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

3 Comments

  1. "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."

    I agree with the first part of this statement that quality in India's educational institutes is a nagging problem. However, deriving the conclusion that thus people will go abroad to study is too hasty. Going abroad to study is not a trivial decision by any means. Besides other considerations RoI plays an important part in this decision. And I think this is where US clearly looses out to UK / Australia etc.

    With US economy struggling with record unemployment rates in the vicinity of 10%, I think it will be hard for foreign students to get the RoI from their education in US. A point which has been also mentioned by you.

    So in the mid to short term I think US has no major 'pull' factor which will attract more international students.

    The increasing enrollment trend that you point out in the last year or so is primarily due to a 'push' factor. Indian economy has been seeing great recovery; the euphoric consumption is making a comeback, jobs are back and all other indicators are positive. With increased liquidity (or the hope of it) parents and other sources of education loans like banks are more optimistic about the perceived RoI. Am not sure how many of them really now what is really happing in the US.

  2. Regardless of the economy issues, The United States still one of the most preferred destination for foreign students. American higher education diplomas are worldwide respect and seen as an assurance of educational legitimacy.

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