America’s once-mighty dollar is looking pretty limp these days. Sure, the greenback remains the world’s benchmark currency, but for reasons ranging from interest rate cuts to recession fears to record oil prices, it’s been in near freefall for the last few years, particularly against Western Europe’s two main currencies: the British pound and the euro. The dollar is now roughly worth half a pound, or 50 pence, a nearly 20 percent loss of purchasing power from five years ago. Against the euro, it’s plunged around 30 percent since 2003. u On the whole, the dollar’s dive is not great news for U.S. colleges, students and faculty, coming as it does at a time when higher education is evolving into an internationalized service and educators are broadening curricula to reflect the growing links between countries.
Indeed, American college students are heading overseas in record numbers and the cohort of foreign students enrolling at U.S. schools is on the rise again. But while the sliding dollar may make U.S. education both more attractive and more accessible to foreign students, it’s wreaking havoc on the budgets of many American students and institutions. As part of her duties as the director of the study abroad program at the University of Kansas, for example, Susan L. Gronbeck-Tedesco ordinarily takes four or five foreign trips a year. But this past year, she’s headed overseas just twice: to Costa Rica and Australia. The dollar’s troubles are driving some schools to seek creative alternatives, trimming their international programs or branching out from long-favored student stomping grounds in Europe.
EUROPE'S ENDURING APPEAL
Given how far the dollar has dropped, you might think that many more students would be staying home. Not so. Overseas travel and studies represent a long-term trend. “Sending students overseas is increasingly seen as an important thing to do,” says Peggy Blumenthal, executive vice president at the Institute of International Education (IIE). And these days, that’s just as true for tech schools as for liberal arts colleges. “Schools want to make it possible for all students,” she adds, “and the weak dollar makes it harder to do.”
The continued popularity of European destinations doesn’t help. Despite skyrocketing costs—an iPod Nano that retails for $149 in the United States has a U.K. pricetag of £99, or nearly $200—they still lure 58 percent of U.S. students. Budget-busting Britain remains the top choice, by far. In the 2005-2006 academic year, 32,109 students trekked to Blighty, compared with 8,830 who went to China, according to the IIE’s latest Open Doors report, an annual snapshot of global education. Madeleine F. Green, vice president of the American Council on Education, points out that if “going to Europe is like going to Mars” for American students, “going to China is like going to another galaxy.”
Who pays the extra costs? Mainly the students themselves. How schools finance study-abroad programs varies greatly, but at most schools, students pay the same tuition that they would if they stayed home. Many schools, like KU and the University of Missouri, Kansas City, run one-to-one exchange programs: For each student going overseas, a foreign student comes to them for the same period. That means that each student—domestic and foreign—pays tuition to his or her own school, which essentially takes tuition out of the foreign currency exchange equation. But students pay all other costs, including air fare, room and board, and other recreational expenses. “It does hit their pocketbooks,” says Gronbeck-Tedesco. For 18 years now, Kansas has run a program to send Spanish majors to the University of Santiago de Compostela in Spain. Today, the cost to students per semester is $6,650—58 percent more than the $4,200 rate of five years ago. Though students can get help at most schools from scholarships, loans and other financial aid, the overall costs are still significant.
To save money, more students are opting to go overseas for shorter periods—less than a semester—for intensive studies that can be augmented back home using online courses. Graduate students venturing to expensive locales face a double whammy, however. Because of restrictions on foreign workers, they are sometimes blocked from overseas work in labs or as teaching assistants, which leaves them with less experience and no income.
Diana Carlin, director of international research at the Council of Graduate Schools, predicts the falling dollar will halt the growth of overseas study: “I think a year from now you’ll see a drop off.” That already seems to be happening at Kansas. After several years of annual increases of around 11 percent in the number of students going overseas, KU expects a slight drop in numbers next year.
Schools that strive to hold down costs for students obviously have to absorb some of those costs themselves. When the dollar was strong, year-abroad and semester-abroad programs could be economically beneficial for U.S. schools. Even though students spent a year at a foreign university, where tuition is often lower, they paid full tuition to their home school, which then had a cushion to defray other expenses. Now that tuition gap has shrunk.
