A Passage to America: University Funding and International Students

41 Pages Posted: 27 Dec 2016 Last revised: 30 Jan 2017

See all articles by John Bound

John Bound

University of Michigan; National Bureau of Economic Research (NBER)

Breno Braga

The Urban Institute; IZA

Gaurav Khanna

University of California, San Diego (UCSD)

Sarah E. Turner

University of Virginia; National Bureau of Economic Research (NBER)

Date Written: December 2016

Abstract

The pool of students in the global economy prepared for higher education and able to pay tuition at U.S. colleges and universities has expanded markedly in the last two decades, with a particularly notable increase among potential undergraduate students from China. Given the concentration of high quality colleges and universities in the U.S., there has been a substantial increase in the demand for enrollment among students from abroad. At the same time, substantial declines in state support, driven by contractions in state budgets, have occurred at public sector universities. For such universities, declines in state appropriations force a choice between increasing tuition levels, cutting expenditures, or enrolling a greater proportion of students paying full out-of-state tuition. In this paper we present evidence showing that a significant set of public universities were able to take advantage of the expanding pool of potential students from abroad to provide a stream of tuition revenue that partially offsets declining state appropriations. Our analysis focuses on the interaction between the type of university experience demanded by students from abroad and the supply-side of the U.S. market. For the period between 1996 and 2012, we estimate that a 10% reduction in state appropriations is associated with an increase in foreign enrollment of 12% at public research universities and about 17% at the most resource-intensive public universities. Our results tell a compelling story about the link between changes in state funding and foreign enrollment in recent years. In the absence of the pool of foreign students, many universities would have faced larger cuts to expenditures and potentially greater increases in in-state tuition charges.

Suggested Citation

Bound, John and Braga, Breno and Khanna, Gaurav and Turner, Sarah E., A Passage to America: University Funding and International Students (December 2016). NBER Working Paper No. w22981, Available at SSRN: https://ssrn.com/abstract=2890085

John Bound (Contact Author)

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Breno Braga

The Urban Institute ( email )

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Gaurav Khanna

University of California, San Diego (UCSD) ( email )

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Sarah E. Turner

University of Virginia ( email )

Curry School of Education
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United States

National Bureau of Economic Research (NBER)

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