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Risk in Context

Higher Education: Mitigating a Reduction in Foreign Students

Posted by Jean Demchak January 16, 2019

Drops in the numbers of international students enrolling in US universities are sending ripples of concern among higher education institutions, which are worried that this trend could lead to shrinking tuition dollars.

New enrollment of international students at US universities fell by close to 7% for the 2017-18 scholastic year. This was the second consecutive year that international enrollment declined, following a 3.3% drop in 2016-17. That was the first time in decades that numbers slid.

For several years, universities and colleges have seen a good source of revenue from foreign students flocking to the US to learn at schools across the country. This trend has led to several institutions making substantial investments in their outreach programs geared towards attracting students from abroad.

Dropping Numbers Raise Concern

The current political environment, especially uncertainty surrounding US-China relations and the potential of visa bans for certain countries, is alarming risk managers at higher education institutions, instilling anxiety that the number of foreign enrollees will continue on this downward trend, negatively affecting revenue.

This concern is pushing several institutions to revise their business models in order to diversify their revenue streams, including reducing reliance on foreign tuition funds. To do that, colleges and universities should consider the following actions:

  • Analyze your enrollment records: Higher education institutions should have a very clear picture of their student profile, including the number of foreign students and the different countries they are coming from. Compile historical data, going back at least five years, to identify any trends in enrollments of foreign students.
  • Diversify your revenue streams: Overreliance on foreign students’ tuition could be risky and lead to a crisis if that money starts to dry up. Some forward-thinking institutions are already looking at ways to change their business models — for example, augmenting their traditional delivery methods with online education programs targeting both local and international students.
  • Keep abreast of any policy changes: Risk managers at higher education institutions should keep informed of any discussions about potential changes in visa issuing policies for individual countries. This would allow them to determine whether these shifts would affect their current and future students, and how much of their student base is likely to be affected.
  • Secure the right coverage: Tuition fee revenue losses due to a drop in foreign students because of events like visa restrictions, comprehensive sanctions, or political violence, could be an insurable loss. Risk managers should discuss the issue with their brokers to find the right policy for their institution.

Tuition from foreign students has become a growing source of income for US higher education institutions. Thus, risk managers need to be agile in seeking the right solutions to address challenges posed by a dwindling international student base.

Related to:  Education

Jean Demchak