At Dickinson College in Pennsylvania, where 80 percent of students study overseas, students pay for the school-run programs in lieu of tuition during the period they’re gone. That payment covers all direct costs, including room and board, though students still have to pony up for their extraneous expenses. “So yeah, my budget’s been hit,” says Brian Whalen, executive director of global education. Foreign study is so embedded in Dickinson’s culture that “we just go ahead and do it.” All the same, he adds, “that doesn’t make it less painful.”
Beyond students and study-abroad programs, some faculty members are also feeling the dollar’s pinch—particularly if they’re not based at better-funded research schools. Many schools are finding it difficult to stretch travel budgets far enough to cover air fares, hotels and meals for faculty research abroad or overseas conferences.
SCHOOLS FEEL THE SQUEEZE
For U.S. schools, if not for students, there’s a silver lining. IIE’s Blumenthal thinks the dollar’s slide could be making U.S. schools more attractive to foreign students, particularly at the undergraduate level, “which is more price-sensitive.” Gronbeck-Tedesco has observed that at Kansas, “we are seeing more students coming in from high-cost areas.” The school has even attracted a few students from Britain, whereas 10 years ago, none came. With their own strong university traditions, European countries and other highly-developed regions have never sent many students to the U.S. And that’s unlikely to change dramatically, even with the dollar’s drop, since taxpayer support of European schools allows them to charge much lower tuitions. Today, 59 percent of foreign students in the U.S. come from Asia, with India leading the charge.
While the dollar has lost strength against many Asian currencies, the effects are underwhelming. The Indian rupee, for example, has gained nearly 20 percent on the dollar since 2003—but that amounts to less than half a cent. So most Asian students clearly aren’t coming to the U.S. because it’s a great deal. The increase in this student presence likely has more to do with the smoothing out of tough visa procedures set in place after the Sept. 11, 2001, terror attacks. The overarching demand for American college degrees has always been based on quality and reputation. U.S. degrees remain the gold standard of international higher education.
The sliding dollar’s effect on international programs is complicated by the fact that a good deal of global attention is beginning to focus on the surging economies in Asia, the Middle East and Latin America. More schools are developing programs linked to fast-developing countries because they’re becoming so economically important. That they’re also less costly provides an additional benefit. A decade ago, an even greater proportion of U.S. students—65 percent—headed for Europe. But now, even though the numbers are still relatively low, “more students are going to places where the dollar goes much further,” Blumenthal says. For instance, those 8,830 students who headed for mainland China represented an increase of 38 percent over the year before. Other burgeoning hotspots include India, Hong Kong and Argentina.
Only a handful of American schools operate satellite campuses overseas designed to attract students in the country where they are located—but this is changing. Most satellite campuses are being established in countries outside of Europe, where demand for more and better universities is greatest, particularly Asia and the Middle East. MIT has a base in Singapore, Carnegie-Mellon one in Qatar and Virginia Tech has an outpost in India. Georgia Tech has a campus in Lorraine, France, but its other overseas campus is in Singapore. As more U.S. schools are exploring options for establishing beachheads abroad, nearly all are targeting developing regions, where they see the most opportunity.
Missouri’s Webster University is something of an anomaly, with nine campuses in six countries, including four in Europe: London, Vienna, Geneva, and Leiden, in the Netherlands. Despite its sizable European footprint, Webster manages to sidestep the weak dollar because it uses local currencies to collect revenues and pay expenses. In Holland and Vienna, for example, it charges tuition in euros, and it pays for staff, faculty, rent and other costs in euros, too, so there’s a balancing out. Although Webster uses its foreign campuses as destinations for its American students who study abroad—and 40 percent of them opt to go—most of the students studying in these locales are foreign students from “all over the world,” says Grant Chapman, director of the international program. Those foreign students aren’t getting a break on the price of an American degree, because they’re not paying in dollars. But given the enduring quality of U.S. degrees and the international respect they’re still accorded, the recipients know it’s worth every pound, euro or franc they’re paying.
Thomas K. Grose is a freelance journalist based in Great Britain.