Why the strong dollar could weaken demand for education in the U.S.
A lot of attention is paid to how politics and the pandemic affect international student mobility. But a surging dollar could make an American degree increasingly unaffordable to students around the world.
The value of the American dollar is the strongest it has been in 20 years, gaining in recent months amid inflation, interest-rate increases, and worries about global economic growth stalling out. The dollar’s rise has had the affect of devaluing other currencies, which can spell trouble for international students who suddenly find that their college savings won’t go nearly as far.
Three quarters of foreign students rely on personal or family funds or their own employment as the primary source to pay for their studies, according to the Institute of International Education.
The Chinese renminbi has lost more than 5 percent of its value against the dollar since the beginning of 2022. Last week the Indian rupee hit its lowest exchange level ever. China and India are, of course, the two largest sources of international students in the United States, accounting for more than half the overseas students on American campuses.
Currency fluctuations have affected international enrollments in the past. Monetary devaluations and an economic crisis in the late 1990s led to a fall-off in students from South Korea, Thailand, and other Asian countries. A decade ago, a weakened rupee contributed to several years of enrollment declines among students from India. More recently, political and economic turmoil in Brazil have caused the value of its currency, the real, to plummet against the dollar.
Andrew S. Horsfall, assistant dean of international programs at Syracuse University’s College of Law, has been tracking international-exchange rates biannually since 2014. In the last couple of years, he has increased scholarship aid for both current and prospective students from Brazil to help mitigate some of the currency-driven cost increases. Taking action may have helped retain students; this year, nearly a third of the students in Syracuse’s master’s and doctoral law programs are Brazilian.
What’s different in the current environment is that currency fluctuations aren’t limited to a single country or region. When Horsfall ran his most recent study, in March, he found that students from 19 of the 23 countries he tracks would spend more in their home currency to pay their tuition costs than six months earlier.
Horsfall shared some strategies and interventions colleges can take to help reduce the impact of currency devaluations of foreign students. Some, like awarding supplemental scholarships, he has put in place, while others he noted will take institutional buy-in. Among the approaches colleges could take:
- Re-evaluate international-recruitment strategy to focus on countries or regions where currency fluctuations haven’t been as great.
- Freeze tuition when currencies drop significantly or consider tuition reductions.
- Lock in tuition rates for students paying in foreign currencies when they first enroll so that they are not affected by fluctuations.
- Permit students to extend their payments over a longer period of time when it looks like a currency might stabilize in a few months.
- Encourage students to pay in full early when declines in a currency’s value are expected to continue,
- Relax discount rates over all or for a select group of countries.
“For the better part of a year there was a sense that we were starting to rebound from pandemic disruptions and see international-student mobility tick back up,” Horsfall said, “but the lingering economic uncertainty has muted some of that initial excitement.”
