Are International Students Cash Cows? Examining the Relationship between New International Undergraduate Enrollments and Institutional Revenue at Public Colleges and Universities in the US

By Cantwell, Brendan | Journal of International Students, September/October 2015 | Go to article overview

Are International Students Cash Cows? Examining the Relationship between New International Undergraduate Enrollments and Institutional Revenue at Public Colleges and Universities in the US


Cantwell, Brendan, Journal of International Students


Abstract

There has been growing interest in the business of international education. It is often assumed that universities seek international students as a means of generating revenue. The broad purpose of this study was to understand the effects of increased international student enrollment on net tuition revenue. Informed by resource dependency and academic capitalism theory, this study used panel regression techniques to estimate the effect of enrolling an international undergraduate student on tuition revenue among public colleges and universities in the United States Findings show some but not all institutions are able to generate additional income by enrolling additional international students.

Keywords: international students, resource dependence, academic capitalism, regression

User, or tuition, fees have been on the rise in higher education systems around the world. Fees have recently been increased in many countries and newly implemented in a number of systems where students previously did not pay tuition. In some countries, such as the United Kingdom (UK), fee increases reflect explicit government policy while in others, like the United States (US), higher education institutions (HEIs) have increased fees without explicit changes in government policy designed to increase fees. In both cases, fees have been charged in order to share the cost of providing higher education between the state and the students (and their families) who consume education (Johnstone, 2004; Johnstone & Marcucci, 2010). However, some fee schemes have extended beyond cost sharing. HEIs, especially in Anglo-Saxon countries, have become increasingly entrepreneurial and seek revenue through market-like competition (Bok, 2003; Clark, 1998; Marginson & Considine, 2000; Morphew & Eckel, 2009; Slaughter & Cantwell, 2012; Slaughter & Leslie, 1997). Competition for fee-paying students has been one prominent way in which HEIs compete for additional income (Brown, 2010; McBurnie & Ziguras, 2003; Marginson, 2007; Slaughter & Cantwell, 2012).

Internationally mobile students constitute a large group of potential fee- paying students. The international student market has been large and growing, with over 4 million students now studying outside of their home country (see Organisation for Economic Cooperation and Development [OECD], 2013, p. 306). International students, especially those at the undergraduate level, have been especially attractive as a source of revenue. International undergraduate students have sometimes been charged fees by countries where there are no fees for national students, such as in Sweden. In countries where domestic students share some of the costs but also enjoy a state subsidy, international students have often been charged fee premiums (Johnstone & Marcucci, 2010, pp. 119-120), such as in the UK and Australia. Indeed, HEIs in some Anglophone countries, especially Australia and the UK, have leveraged international student fees as a means of financing their operations (Ziguras, 2011). For example, Australia positioned itself as a major exporter of education and some Australian HEIs collect nearly one-quarter of their total revenue from overseas student fees (Marginson, 2007). Even in Finland, which has a strong egalitarian tradition and expectation for the social provision of higher education, HEIs now have the option of charging fees to non-European Union (EU) students in some programs (Kauppinen & Kaidesoja, 2014). While cost sharing has undoubtedly been a consideration, the implementation of oversees tuition fees has also been part of general policy shift in many countries towards a more market based and entrepreneurial higher education system (Slaughter & Cantwell, 2012).

A number of countries including China (McCafferty, 2013), France (Marshall, 2013), Japan (Shao, 2012), and the United Kingdom (UK) (Buchanan, 2013) have recently announced plans to attract more international students at the undergraduate level. …

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