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Education

US colleges lose grip on vital revenue source: Asian students

Third straight drop in international enrollment fuels worries over China and India

American universities that rely heavily on Asian students are bracing for financial pain as international enrollment declines. (Photo by Hiroyuki Nishimura)

NEW YORK -- American universities have a problem: Despite their best efforts to attract foreign students, fewer and fewer are coming their way.

New international enrollment on U.S. campuses -- long the preferred destination for students from Asia -- has fallen for the third consecutive year, according to data released on Monday by the Institute of International Education, a New York-based nonprofit.

In the 2018-19 academic year, 269,383 international students enrolled in the U.S. for the first time, down 0.9% from the previous year and 10.4% off the peak in 2015-16.

China and India remained the largest sources of overseas students in the U.S., accounting for 33.7% and 18.4% of the total foreign student population, respectively, when taking into account those working on a visa program known as optional practical training.

While the IIE did not provide a breakdown of new incoming students by country, a survey this fall by the organization shows that 80.2% of institutions are worried about future enrollment from China, while 71.8% cited apprehensions about India. The same survey also suggests the general downward trend of new international enrollment at U.S. schools has continued into 2019-20.

Meanwhile, the U.K.'s Universities and Colleges Admissions Service reported a 30% surge in applications from Chinese students.

American colleges -- whose revenue increasingly relies on students from these countries, who tend to pay more in tuition than local students -- are steeling themselves for the financial impact.

The business and engineering schools of the University of Illinois Urbana-Champaign, for example, have purchased insurance that would pay out $60 million if they suffer an 18.5% decline in revenue from Chinese students due to events beyond the schools' control, such as visa restrictions or the trade war, per a report in Times Higher Education.

Declining international enrollment also takes a toll on the U.S. economy. According to the U.S. Department of Commerce, foreign students contributed $44.7 billion to the economy last year. The NAFSA Association of International Educators estimates that for every seven international students enrolled, three American jobs are created.

"We roughly calculate that the drop in new student enrollment last year translates to about a $5.5 billion loss to the U.S. economy," Rachel Banks, director of public policy at NAFSA, told the Nikkei Asian Review.

"But international students also contribute significantly to the classroom, to research, to innovation," Banks added.

Apart from perceived hostility toward Chinese students and growing anti-immigration rhetoric in the U.S., analysts have also pegged the decline to issues predating the Donald Trump administration, such as costly tuition and uncertainty over post-graduation work visas.

The limited availability of H-1B work visas every year subjects all applicants to a lottery, making it difficult to stay in the U.S. after graduation. Even if they obtain a work permit, Indian nationals hoping to secure permanent U.S. residency through employment may have to wait up to half a century.

In the case of South Korea, which sent 4.2% fewer students to the U.S. in 2018-19, a weaker economy and currency might also have been to blame, as well as a shrinking youth population.

Among all fields of study, business and management programs in the U.S. suffered the steepest declines in absolute numbers of international students.

A separate report by the U.S.-based Graduate Management Admission Council shows a 13.7% drop in international applications to American business schools this year, while European and Canadian institutions gained popularity. More Asia-Pacific candidates are also opting to stay close to home, according to the report.

Half the international students who considered U.S. business schools but did not end up applying said job prospects after graduation impacted their decision. Nearly as many cited fear of being denied a student visa and the political environment as a concern.

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