Back to School.
Thousands of students will be heading off to college this fall and, with COVID behind us, many of those will be international students. In fact, close to one million students from around the world are anticipated to be coming to the U.S. to pursue their higher education.
Export/Import
In fact, higher education is the 9th leading export of the United States—except the export is really an import—importing students from around the world. While China, India, and South Korea are the top three countries with the greatest number of students studying in the U.S., totaling over 530,000 in the 2021/22 academic year, students come from around the globe to pursue degrees. They represent some 224 nations, territories, and islands—including two students from the Holy See.
Nationwide, the positive economic impact of importing students is in the billions of dollars—an estimated $33.8 billion generating over 335,000 jobs. That’s not just paying professors and buying textbooks—it includes everything from renting apartments to late night DoorDash and Grubhub
GRUB
Think Global, Enroll Local
It’s an economic boost felt locally. Look at any of the top 50 American cities. You’ll find that each hosts at least one college or university that will have international students on campus.
Consider Boston, Massachusetts. With its pantheon of venerable Ivy League and world-class institutions from Harvard to Boston University to the Berklee College of Music—there are over 55 degree-granting colleges and universities in the region—Boston’s economic gains from the over 54,700 enrolled international students in all these schools is huge. $2.45 billion huge.
State vs. Private
Prestigious private schools are a draw, but hands down the biggest pull for international students are state universities and colleges. Of the top 50 doctoral and master’s schools enrolling these students, 32 were public schools, attracting nearly 221,000 students in total.
For the top three of those public schools alone—Arizona State University, University of Illinois/Urbana, and University of California/San Diego—international students contributed a cool $1.325 billion, supporting 15,347 jobs in the 2021/2022 school year. Expand that to the top 10 (the University of California system takes four of those spots), and the numbers pop up to $3.99 billion and 45,433 jobs.
But it’s not just the geographically sprawling University of California and other large state systems. Mankato, Minnesota hosts a Minnesota State University campus, where some 1,751 international students call this small city, 80 miles from Minneapolis, their home away from home. Those students brought an infusion of $68.5 million into that community, supporting around 190 jobs. There are dozens of similar campuses in cities and towns like Mankato across the country. It adds up quick.
In addition to private and public universities, community colleges also attract thousands of international students. Although international enrollment has fallen off in recent years, the community college systems still attracted just shy of 50,000 students from foreign countries in 2021/2022, with China, Vietnam, and Japan leading the list. Generating some $1.3 billion and supporting 6,095 jobs, the impact is felt large, particularly in Texas, California, and Florida, where the majority of these students come to learn.
Bond Investor’s Get A Financial Aid Package
All of this is good news for municipal bond investors. The market’s higher education sector has an estimated $216 billion of long-term debt outstanding. The sector has been under pressure recently as domestic demographic trends have shifted, the number of college age students is declining, a so called “admission cliff”. By some estimates, high schools will have the lowest graduation classes by 2025. In part, this explains the reported closure, merger, or planned closing of 91 private colleges in the U.S. since 2016.
It’s more than college closures. In many ‘college town’ communities, the higher education institution is likely to be one of the top 10 employers, offering stable jobs. Now facing potentially serious declines in tuition revenues, the schools are not only lowering the number of new hires and not replacing those who leave or retire, but also are actively considering or going ahead with layoffs.
Some schools are literally exporting education. To capture more international students, there are schools opening campuses overseas. In China, universities such as NYU, Duke and UC-Berkeley have partnered with Chinese universities to established campuses in that country. Other schools are following in China and other countries where they have seen strong interest but, due to economic or visa reasons, students may not be able to come to the U.S. Some school have built their entire business model around this strategy. For example, the Hult International Business School, with campuses in Cambridge (MA), London, San Francisco, Dubai, New York City, and Shanghai, requires students to study in different countries as part of obtaining a degree.
International students won’t entirely offset enrollment declines from the U.S. demographic changes. However, for those universities and colleges and the cities and towns they are in, it’s a welcome foreign financial aid package.
Now back to school.
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