Tuesday, August 19, 2014

Unlocking the Interlocking Relationship Between International Student Enrollment in Public Universities and Declining State Appropriations Operations Revenue

“The interlocking relationship between public institutions, tuition and fee policies, and state appropriations is an area that seems to be pervasively misunderstood by taxpayers and policymakers” (Alexander, 2011).

International student enrollment within U.S. higher education has experienced significant growth since 2007 (Institute of International Education, 2013).  The growth of this demographic in public institutions has gained increased media attention (e.g. Chicago Tribune, Crain’s Detroit Business,  and The New York Times).   Generally, these reports are not favorable to the universities as the media often focus on increases of international student enrollments then jumps to conclusions toward how this affects the in-state domestic students’ chances of entering into these universities.    Commonly, there is minimal reporting that specifically links international student enrollment increases to declining state appropriations operations revenue.  For example, one report extensively stated, “During a decade of declining state funding, the additional revenue by non-resident freshmen is budget friendly” and another superficially reported that, “But disapproval seems to have quieted in recent years with the decline in state funding to U.I. and public institutions, and the recognition that full-tuition-paying international students help the bottom line.”   In media reports full of numbers, they often seem to fail to report some of the numbers that may help the public better understand why enrollments of international students are increasing. 

For decades, state appropriations for large, research universities, have been in decline (The College Board).   As appropriations decline, legislatures expect that universities will generate institution-controlled revenue to bridge funding gaps (Hovey, 1999).   Reacting to an eroding financial relationship with the states, universities have been forced away from the public good paradigm toward a privatized, revenue generating paradigm where institutions are now “seeking to generate revenue from their core educational, research and services functions…” (Slaughter and Rhoades, 2004).  One market identified as a viable source of revenue are international undergraduate students, hence the recent significant enrollment increases of this demographic.   In fact, the revenue generated from this demographic has turned into big business as international students supply $17b in tuition and fees, an overall $24b to the U.S. economy, and is responsible for the creation of roughly 300,000 jobs.    Essentially, international student enrollment supports more U.S. jobs than Apple, Amazon, Facebook, and Google combined.

The table below displays the annual average decline in state appropriations from 2007-2012 and shows the relationship between inflation adjusted state appropriations and undergraduate full-time international student [UG FTI] enrollment.   The numbers are based on my original research using IPEDS reported data and focuses on the public universities of the Big Ten, many of which hold top spots in national enrollment of international students.  The table shows that each university, sans Maryland, has experienced state appropriations operations revenue declines, some of which are more profound than others.  It also suggests that for most of these universities there are correlations between losses in inflation adjusted state appropriations and UG FTI enrollment.   Essentially, for every million dollars removed in inflation adjusted appropriations, the universities are expected to enroll more UG FTI students.  The exact numbers per individual university are found within the table.

The bar graphic shows 2007-2012 trends of inflation adjusted state appropriations and collected international student and fees (estimated via base tuition), projected to the year 2020.   The forecasts suggest that aggregate estimated international student enrollment tuition and fees will soon overcome aggregate state appropriations.  By 2020, the total estimated international student tuition and fees should exceed $3 billion for just these 13 universities, with seven universities projected collect more revenue in international student tuition than they do in state appropriations. 

This data signals that state legislatures’ facilitation of declines in appropriations holds influence on enrollment of UG FTI student enrollment.  Basically, through decreased financial support, state legislatures are positioning the universities to act as privatized entities.  This argument is often lost in public media outlets because the decreased financial commitment from states to universities is not deeply reported on, especially within articles that explore international student enrollments.   See the throwaway sentences cited earlier. 

Before I finish, I wish to make my personal position explicitly clear.  My stance on international student enrollment in U.S. institutions is one of inclusion.  I believe these students are an asset to our universities as they subsidize domestic tuition and fees and bring unique perspectives to our classrooms. 

Fundamentally, I believe the problem is not within the practice of enrollment international students, but instead is with international students’ ability to remain in the U.S. post-graduation.  Specifically, I believe that the federal H-1B work visa and citizenship policies are too limiting.  These restrictive laws are an issue because almost 50% of international students indicate a desire to stay and work within the U.S. beyond graduation, but are forced to leave.    As higher education institutions use this demographic to generate revenue, whether by choice or through reactions to legislatures’ actions, I believe it is their ethical duty to influence modification of these restrictive policies.   

Yet, that is the topic for a forthcoming blog.