A U.S. university has revealed it has insured itself against a future drop in Chinese student enrolments, in a first-of-its-kind package that underlines both the economic impact of China's overseas students and ongoing concerns about potential restrictions from the Trump administration.
The University of Illinois at Urbana-Champaign, which was at the center of the Zhang Yingying kidnapping case last year, is paying 424,000 U.S. dollars a year for coverage of up to 60 million U.S. dollars on a three-year contract, according to Times Higher Education (THE).
A payout would be triggered in the event of a 20 percent drop in revenue from Chinese students at the university's colleges of business and engineering, in the space of one year.
That downturn in revenue would have to be caused by a “specific set of identifiable events”, THE quoted Jeffrey Brown, dean of the Gies College of Business, as saying.
Brown told THE such events could include “things like a visa restriction, a pandemic, a trade war – something like that that was outside of our control.”
Jeffrey Brown, dean of the Gies College of Business, comments on the insurance package. /From Twitter @IlliniBizDean
The two colleges began discussing the insurance package in 2015, and started paying into it last year. However, the insurance broker only gave permission to publicize the deal last month.
The 60 million U.S. dollars figure roughly represents the two colleges' financial exposure to Chinese students, with Brown telling THE: “If demand had actually completely disappeared, we'd be ‘made whole' for that year.”
Chinese students have grown increasingly important for the U.S. economy in recent years, representing 30 percent of all overseas students, according to U.S. data. In July 2018, there were more than 340,000 students from China in the U.S., according to the Department of Homeland Security.
Those students contribute around 14 billion U.S. dollars each year to the U.S. economy, and for every seven international students enrolled, three American jobs were created in 2016-17, according to the National Association of Foreign Student Advisors (NAFSA).
However, recent concerns over potential visa restrictions on Chinese students have highlighted how U.S. universities would suffer financially if such policies were implemented.
The University of Illinois' “hedging” approach is, for now, a one-off tactic. However, tensions in higher education over exposure to fluctuations in Chinese student numbers are not limited to the U.S.
Earlier this month, the British Department for Education used its Sina Weibo account to officially deny rumors that eight UK universities would introduce restrictions on Chinese student numbers.
Chinese students have become hugely important sources of income for U.S., UK and Australian universities in recent years. /VCG Photo
The UK has approximately 480,000 international students, with almost one in five of those coming from China.
International education is Australia's third largest export, worth 28 billion Australian dollars in 2016-17. According to official data, there were 166,000 Chinese students in the country in December 2017, representing 43.3 percent of the entire international student population.
With Australia particularly exposed to any significant changes in Chinese student numbers, University of Queensland Chancellor Peter Varghese said last month that profits earned from Chinese student fees could be set aside in a trust fund, to safeguard against any future downturn.