US is still the most attractive destination for international students

US is strengthening its dominance in attracting foreign students especially from China and India. Already every fifth globally mobile students is enrolled in the US higher education institutions (OECD). The recent survey of graduate schools by CGS  indicates that the number of applications for US universities has increased by 7% for Indians and 18 % for Chinese as compared to 1% and 20% respectively for last year. This indicates that there continues to be a strong intent of international students to study in the US.
I have been making two arguments on the sources and destinations in the short and medium-term:

Source countries: Expansion of local systems in India and China will continue to fuel demand for higher education abroad. This is contrary to perception that local capacity will give more options for students to stay back. I argue that expansion is taking place at a rapid pace and mostly at the expense of quality. Thus, many more will continue to go abroad in search of quality of education and better career prospects.

Destination countries: US will maintain its leadership in attracting foreign students. Although, share of the US has decreased over years, it still enrolls every fifth foreign student. Over the years, people have been saying that the US will lose its leadership in international student market to Australia and the UK. I argue that the US has a huge capacity to absorb international students, offers diverse set of quality programs and has better career prospects than any other destination. For example, Australia and the UK already have significant proportion of their total enrollment as foreign students and this had resulted in the immigration and employment related issues. In contrast, the US has a large capacity to absorb international students and with the budget cuts at public universities, many more are actively recruiting international students.

Counter-trend in business programs: In search of ROI
One area where US is losing in the short-term is the decline in interest for business programs. In the previous posting, I analyzed that number of GMAT test-takers had reduced for India  in 2010. This counter-trend for business programs is a result of perception of poorer ROI of business programs offered by the US universities. For students, on the cost side, there are very limited financial aid and scholarships available and on the returns side, students seek jobs to recover the investments in education. Although, there are indicators of economic recovery, big-spree hiring by sectors like financial services, investment banking and consulting is still not happening. This means, that students will be considering destinations which have lower upfront investment or shorter duration of programs. This is where, the UK has emerged as a big winner with its one-year MBA model, which translates into lower upfront cost. For example, the number of Indian students in the UK has increased by 150% to nearly 25,000 students in five-years, primarily driven by master’s level business programs.

For 2011, the overall trend seems to be of big getting bigger, where the US total enrollment is expected to increase. Business programs will face some challenges in the US while they will gain traction in other destinations which offer better value.

What are your thoughts? Share your experiences and trends you are witnessing.

Related earlier postings:
Drivers of Mobility of Indian and Chinese Students

Dr. Rahul Choudaha

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