Losing Foreign Students

For the first time in 35 years, total enrollment of international students in U.S. colleges and universities has dropped, according to multiple sources using National Science Foundation and U.S. Department of Education data. 

As pointed out in the Brookings report cited above, one of the effects of this downward trend is a negative impact on college revenue. International students typically do not receive financial aid from the institutions in which they enroll, which means they pay full tuition in a time when that is not the norm. So, international students can provide much needed cash in an era when state appropriations for public institutions and high tuition discount rates at private institutions are eating away at the revenue stream. 

We saw a foreshadowing of this in the Chronicle Pricing Survey that I conducted with the Chronicle of Higher Education in the fall of 2017. Fifty-nine percent of presidents and chief financial officers at private not-for-profit colleges and 40% at public institutions told us they were either "extremely" or "very" concerned about potential federal policies resulting in a "diminished ability to attract international students." 

There are many benefits of enrolling international students besides tuition revenue. But the decrease in this source of revenue will need to be offset by an increase in other sources, and the one source that colleges and universities have the most control over is tuition. The decrease in enrollment of international students could mean an even larger increase in tuition for U.S. students. In an era when college tuition needs to go down and not up, the loss of international students is a move in the wrong direction.

What Really Drives Tuition

We often hear, from faculty, higher education pundits, and just from random people on the street, that the high cost of college is driven by spending money on college administration. We've all seen the stories about the million dollar lazy river on campus! And while there are a few of those (not paid for by tuition dollars, though), this is hardly the norm.    

In the Chronicle Pricing Survey that I conducted with the Chronicle of Higher Education, we asked college presidents and chief financial officers how important various expenditures and revenue streams were in determining undergraduate tuition this past year.  

About three out of four (74%) college leaders told us that the "cost of faculty" was either "extremely" or "very important" in determining tuition. This was the expenditure of highest concern for them.  

The cost of administration was of concern to many fewer college leaders, with only 44% telling us this was an "extremely" or "very important" consideration in setting tuition.

So, while administrative costs have an impact, it is quite a bit lower than that of the faculty. This is probably as it should be. But not how the issue is perceived.  

College tuition is not largely driven by administrative costs. So the next time you hear someone say other wise, remember that you have the data on your side.

So, how would that work, for higher education professionals? I turned to my friend Gavin Henning, past president of ACPA and snappy dresser, for a consultation. He suggested looking at it from the lens of staff level.

For entry and mid-level, Gavin said, this "helps to provide a counter narrative to what we hear in the news." Sharing this data with colleagues helps to provide data to their experience.

For the mid-level to senior-level staff, this information can be used in budget discussions. Student-affairs professional have student learning at heart, and many students and alumni tell us that their learning was greatly enhanced by their experiences outside the classroom. Student affairs professionals can use this information to stave off budget raids when others think that "administrative bloat" needs to be curtailed. 

Data always contributes to the story if you use it wisely. 

The Current Practice of College Tuition Discounting is Not Sustainable

In my last blog, I wrote about the practice of tuition discounting, and how college presidents have a very different understanding of how applicants and their families view tuition than they actually do. Tuition discounting is the widespread practice of setting the “sticker price” of tuition at a high level, but then offering financial aid to discount what people actually pay.  Hardly anyone pays full price. The average discount is about half the price in private colleges and universities.

And the rate at which schools discount is increasing every year. In the last ten years, it has increased about a percentage point a year, from 38.6% in 2006-2007 to 49.1% in 2016-2017 (figures are from the very well done NACUBO Tuition Discounting Study).

Economically, this annual increase is a disaster for colleges and universities, since it means less tuition revenue per student.

The schools know this. In a survey that I created and conducted with The Chronicle of Higher Education, we found that four out of five college presidents and chief financial officers (CFOs) thought that the practice of tuition discounting was unsustainable. At private institutions, we found that among CFOs, the people most knowledgeable about institutional finances, 70% thought that tuition discounting was not sustainable at their own institution.

Clearly, something needs to change.

For more results on the College Pricing Survey, get the report from the Chronicle’s website.