolled just 39 first-time, full-time international students, half the number it welcomed three years earlier. The drop in international enrollments has hurt Tulsa’s bottom line. When Moody’s Investor Services downgraded the rating on the university’s bonds late last year, it cited the loss of international students in forecasting a negative outlook. Administrators were forced to draw on reserves to cover operating expenses.

Tulsa now is looking closer to home for students. In a written statement, Janet K. Levit, Tulsa’s interim president, says the university has “rapidly shifted gears to focus on domestic enrollment.” While the number of new international students declined, last fall’s domestic freshman class was the largest in recent history, Levit says.

Like Tulsa, the Illinois Institute of Technology and Wright State University have had their financial outlooks downgraded in part because of declines in international enrollments.

International-tuition revenue should be seen as “soft money,” subject to swings, much like competitive research grants, says Simon Marginson, a professor of higher education at the University of Oxford and an expert in comparative and international education. The trouble, he says, is when it takes the place of “hard money,” such as domestic-student tuition and, at public colleges, state support. That can compromise core services, like classroom instruction.

For American colleges, Australia could provide a cautionary tale. International students there account for as much as a third of the student body at some institutions, offsetting a declining college-age population and decreases in taxpayer support. “The international intake has become normalized as part of the budget structure,” Marginson says.

That source of revenue has been threatened in the past. A decade ago, a series of violent attacks on Indian students in Australia, along with tightening visa rules, led to a significant dip in Indian enrollments.

The outbreak of the coronavirus means Australian universities’ continued dependence on international tuition could again put them at risk. While the respiratory illness began to spread in China after most students on American campuses had returned to classes, the Australian academic calendar meant that many Chinese students enrolled there remained in China for the summer break and the Lunar New Year. Some 100,000 Chinese students have been unable to return to Australia for the start of the classes, about half of the total number of Chinese students studying there. The head of a government commission formed to deal with the impact of coronavirus on Australian higher education estimates that it could cost universities as much as $8 billion in Australian currency, or about $5.3 billion in U.S. dollars.

“They have pursued international revenues with the belief that the market will be consistent or grow,” says Alan Ruby, a senior fellow at the Graduate School of Education at the University of Pennsylvania. “But because it’s a market, there will be volatility. Markets aren’t constant.”

And colleges in the United States don’t have to look abroad for a sense of what could happen, says Debra Roane, a vice president at Moody’s. Think of the way many of them embraced online education, which seemed to offer new streams of revenue only to fall short, she says. “There’s no silver bullet for institutions that are struggling.”

To Rick Staisloff, founder of rpk Group, an education-consulting firm, the reliance on international enrollments points to the lack of strategy on colleges’ part. While colleges collect information, the data often aren’t systematically analyzed and used to inform an approach to recruitment or other aspects of college operations, he says. “Who wakes in the morning and keeps an eye on markets” like international education? he asks.

Still, on the whole, international enrollments have been “credit positive,” says Susan Fitzgerald, a Moody’s analyst, meaning that they have helped colleges’ bottom line. In general, colleges with a track record of international recruitment have been steadier during the current slump, she says.

Many colleges have raised their profiles through international engagement, Marginson says. NYU, for example, has shot up the global rankings in part by attracting international students, both to its New York campus and to outposts in Abu Dhabi and Shanghai. Global rankings reward institutions that have a more-international student body and faculty. And colleges that enroll top international students who score well on standardized tests can increase their selectivity. “You didn’t think about NYU in the same breath as Columbia, but now you do,” Marginson says.

Likewise, the University of Nottingham is now seen as one of Britain’s top institutions, in large measure because of its global connections. The University of South Florida generates annual revenues of $100 million through a public-private partnership to recruit international students.

For some institutions, though, a big bet on international enrollments has never really paid off. At the University of Kansas, administrators saw international students as a way to fund an ambitious, multimillion-dollar campus-construction project. The university’s goal was to double its international enrollments, which in 2014 totaled 2,283.

That year, Kansas signed on with a private company, Shorelight, to help attract international students. The decision to outsource overseas recruitment was met with opposition from some faculty members, like Ron Barrett-Gonzalez, a professor of aerospace engineering and a former president of the local chapter of the American Association of University Professors. He and other faculty members were concerned that the university was privatizing a core service with an agreement that lacked transparency. He also was dismayed that administrators saw international students as a new revenue source. They wanted to “milk them like cows,” he says.

