Trump travel curbs pose revenue challenges for U.S. colleges

  • World
  • Thursday, 02 Feb 2017

FILE PHOTO: Students take their seats for the diploma ceremony at the John F. Kennedy School of Government during the 361st Commencement Exercises at Harvard University in Cambridge, Massachusetts May 24, 2012. REUTERS/Brian Snyder

NEW YORK/SAN FRANCISCO (Reuters) - President Donald Trump's travel restrictions on people from seven countries could dampen international enrolment at U.S. colleges, at a time they have become increasingly reliant on tuition revenue from overseas students.

Colleges and universities have struggled in recent years with slowing tuition growth, increased competition and a stronger focus on making education more affordable.

Those factors have increased the importance of international students, who made up 5.2 percent of enrolment last year, up from 3.2 percent a decade earlier, according to the Institute of International Education, or IIE.

"International student growth is important for many institutions," said Roy Eappen, municipal research analyst at Wells Fargo. "Many international students come to the U.S. to study and are willing to pay full price for higher education."

Analysts said international student applications could be hit by the White House travel order. Trump suspended travellers from seven majority-Muslim countries - Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen - saying the move would help protect Americans from terrorist attacks.

The curbs come "at a delicate point in the admissions cycle" because students are beginning to decide where to enrol this autumn, said Susan Fitzgerald, associate managing director, Moody's. "You could see an impact in the fall. We just don't know yet."

U.S. universities in both Democratic- and Republican-led states said over the weekend they were unnerved by the executive order.

Lee Bollinger, president of New York's Columbia University, wrote in a statement on Sunday that "if this order stands, there is the certainty of a profound impact on our University community."

Of the 1,043,839 international students in the United States during the 2015-16 school year, 17,354, or 1.7 percent, came from the countries affected by the order, IIE data shows.

While that is a small portion of the total, there could be a broader impact on the country's ability to attract students from the global marketplace if the United States becomes viewed as potentially less welcoming for international students, some analysts said.


Wells Fargo's Eappen said any kind of anti-immigration sentiment may lead to a pullback in demand from international students.

IIE President Allan Goodman said in an emailed statement that "beyond the immediate impact of students from specific countries who are not able to enter the country, there could be a ripple effect of significant unintended economic consequences as students, faculty and researchers from other countries decide whether to come to the United States."

Public universities have increasingly fallen victim to state budget cuts or tuition freezes, while many private universities now discount tuition, meaning they slash their price tags to lure prospective students. In many parts of the country, enrolment numbers are on the decline and university debt is on the rise.

That makes attracting international students increasingly important. International students make up an estimated 10 to 12 percent of tuition revenue among U.S. schools rated by Moody's, Fitzgerald said.

"University education for Americans is subsidized by foreigners who occupy seats in classrooms," said David Kotok, chairman and chief investment officer of Cumberland Advisors. "Ask any dean or provost what his school's financial structure would look like if there were no foreign students enrolled."

According to NAFSA, an international education association, international students contributed $32.8 billion and supported more than 400,000 jobs in the U.S. economy during the 2015-2016 academic year.

Moody's Fitzgerald said international students had become a counterweight to the relatively low revenue growth from domestic students among U.S. schools.

"It would be an additional challenge for the sector should it fall," Fitzgerald said.

(Reporting by Megan Davies in New York and Robin Respaut in San Francisco; Editing by Peter Cooney)

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