Budget and Scholarship Management in Education Abroad
Editor’s note: The following excerpt is adapted from the chapter “Education Abroad Budgets” in the forthcoming NAFSA’s Guide to Education Abroad, Fifth Edition. See the full chapter for sample budgets and additional sections on operational budgets and surplus.
Studying abroad encourages students to reach beyond their comfort zone, and budget management oftentimes does the same for international educators as it is frequently the part of the job with which they are least familiar. International educators may come into the field without formal training in accounting or budget management and therefore have to acquire this unfamiliar, yet very important, skill while on the job. The NAFSA International Education Professional Competencies recognizes business acumen as a core competency for the international education professional. This skill includes aligning business models with institutional strategy, championing ethical practices, facilitating contracts, and managing finances and budget.
In addition to managing the office operating expenses, education abroad professionals must manage the individual budgets that support the programs offered. The education abroad office facilitates a diverse portfolio of program types that vary in enrollment capacity, levels of support, and types of experience. Program types also vary in the type of budget management that is required for each of them. Some education abroad program types require much more budgetary oversight than others.
Faculty-Led Program Budgets
Faculty-led programs can bring enrollment volume but require greater financial and budgetary oversight. Although there are a variety of ways to structure and financially support a faculty-led program budget, a common practice is for the faculty-led program to follow a self-contained budget. In other words, the cost to administer the program is the cost passed on to participants so that the institution does not incur any additional expense for offering the program.
There are several ways to structure a faculty-led program, but most faculty-led program budgets involve a combination of fixed and variable expenses.
A fixed expense is a flat rate expense that the entire program incurs regardless of how many students participate on the program. For example, a faculty member’s travel expenses (airfare, lodging, and meals) would be a fixed expense because that cost would not change if two students or twenty students participate.
Variable expenses are not fixed across the program but follow each participant. These expenses will depend on the number of participants joining the program. For example, hotel rooms would be a variable expense because the program may need to reserve five rooms or fifteen rooms depending on the number of participants, thus changing the program’s overall cost. Insurance is another important expense that varies based on the number of participants.
Some education abroad offices budget an amount to use for needs that can be difficult or impossible to plan for, such as unexpected expenses, currency fluctuations, or transactional fees. Building in a small amount to cover unplanned expenses, especially emergency situations, can be a good practice to implement for programs that operate on a self-contained budget. Some offices may set a static contingency amount that each program incurs, while others may work from a percentage (3 percent of the overall program expenses) or base the contingency amount on the number of participants.
Exchange program budget management, in general, works from the assumption that both the sending and receiving institution(s) are mutually benefiting from the arrangement and managing enrollment activity in a way that keeps the exchange “balanced” or budget-neutral. In some instances, an exchange program can be used for its tuition capture, but overall, exchanges are not intended to be revenue-generating. Exchange programs generally yield lower enrollment than faculty-directed programs but can present a higher operational cost to the office. Exchange programs can follow one or both methods of balance: balancing student activity and/or balancing the financial activity.
Student Enrollment Activity
Most exchange agreements will articulate the approximate number of students who can participate on the exchange during a given year. This enrollment threshold depends on the supply and demand of both incoming and outgoing students to be exchanged between the institutions. Education abroad offices must continually track the incoming and outgoing activity to make sure both institutions are sending and receiving a balanced number of students while upholding the intentions of the agreement.
For U.S. institutions, exchanges can come with a financial cost if the institution must also account for the tuition that follows the participants. For students going out on exchange, the sending institution may assess tuition or charge the equivalent of the tuition cost as a program fee. Commonly, this program fee is then captured and used to subsidize the tuition of an incoming participant’s coursework. For the student participants, this financial arrangement alleviates their need to pay a host university’s tuition. For the education abroad office, this means careful tracking to make sure the exchange’s budget is staying in balance.
Self-contained programs have been developed exclusively for college students who will enroll for a distinct period of time. Some items factored into the program budget include on-site amenities and staff support, room and board, cultural activities, risk management, and crisis response.
