Inside the Numbers: How Foreign Students Contribute $18.8 Billion to U.S. Economy

December 21, 2010

By Jason Baumgartner

NAFSA’s latest annual economic impact statements estimate that international students at U.S. colleges and universities contributed $18.8 billion to this country’s economy during the 2009 -2010 academic year. As sometimes happens, the NAFSA report has raised a few questions about how the numbers are derived. Interestingly, two articles appeared in the same week recently, one suggesting that the NAFSA estimate is too low, and another suggesting that it overstates the contribution foreign students make. These two contradictory analyses offer an occasion to provide some additional information and context for how the NAFSA economic impact statements are calculated.

The first article, “The Not So Open Door” written by scholar Alan Ruby at the University of Pennsylvania for Inside Higher Ed, suggests that NAFSA’s figures are too modest. Ruby compares NAFSA’s report to a recent study, “The Economic Implications of Fewer International Higher Education Students in Australia,” which was sponsored by the Australian Technology Network of Universities. He observes that the total estimated impact for both nations is about the same, and draws the conclusion that the U.S. estimate must be too low, given that the United States hosts three times as many foreign students as Australia.

On its face, this seems a logical argument. However, on closer examination, a direct comparison between the two studies is not so straightforward. The Australian study outlines a per-student export income of $50,874, based on $18,281 in tuition and fees and another $32,593 in living expenses. The NAFSA study calculates a per-student export income of $30,080, based on $20,979 in tuition and fees, and another $20,671 in living expenses – minus $11,571 of U.S. support.

There are two fundamental differences in these methodologies. The first is that the Australian study does not list any Australian sources of support for foreign students – scholarships, fellowships, research assistantships, teaching assistantships, employment, or other – that would (as they do in the American case) offset the estimated export income from each foreign student.

Second, the Australian study estimates that international students spend on average $2,716 per month on living expenses in Australia. This seems high. NAFSA estimates that international students in the United States spend on average $1,722 per month on living expenses; this figure includes an average of $487 per month in U.S.-based funding, plus $1,235 per month of their own money. NAFSA also factors in the likelihood that many students are living with roommates and cost-sharing their expenses, while it is not clear that the Australian study took the same approach.

Beyond comparing the NAFSA study to the Australian analysis, Ruby makes a case for the use of multipliers in describing the economic impact of foreign students, suggesting that such an approach would yield a more robust overall number. NAFSA’s current approach is to frame the impact of foreign-student spending in terms of estimated exports, so that the value of the foreign-student contribution can be easily compared to the value of other exports. The emphasis of the NAFSA report has always been on “economic impact” and NAFSA has deliberately chosen not to apply multipliers, so as to generate the most accurate and readily comparable statistics. The application of multipliers can offer a look at how export dollars cycle beyond the export through the economy – such as in the form of jobs, for instance – but introduces other downsides that researchers must weigh.

The second article, written by David North of the Center for Immigration Studies and entitled “Do Foreign Students Contribute Billions to U.S. Economy?” contends that the NAFSA statistics are an overestimation and posits that most international students receive financial support from the United States. North’s argument focuses largely on sources of funding for doctoral students and suggests that NAFSA’s reporting of the funding data is subjective.

While North extrapolates from a small number of doctoral students he polled to suggest that foreign students are overwhelmingly supported by U.S.-based funding, the reality is that foreign doctoral students in the United States account for just15% of the total foreign-student population and just 40% of the foreign graduate student population. It is true that doctoral students receive a significant portion of U.S. educational support because of the large role of university funding in advanced research and teaching. However, foreign graduate students at the masters and professional levels typically do not receive this level of U.S. support, and foreign students in undergraduate, intensive-English, and certificate programs do not receive much U.S. support at all.

North also questions how NAFSA calculates data on expenses and funding and suggests that the NAFSA approach is faulty because it relies on “subjective” input. In fact, the Institute of International Education’s Open Doors data that NAFSA uses are based on official government documents that U.S. higher education institutions are required to complete to report program costs and source of funding. In order to secure student visas using those document, prospective foreign students must be able to demonstrate that they possess the resources to complete their chosen course of study – including presenting bank statements and other evidence of resources at the U.S. consulate.

NAFSA is continually looking for ways to improve the current algorithm used to compute economic impact. At the same time, NAFSA believes the findings provide a fair and reliable estimate – and a valuable tool for communities and states in better understanding and articulating the economic benefits that foreign students bring. NAFSA is pleased to see the ongoing interest in this area of data and research and looks forward to further enhancements of this study in the future.


Jason BaumgartnerJason Baumgartner conducts the annual analysis to produce the international student economic impact reports for NAFSA. He has worked for the Office of International Services at Indiana University for more than 10 years and is currently the director for information services and the lead developer of the SUNAPSIS International Office Module, a comprehensive immigration case management system.


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