Monday, November 12, 2007

What it costs to educate international students 

Dani Rodrik comments today:

"In the 2006-7 school year ... international students� net contribution to the United States economy was nearly $14.5 billion," reports the New York Times, citing a just-released study by the Institute of International Education. The IIE report itself states: "International students contribute approximately $14.5 billion dollars to the U.S. economy, through their expenditure on tuition and living expenses." Apparently, two-thirds of this spending is financed by students' own families and their home governments.

As anyone with a modicum of economics training should understand, this number represents a net contribution to the U.S. economy only in the absurd limiting case in which the opportunity cost of resources used in providing U.S. education services to foreign students is ZERO. I bet my Dean at Harvard--which is ranked #9 among top hosts of foreign students--can vouch that he pays me real money.

I've heard people in Minnesota say that we spend too much on educating international students here at SCSU and not enough on education for Minnesotans. I've thought about this, "does it cost us more to educate an international student than a Minnesotan?" Most schools, ours included, make a good bit of money selling English language courses to international students who don't speak English well enough when they come to our university to succeed in classes. (These are separate programs, which may or may not include students counting in our international student body.) Those of course use real resources, and it's appropriate to ask what are the opportunity costs.

As to what international students pay, here's their fee schedule, and here's the tuition and fee schedule for the university. Notice the line in the former marked "Academic & Cultural Sharing
Scholarship". This money goes to every international student regardless of the cultural sharing they will do, whether we already have 200 students from that culture, etc. The size of that scholarship is exactly equal to the difference between the non-resident and Minnesota tuition rates.

If it costs more to educate an international student than a Minnesotan, that becomes a net subsidy. Even if it does not, if an international student crowds out a domestic student, one can argue that we are subsidizing. Now SCSU does use as its current marketing logo "What's Your World?" So one can argue as well that we are subsidizing international students so that Minnesota students experience global exposure. But we admit 1000 international students to a campus with headcount under 17,000. When do diminishing returns set in? Is this a cost-effective way to provide Minnesotans with a global education?

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