For Suraya Sharma, the cost of his master’s degree in robotics suddenly got steeper.
The culprit is the weakened Indian rupee, which has lost about 20 percent of its value against the dollar since the beginning of the calendar year. Mr. Sharma still plans to enroll this fall at Clemson University, thanks in large measure to “good investments” his father made years ago. But he hopes to get a teaching assistantship to cover his expenses, and he may need to take out a bank loan. “You start wondering if you should reconsider your decision” to study abroad, he says.
As India’s previously hot economy cools, other families there are making similar calculations, balancing the value of a foreign degree against the higher upfront costs. And it’s happening not just in India. China, too, is seeing a slowdown in economic growth.
To be clear, neither country is Greece, with its contracting economy and threats of default. As one observer notes of China: “It was torrid growth before; now it’s just amazing growth.”
Still, economists in both India and China see signs of slackening economic activity, from currency fluctuations in India to a falloff in imports, electricity consumption, and real-estate sales in China. A weakening of the economies in the two countries could be worrisome news for American colleges, for which an uptick in full-paying foreign students has been the one bright spot amid recent budgetary woes. China and India are by far the two largest sources of international students in the United States; together, they account for more than a third of all foreign students on American campuses.
If the rupee and renminbi don’t go as far as before, could a pricey American degree be out of the reach of students who might otherwise flock to the United States? And how prepared for that possibility are American colleges, many of which have seen international enrollments balloon in recent years on the strength of interest from India and, in particular, China? What if those major sources of foreign students become less dependable?
Mark W. Harris, president of ELS Educational Services, a language-instruction provider, remains bullish about the flow of international students. But he cautions that colleges need to be savvier about their overseas recruiting instead of relying so heavily on certain countries. “They have to be careful,” he says, “not to get addicted to that sugar.”
‘Double Take on the Cost’
Many educators, however, hesitate to draw a strong connection between the economy and international enrollments—and history is on their side. Over the past decade, even as stock markets tumbled, the number of international students worldwide continued to grow at a steady clip, 6.6 percent annually, according to StudentMarketing, an Austrian company specializing in international-student data. In the United States, the only significant dip in foreign-student enrollments in recent decades followed the September 2001 terrorist attacks.
“In many ways, education is less sensitive than other investments in a recession,” says Allan E. Goodman, president of the Institute of International Education, which tracks annual enrollments. “You don’t put it off, like buying a car.”
But Janet Ilieva, head of research at the British Council, a British-government educational and cultural agency, says it can be misleading to look only at overall enrollment figures. In poorer countries—those with a gross domestic product per capita of less than $10,000, a group that includes both China and India—college-going rates are far more sensitive to economic swings. Relatively small increases in GDP can lead to comparatively sharper increases in higher-education enrollments, and downturns, too, can have an outsized effect, she says.
As an example, Ms. Ilieva cites Malaysia, which was hit hard during the Asian currency crisis of the 1990s. The share of its students going overseas dropped from 6.5 percent to 5.5 percent, a sudden and steep decline. “Families lost their purchasing power,” she says.
Demand for international education in India and China also has “higher price elasticity,” Ms. Ilieva says. In other words, students from those countries are more affected by increases in educational costs than are those from wealthier countries.
Mel Broitman, a co-founder of Higher-Edge, an international-education consulting firm, says families in India and China are “willing to sacrifice to send their children abroad.” Still, especially in India, where many students borrow money to finance their education, “people will do a double take on the cost,” he says.
Affluent vs. Aspiring Students
But if not all countries are affected equally by the economy, neither are all students within given countries. Rahul Choudaha, director of research and advisory services at World Education Services, a nonprofit group that specializes in evaluating foreign credentials and trends, distinguishes between two groups of foreign students: affluent and aspiring. The former, he says, make up “the emerging wealthy class. They’re immune to economic fluctuations. Good, bad, cheap, expensive—they’ll go abroad.” (China, with more than 535,000 millionaires, has a larger concentration of affluent students than does India, whose millionaires number 153,000.)
