Financial Crisis Makes Full-Tuition Paying Applicants to US Universities More Competitive

International and Emirati Students in the UAE stand to benefit from increased financial strain on US post-secondary institutions, say Carian College Advisors of Dubai

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Carian College Advisors
When a US university accepts a full-tuition paying international student, that student essentially subsidizes the education costs of an American student that is receiving need-based aid and is paying little or nothing in terms of tuition

(PRWEB) October 23, 2012

The global financial crisis that began in 2007 continues to cast a long shadow over US higher education. For American universities, the economic recession has severely impacted their ability to fund education and continue to offer the same levels of financial aid, teaching standards, and nonacademic offerings, as before the crisis. Universities across the United States have had to make tough economic sacrifices, including limiting or eliminating academic programs, slashing funding for student activities, imposing new academic and nonacademic fees, and even reducing the amount of financial aid awarded to students. The laudable need-blind admissions policies of many private universities have been pared down or even scrapped, but some have come up with a creative solution to mitigate their financial woes: increasing the number of international students they enroll.

A recent survey of administrators at public and private universities reveals that they strongly endorse increasing the recruitment of international students and individuals that pay higher out-of-state tuition fees as one method of increasing schools’ revenue, according to a report issued in the 2012 Inside Higher Ed Survey of College and University Business Officers. This is good news for full-fee-paying international students from the Middle East. Students that do not demonstrate financial need are now more desirable than ever and have increased chance of admission as a result.
“When a US university accepts a full-tuition paying international student, that student essentially subsidizes the education costs of an American student that is receiving need-based aid and is paying little or nothing in terms of tuition,” says Peter Davos of Carian College Advisors in Dubai. “The difference is even more pronounced in public universities, where international students pay up to three times as much as in-state residents,” he adds.

“International applicants—particularly highly qualified ones—may still be eligible for merit-based aid,” emphasized Davos, “but US universities are reaping considerable financial dividends by enrolling more international students.” According to the Institute of International Education, in 2010 - 2011 international students contributed over $20 billion to the American economy through tuition and living expenditures. While students from China and India generated $7 billion of this revenue last year, students from Saudi Arabia contributed over $400 million in revenue over the same period, an impressive 23% increase from the previous year.

Over the past five years, most US universities have dramatically increased the number of international students they have accepted and enrolled. The New York Times recently reported that at least ten percent of incoming students to public universities in Illinois, Indiana, Iowa, the University of California at Berkeley, and UCLA are now international—more than twice the number from five years ago. And at least fifteen percent of the most recent freshman classes at the University of Pennsylvania, Columbia, and Boston Universities came from abroad.

While increasing globalization has played a role in this demographic shift, finances have been a driving consideration. “Each US university is a business,” says Davos, “and the decrease in returns from endowment investments, federal and state funding, and alumni contributions have to be made up somehow.” Some universities, such as Purdue University, the University of Massachusetts Boston, North Carolina State University, and the University of Illinois at Urbana-Champaign even charge international students thousands of dollars in additional tuition surcharges.

Full-fee-paying applicants are now considered to be more competitive, from an admissions perspective, than ever before. While universities with large endowments, such as Harvard, Yale, Princeton and the Massachusetts Institute of Technology offer need-blind admissions policies to international applicants, smaller US universities offer extremely limited or no need-based aid for international students, who have traditionally been seen as income generators for such schools. “When you have an international high school student applying to a US university and that student is not eligible for or seeking any type of need-based financial aid, it will definitely improve that applicant’s chance of admission,” says Davos.

“Many US universities even pay up to 10% of annual tuition to international agents to steer applicants to their institutions, because enrolling large numbers of full fee-paying international students has been so financially lucrative, but there is some hope for financial assistance from less selective universities. Skidmore, Trinity, Bates, Colby, Vassar, and Gettysburg offer an average of $50,000 in merit aid to qualified international applicants, according to a recent report by US News, but this aid is awarded on the basis of merit, not need,” said Davos.

In 2010, Williams College, one of the US’s leading liberal arts colleges, ended its policy of need-blind admissions policy when assessing international students. Williams officials admitted that ten years of need-blind policy toward international students had led to a 200% increase in the cost of distributing international financial aid. Similarly, Wesleyan College announced in 2012 that it would shift way from need-blind admissions policies altogether, because it was fiscally impossible to meet the financial need of all of its students. Even Grinnell College—with an endowment of $1.5 billion, one of the wealthiest small liberal arts colleges in the US—is reevaluating its financial aid policies. Cornell University, which had eliminated all loans to students from families making less than $75,000 per year in 2007, recently reinstated loans for some applicants this past summer. American universities are becoming increasingly need-sensitive, which means the financial status of the applicants affect the school’s ultimate decision whether to admit them.

“I believe we will see these trends continue for the foreseeable future,” said Davos, “as it will be very difficult for US universities to replace the revenue streams generated by tuition payments from foreign students.”


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