Cross Border Commerce

Deep Dive: Lessons In Global Education

Although the market for international students is fraught with challenges, it’s showing no signs of slowing down. As more international students travel abroad to pursue their educational goals, the frustrations with sending tuition payments across borders are likely to mount among families and university administrators alike. The following Deep Dive features insights into the state of the international space, and a data-rich look at how ripe the market is for innovation.

Millions of international students travel abroad to pursue their educational goals every year.

The market for international education has grown rapidly. In fact, according to the latest figures from the UNESCO Institute of Statistics (UIS), the number of students pursuing education outside their home countries has seen triple-digit growth since the late 1990s. The UIS data found China to be the top exporter of international students, as the number of outbound Chinese students increased by nearly 500 percent during this same period.

The U.S. remains a top destination for international students. World Atlas reports 19 percent of them come to the U.S. to pursue degrees from some of the world’s top universities, followed by the U.K. (10 percent), Australia (6 percent) and France (6 percent). Most who attended the U.S. for higher education hailed from Brazil, China, India, Kuwait, Nigeria and Saudi Arabia.

While this has been a popular way for young people to learn and experience the world for decades, higher education institutions still have plenty of room for improvement — particularly when facilitating a smooth exchange of tuition payments and fees across international borders. International students and their families frequently encounter hurdles in delivering cross-border tuition payments, including problems with currency conversions, transfer fees and delivering correct amounts. Higher education institutions also frequently struggle with communicating payment expectations to overseas families and payment reconciliation once received.

PYMNTS looked at data from the U.S. Department of Homeland Security and the College Board to better understand the international education market. The following Deep Dive explores how the market has evolved, a breakdown in private versus public tuitions and a profile on how U.S.-bound students pursue their education goals.

Public vs. private tuitions

Whether the attending institution is public or private can have a big financial impact for international families. Studying at private colleges and universities comes with a much higher price tag. A deeper examination of 2016 data from the College Board found out-of-state tuition and fees at a public four-year university can cost $24,930 USD on average. The average in-state tuition at the same public university is $9,650 USD, a rate international students are ineligible to receive. Meanwhile, enrolling at a private institution for a four-year degree can cost approximately $33,480 USD per year.

 A snapshot of U.S.-bound students

PYMNTS analyzed the latest data from the Department of Homeland Security to gain a deeper understanding of the students who come to the U.S. to pursue their higher education goals. The international student body in the U.S in December 2017 was more than 541,422 strong, with men representing 66 percent and women making up 33 percent.

The bulk of these international students came from India, with 178,240 Indian students making up 32 percent of the international student population in the U.S. as of December 2017. China had the second-highest number of students attending school in the U.S. at 167,289 or 30 percent of all international students, followed by Saudi Arabia at 22,772 or 4 percent.

As for the top U.S. state for international students, most overseas visitors had California dreams. It hosted the most international students at 76,965 (or 14 percent) attending universities, followed by New York, which attracted 52,705 students (9 percent), and Texas with 48,378 students (8 percent).

In terms of the degrees pursued, many attended U.S.-based universities for post-graduate work. PYMNTS’ review of DHS data found 47 percent of international students, 255,395 in total, attended U.S. universities for a master’s degree. Another 157,822 students (29 percent) attended in pursuit of a bachelor’s degree. 

Problems with cross-border payments

The 541,442 students attending universities in the U.S. come from all over the world, pursuing degrees ranging from medical sciences to arts and more. No matter their major or country of origin, though, international students attending schools in the U.S. share a common experience: payments woes.

Far too many encounter a cross-border payment and international funds transfer system riddled with inefficiencies. These can include higher costs of sending funds, creating problems for international students and their families as well as university administrators who process the payments. To top that off, transferring tuition overseas can mean numerous players involved in the cross-border transfer process. That can eat into the value of an international payment, with players like banks and invisible intermediary actors profiting off the current system and decreasing the value of students’ tuition payments.

At the end of the day, international students and their families are getting a crash course on the various challenges involved in international money transfers. Among the most important lessons is that there are many expenses involved in the process that can serve as rude awakenings for those who were not prepared for them.

Many banks charge fees for a fixed money transfer, for example, with amounts that can vary by the bank used to facilitate the transaction. Each bank has its own approach to setting fees, with some financial institutions setting their rates by the currency in which people send their money. This means one user will pay a higher fee if funds are sent in Rupees as opposed to a university’s local currency.

There are also exchange rate expenses related to international transfers. Many institutions impose a margin on the daily exchange rate on international fund transfers, with some global banks charging 5 percent — meaning a $10,000 transfer might include a fee of $500. Even non-bank money transfer services like Western Union can have markup rates of up to 10 percent.

These fees can cut into the value of the funds transferred. That means the amount sent from one party might not hold the same value once it gets to the recipient because of the related fees and administrative costs involved. These additional costs can come back to hurt both the international students and their families. The process can burden international students with additional debt because insufficient funds are not delivered. For international families, addressing these challenges can mean a painfully time-consuming and costly affair. All told, the current procedure for international tuition expenses can leave many international families with a bad case of sticker shock.

Universities, meanwhile, have their own issues with the current international payment system. Payment officials must communicate to international families when their tuition payments are due, the amount they are expected to pay and in what currency. Payments must be reconciled against the correct student’s account once they are received. Because international funds transfer can alter the amount transferred, the variables can become a dilemma once payments reach administration offices.

Despite issues with payment arrangements, the volume of students pursuing international education is expected to grow in the coming years. PYMNTS’ analysis of data from the United Nations indicates the global education market will likely continue to grow.

With more students and their families pursuing educational opportunities abroad, however, the market still needs a lesson in making the flow of tuition and fees more efficient.


New PYMNTS Study: Subscription Commerce Conversion Index – July 2020 

Staying home 24/7 has consumers turning to subscription services for both entertainment and their day-to-day needs. While that’s a great opportunity for providers, it also presents a challenge — 27.4 million consumers are looking to cancel their subscriptions because of friction and cost concerns. In the latest Subscription Commerce Conversion Index, PYMNTS reveals the five key features that can help companies keep subscribers loyal despite today’s challenging economic times.