The other group, Mr. Choudaha says, is far more price-conscious. That doesn’t mean those students won’t study abroad—indeed, neither India nor China has enough universities, or enough high-quality universities, to meet domestic demand. But those students may be looking for a bargain.
That could benefit certain institutions. Diana L. Sampson, executive director of international education at Shoreline Community College, in Washington State, says she is seeing a surge in applications from overseas, many from students seeking to save money before finishing their degrees at four-year universities. Tuition at Shoreline is half that of neighboring public universities. “They’re watching their dollars—and their yuan—closely,” she says of her students.
The weakening of economies also could lead students to turn to other countries, such as Malaysia, a growing regional education hub where both a degree and the cost of living are more affordable than in destinations like Australia or the United States. Low-tuition European countries are stepping up their English-language degree programs to attract overseas students. And universities in places like Canada and Singapore are competing more aggressively for foreign students, promoting the fact that graduates there can stay and work after earning degrees.
Mr. Choudaha points to Germany, where the number of Indian students has shot up 24 percent, in part because the country has made it easier for graduates in high-demand fields to remain in the country to work. For the class of “aspiring” students, decision making is not based simply on what’s happening in the economy today, he argues. Choices about college are also affected by how a foreign degree might help students fare in future economies.
Shifting Ground
That’s exactly the message that Ganesh Kohli sends his students. “They have to look at what education is going to do for them 40 years from now,” says Mr. Kohli, a college counselor based in Mumbai. “They should look at education as something that will carry them through the fluctuating economy.” Many Indian families take such a long-term view. Like China, India has a high savings rate: Indians save about a third of their country’s GDP; the Chinese, half. Short-term economic changes don’t derail those long-term investments, Mr. Kohli says.
Umang Shroff, one of Mr. Kohli’s advisees, agrees, calling the currency devaluation “not a big deal.”
“We’ve been saving up for quite a long time,” says Mr. Shroff, who will study computer science and engineering at Ohio State University. “My dad thinks education takes precedence over everything else.”
Suraya Sharma, the robotics student from India, says his family is willing to deal with the financial strain because he doesn’t have access to the same kind of research opportunities that he would in the United States. Indeed, access to higher education, period, is a challenge in that country, where hundreds of students may compete for a single university seat. The college-age population will grow by five million more by 2015.
China, by contrast, hit its demographic peak in 2010, a legacy of its one-child policy, and, by 2020, its college-age population will be on the decline, says Ms. Ilieva, of the British Council. Such demographic trends complicate the enrollment picture. “International-student mobility is a complex balance of push and pull factors,” she says.
For universities’ international-admissions officials, it can be hard to read the tea leaves of enrollment trends. Indiana University-Purdue University at Indianapolis, for example, had a 50-percent increase in applications from India for fall 2012, despite the economic headwinds. Sara Allaei, assistant dean for international affairs, is at a loss to explain the upswing in interest, even as she hears about declining applications at some of the university’s peer institutions.
Could it be that Indiana-Purdue’s mix of degree programs is more recession-proof? Perhaps recruiting is finally bearing fruit? Or chalk it up to a new sister-city relationship between Indianapolis and Hyderabad? “Figuring out what’s going on is never straightforward,” Ms. Allaei says.
International-education veterans have only to look back to 1979, when the revolution in Iran provided a cautionary tale of relying too heavily on one source of students. The culprit wasn’t the economy but political instability. After the overthrow of the shah, “overnight the flow of students dried up,” recalls Patricia A. Burak, director of international services at Syracuse University.
Syracuse has begun offering financial aid to some foreign students, in part to diversify, but that’s hardly an option for institutions that turn to international enrollments to bolster their bottom line.
At the graduate level, at least, applications from China to American universities are up, while those from India are holding their own, according to a survey by the Council of Graduate Schools this spring. The statistics are reassuring, says Debra W. Stewart, the group’s president, but she still worries that colleges might become complacent. Economic factors, global competition, financial support for American universities—all can affect enrollments, she says.
“It’s a dicey thing, because you don’t want to cry wolf if the numbers are strong,” Ms. Stewart says. “But I think the ground is changing underneath us, and it’s hard for us to tell on a day-to-day basis.”