Working with education abroad providers offers many benefits, including assistance with the administrative workload and oversight of the program’s finances. Providers will set their own program prices, which include standard components like academic coursework, on-site amenities and support, cultural activities, risk management, and crisis response. In addition, both for-profit and nonprofit providers must also capture what they need to administer their programs, so there is generally an additional overhead cost. Some education abroad offices arrange direct billing for their students, where the university pays the provider’s program fees on behalf of the student and charges the students’ institutional account to recover the costs.
In addition to education abroad operational budgets and program budgets, an education abroad office may be responsible for scholarship funding oversight. This section presents an overview of the various sources that commonly fund scholarship budgets for education abroad. Regardless of source, the education abroad office should be following or managing the budget specific to the scholarship to ensure responsible stewardship and maximize available funding for students.
It is not uncommon for an education abroad alum to take interest in funding education abroad opportunities for future participants. Donors may want to contribute scholarship funding to help students who come from specific backgrounds, meet specific criteria, or have a specific academic pursuit. For example, the donor may be a former first-generation college student or a former engineering major and prefers to create a scholarship with this specific population in mind. Donors may be interested in investing in a specific destination or program type, such as an international service learning project.
Developing strong partnerships with engaged donors can be rewarding for both the education abroad office and the students, but these relationships should be managed carefully and with the oversight of the university’s donor relations or development department. The education abroad office can partner with the institutional donor relations department to provide guidance or expertise that helps donors think strategically about their gift to ensure not only that the donor’s funding goals are met but that the scholarship is feasible, accessible, and relevant.
The institution or the institution’s student government association may choose to self-impose a small mandatory fee across all tuition-paying students to build a fund for education abroad scholarships. When the entire student population contributes a small amount, the economic impact on each student is minimal.
Similar to a fee-funded scholarship pool, a campus department may choose to allocate funding toward education abroad scholarships or receive grant funding to support its students. The education abroad office should work with these departments to understand their goals, expectations, and any requirements for the funding. Education abroad offices should also play a role in supporting or overseeing the administration of these scholarships and assist with reporting.
One of the many benefits of working with education abroad providers is the opportunity to negotiate program discounts or scholarship funding for participants. Providers may offer a general discount for affiliating with them, or they can reinvest in their own enrollment by offering scholarships to their participants. In most cases, it can be easiest when no money changes hands, so the funding may not be awarded directly to a student like a traditional scholarship. Rather, provider discounts more commonly come in the form of a credit or a program fee reduction. Providers may choose to maintain an external escrow account specific to an institution to reallocate in the form of student scholarships.
External and Corporate Partners
Similar to donor-funded scholarships, external and corporate partnerships should be managed through the institution’s donor relations or development department. These partnerships can open funding opportunities for education abroad participants but require careful oversight to ensure that the corporation’s goals and expectations align with those of the institution. The education abroad office can provide guidance and expertise to support this synergy and assist with the overall administration of the scholarship or program funding. •
Core Principles for Fiscal Management
There are a few core principles required for navigating the fiscal management priorities of the institution.
International educators managing budgets are almost always stewarding fees paid by students and donors or handling tuition on behalf of the institution. The responsibility of managing funds intended to support students’ personal, academic, and professional growth is not to be taken lightly. Therefore, budget management practices should always be accessible and transparent to stakeholders to ensure maximum accountability and responsible financial stewardship. Consider what the budget would look like to the general public. Be prepared to justify actions and line items to the students paying these fees or to the institution. Would auditors understand this rationale? Expect or be prepared to produce documentation to justify budget decisions. Better yet, proactively publish budget practices in the spirit of transparency.
Strive for Accuracy
Accuracy, coupled with transparency, in everything one does harbors trust—and with trust comes credibility. Striving for accuracy in budget management is not just aspirational; it is absolutely necessary. (“Strive” is used intentionally because education abroad budget forecasting requires one to make an educated estimate or projection of future events. However, in situations where budgeting is showing past or current actions with known dollar amounts, accounting must be accurate.) If an error is discovered, be sure to take responsibility and fix it.
Make Sustainability the Long Game
Everything international educators do should serve not only the best interests of current students but also those of future students. When it comes to financial decisions and actions, consider how today’s budget will impact future operations and future students. It is in the best interest of future students to operate in such a way that allows the program, support services, and scholarships—or whatever the budget is tied to—to be available when the time comes. Therefore, design budgets to support long-term growth and sustainability.
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