How international students are subsidizing U.S. universities

A young Brazilian woman got accepted to eight U.S. universities this year. The 18-year-old high school grad dreams of becoming a researcher with a degree in physics. But the dream could end before it begins.

Leticia de Mattos da Silva may be a star student with a promising future in Brazil, but she doesn’t have the money to pay a U.S. tuition. And as a foreigner, it’s nearly impossible to get financial aid here.

Undeterred, Silva is trying to raise money for her tuition through a crowd-funding campaign. Her goal is to raise $58,000 by July 1, which will give her enough time to process her admissions paperwork and student visa before classes start.

But that lofty sum would just be enough to get her in the door.

“The amount would cover just my first year abroad at University of California Santa Barbara (UCSB), which I chose among all eight schools. For the full four years I will need at least $240,000,” Silva told Fusion in a phone interview from her home in Porto Alegre, in southern Brazil.

Eternally optimistic, Silva has already enrolled in the school and is keeping the faith that money will come.

She’s got some help. Silva’s former high school, Colégio Farroupilha, is letting her to use their status as a non-profit institution to raise funds, meaning all donations to her cause are tax deductible. So far she’s raised about $18,200. If she doesn’t reach her goal by the end of the month, all the pledged funds will be returned to the donors.

Silva’s story is not unique. A growing number of international students are finding that their dreams of studying in the U.S. comes with a nearly impossible price tag. Many schools have limited funds for student aid, and the lion’s share of that money is reserved for U.S. students. And most foreign citizens are not eligible for federal student aid from the U.S. Department of Education.

That means that being a foreign student in the U.S. usually means paying full tuition. And that’s not all. Tuition for international students can sometimes be even more expensive, because of foreign exchange rates and higher price tiers for out-of-country applicants.

The situation has created a financial structure where foreign students — particularly those from China — are subsidizing financial aid for U.S. students by paying the full boat themselves, and sometimes at inflated prices, admissions experts say.

“Michigan State, for example, had over 1,000 students from China in the entering class. All of these students were full-payers. Only a very small group of schools in the U.S. provide need-based aid for international students,” says Parke Muth, former Dean of Admissions and Director of International Admission at the University of Virginia. “They reserve money for U.S. citizens first.”

The United States last year had more than 886,000 international students enrolled in colleges across the country, according to Open Doors Report, from Institute of International Education. That’s almost double the number of international students studying in the United States 20 years ago.

International students contribute to the diversity of a university’s student body, and also help fatten its coffers. Sometimes substantially.

“U.S. schools now cost so much that they have become dependent on international student who can afford to pay full fees,” says Muth, who now runs a consulting firm that advises students about jobs, internships and graduate school.

By helping bankroll U.S. universities, international students are also helping the U.S. economy. International students contributed $26.8 billion to the U.S. economy during the 2013-2014 academic year, according to 2014 Association of International Educators (NAFSA) findings.

The impact of international students is felt more in some states than others.

For example, in California the state university system has dramatically increased its international enrollment over the past decade, in part to help subsidize in-state students, Muth says. With 120,000 international students in the University of California system, the Golden State has the singled greatest enrollment of foreign-born students, followed by New York and Texas. Together, those three states account for 32 percent of all the foreign students enrolled in United States, according to Shore Light.

In some instances, international students play the same financial role as any other wealthy out-of-state U.S. student, only with the added bonus of a splash of cultural diversity, which always looks good in the school brochure.

“If [international students] are paying the same rates as nonresident U.S. students, it would be hard to justify saying they are subsidizing U.S. students any differently than, say, a Californian at the University of Iowa is subsidizing Iowa students,” says Gloria Auer, of the Association of State Higher Education Executive Officers.

But as the cost of higher education continues to climb, there’s little doubt that wealthy international students — especially those from cash-flush Chinese families — are playing a greater role than ever before in U.S. universities.

Nearly one in three international students in the U.S. — more than 274,000 — is now from China, followed India and South Korea. Saudi Arabia is in fourth, followed by Canada and Taiwan, which are tied in fifth, according to Open Doors Report on International Educational Exchange, by Institute of International Education.

Most international students (65 percent) say their tuition comes from personal and family funds, while 19 percent say they receive some financial aid from their U.S. college and university. Eight percent of foreign students say they get money from their government, according to the Open Doors.

But for many international students, just applying to U.S. colleges can be expensive proposition. Silva said she spent at least $5,000 applying to U.S. colleges last year. She’s chronicling the process on her blog, called Destination Santa Barbara.

The UCSB website says that assistance from the Office of Financial Aid and Scholarships is extremely limited for international students. Silva’s father, Edmar, has found that to be the case. He said he tried to appeal to the school for help, but had no success.

“On a telephone call, they advised me to try a private scholarship. Since the beginning we knew that we wouldn’t have the full money. But that did not mean that we would stop trying to achieve her dream.”

The Kindness of Strangers

Pedro Girardi, 17, is another Brazilian student who is coming to U.S. to study at Carleton College, in Minnesota. He got a partial scholarship that covers most of his the costs after negotiating a deal with the financial aid office and getting some help from Brazil’s Fundação Estudar,” which helps Brazilian students find scholarships and financial aid.

Girardi and 25 other Brazilan high school grads launched a crowd-funding campaign to try to raise additional money to help with the cost of living abroad. So far they’ve raised $7,000 towards their goal of $110,000.

Crowd-funding tuition costs may seem like a desperation move, but it’s becoming increasingly common in Brazil. And there are success stories.

For example, Brazilian student Ingrid Glitz used a site called Benfeitoria to raise some $7,000 to help pay for Georgetown University. She said she even got donations from 21 person she’s never met.

Carolina Lyrio, a student counsellor for Fundação Estudar, says technology is helping students connect with those who need with those who have. Crowdfunding sites, although not a guaranteed success, shouldn’t be ruled out either, especially given how competitive merit-based and financial-need scholarships are, she said.

“Most of international students need financial help. And when they share their dream online in a nice campaign, they can get someone who believes in their project and is willing to help them achieve it,” she said.

That’s what Silva hopes will happen, as she watches the clock tick down the final month to July 1.

Sabrina Passos is a journalist who coordinates special projects for a Brazilian newspaper Zero Hora.