In seeking to supercharge overseas recruiting, Kansas’ timing couldn’t have been worse. Just as its recruitment work with Shorelight was getting off the ground, the number of new students coming to the United States from abroad began to fall. Rather than increasing international enrollments, Kansas now has slightly fewer international students than it did in 2014 — 2,228 as of last fall.

Had the original projections been met, Shorelight could have been paid $2 million a year to recruit international students from around the world, according to a copy of the contract obtained through an open-records request. But because payments to Shorelight were contingent on enrollment — the contract specifies that the company would bear start-up costs until the partnership could be funded through tuition revenue — they never were made. Kansas also was to pay Shorelight 10 percent of annual tuition for each student it recruited who matriculated at the university.

Still, the lack of tuition revenue that had been counted on, combined with a reduction in state funding, led administrators to make emergency cuts of $20 million in a $450-million budget in May 2018. They offered faculty buyouts and early-retirement incentives, and left open positions unfilled. Salaries were frozen. Moody’s temporarily downgraded its outlook for the university, citing optimistic revenue targets predicated on international enrollment, though it has since restored Kansas’ stable rating.

The president and provost who signed the Shorelight deal are no longer at Kansas, which has seen widespread administrative turnover. In an email, Charles Bankart, associate vice provost for international affairs, says the earlier enrollment targets were no longer an “active element in institutional planning.” Because international-student mobility has changed so much, Bankart, who did not hold the international-affairs position in 2014, says, “it’s difficult to place today’s planning, assumptions, and benchmarks into a context that has become anachronistic at best.”

Kansas, Bankart says, has diversified its approach to international recruitment. It has hired its own representatives on the ground in key markets like Latin American and South Asia, struck agreements with foreign universities to send students on exchange or joint-degree programs, and expanded its use of data to better deploy staff and financial resources. The university also continues to work with Shorelight.

Barrett-Gonzalez says the university continues to feel the aftereffects of its failed strategy. In the past year, two professors in his 13-member department left for jobs at other colleges. Others are looking, he says. “It decimated morale.”

He welcomes international students, he says. Many of those whom Kansas attracts are “special and standout.” But he thinks it was irresponsible for the earlier administration to base budgets on what can be a volatile market. “Like many get-rich-quick schemes, there’s often a problem.”

Chatham University, a Pittsburgh institution with about 1,100 undergraduates and a like number of graduate students, saw becoming more international as something that could help it thrive even as other small, regional liberal-arts colleges shut their doors. In 2010, as most colleges braced for the recession, Esther L. Barazzone, then Chatham’s president, doubled down and created the position of assistant vice president for international education, a reflection of its elevation as an institutional priority. “It’s as essential as English and mathematics,” Barazzone said at the time, noting that her graduates would work in a global workplace, with colleagues from around the world.

In January, her successor, David Finegold, eliminated the role, after international enrollments declined, from 101 in 2014 to 49.

Finegold says doing away with the position shouldn’t be read as a sign that Chatham is pulling back from its support for international education, just a reflection of the dip in foreign-student numbers. “You have to look hard at where you invest resources,” he says.

Rebuilding overseas enrollment will be a slow, piecemeal process, Finegold says — and something Chatham wants to do. He hopes to use global relationships forged during his time as a top administrator at Rutgers University to start dual-degree programs with foreign universities. He also sees an expansion of Chatham’s athletics programs as a route to internationalization. Its three-year-old men’s ice-hockey team includes a half dozen Canadians. The new men’s squash team has players from Brazil, Egypt, and Pakistan. “You have to think microstrategies,” Finegold says.

Chatham isn’t the only college to pick itself back up after its international enrollments took a hit — so, too, is Central Missouri. This time around, the university won’t place all its bets on a single country, Best says. It’s recruiting more broadly, in Nepal, Singapore, Africa. Numbers have slowly begun to come back, up to about 800 international students.

Should the university again experience surging growth rates, it would be cautious, Best says. “Our mantra has always been to serve all who come to us who are qualified. But if we were to start to have significant growth, it would probably be best to impose capacity controls.” That’s a lesson from the international boom and bust: There can be too much of a good thing.