“Travel is fatal to prejudice, bigotry, and narrow-mindedness, and many of our people need it sorely on these accounts. Broad, wholesome, charitable views of men and things cannot be acquired by vegetating in one little corner of the earth all one’s lifetime.”
-Mark Twain, Innocents Abroad, 1869.
Swept into the miasma of debates over U.S. immigration policy are those who visit the U.S. legitimately, particularly international students. Just as some claim that immigration denies jobs to U.S. citizens, some argue that international students deny places in our colleges and universities to U.S. citizens. If so, then why should we recruit and make accommodations for these students? In particular, why should Darden do this? The short answer is that it sustains our educational mission, it is sound economics, and it is consistent with America’s highest values. Let me explain.
An Overview
At the outset, you must understand that contrary to the claims of the staunchest nativists, attendance by international students hardly constitutes a tidal wave. In the 2011-12 academic year, international students were 3.7% of all students enrolled in U.S. institutions of higher education. ((“Open doors: Fast Facts” at http://www.iie.org/~/media/Files/Corporate/Open-Doors/Fast-Facts/Fast%20Facts%202012-final.ashx.)) In 2012-13, international students comprised 14.2% of all students enrolled in U.S. B-schools. ((Source: Association for the Advancement of Collegiate Schools of Business.))
Since 2002, the volume of people sitting for the Graduate Management Admission Test (GMAT) in the U.S. has declined 15%; all demographic indications are that this trend will continue. However, the volume of international test-takers has more than offset this decline. For instance, Asian GMAT examinees increased 11% over the last five years. Darden saw a 21% increase in international applications this year with just a 1% increase in domestic applications. Student mobility is rising. ((A task force of business school Deans that I chaired produced a report, Globalization of Management Education (AACSB, 2011), which showed that the mobility of students, teachers, and whole institutions is already high and rising still. We are seeing stunning growth of cross-border partnerships among business schools, the development of curricula on globalization, and a serious deepening of the respect for cross-border differences. The world is not “flat;” it is “curved.” Differences in culture, laws, geography, and economies mean that we must produce a new generation of leaders who can navigate through those differences.)) No surprise: as markets liberalize and aspirations rise, applications by international students (particularly from the emerging economies) have increased to offset the declining application volume from the U.S.
“But,” you may ask, “why should they want to come to the U.S.?” There are over 13,000 institutions in the world that award degrees in business. ((http://www.aacsb.edu/aacsb-accredited/.)) Applicants enjoy an enormous range of choice. The appeal of American schools is summarized in one word: quality. A passel of metrics point to the prominence of U.S. higher education, including the count of Nobel Laureates, the Shanghai Jiao Tong research rankings, and international b-school league tables. Applicants take notice. The market for university degrees is fairly efficient.
America’s higher education of international students lifts the economy. A recent report estimated that international students contribute $29.8 billion to the U.S. economy—of that, about 28% or $8.4 billion is supported by U.S. sources, but that still leaves a very healthy $21.4 billion net contribution to America’s GDP. ((“The U.S. support percentage includes funding from a U.S. college or university, the U.S. Government, a U.S. private sponsor or current employment.” From “Economic Impact of International Students,” prepared by the NAFSA Association of International Educators. It is available online at http://www.iie.org/Research-and-Publications/Open-Doors/Data/Special-Reports/Economic-Impact-of-International-Students .)) A report by NAFSA found that “more than 60% of all international students receive the majority of their funds from personal and family sources. When other sources of foreign funding are included, such as assistance from their home country governments or universities, over 70% of all international students’ primary funding comes from sources outside of the United States.” ((ibid.)) And this estimate of net benefits probably understates the contribution of foreign students to the U.S. economy because it ignores so-called “multiplier effects”—an increase in GDP greater than the initial spending.
The U.S. has been running consistent deficits in the balance of trade since 1980, owing to large imports of oil and consumer goods. These trade deficits spawned a plethora of problems including a weakening dollar, inflation, flows of “hot money,” capital market volatility, and disputes with trading partners. Educating international students helps to stem the trade deficits–it’s an export of educational services and a smart trade strategy for offsetting what we buy from the world. As one of my colleagues says, “Other countries sell us cars and we train their leaders – which one of these seems like the smarter strategy?”
Virginia is no stranger to these benefits. The NAFSA study reported that in 2012, 15,169 international students contributed $406 million to Virginia’s economy. In 2012, the University of Virginia hosted 2,141 international students, the third highest in the Commonwealth, after Virginia Tech and George Mason Universities. ((“Open Doors Fact Sheet—Virginia” Institute of International Education, 2012.)) Virginia runs an annual foreign trade deficit of about $3.5 billion. ((Virginia export data is from U.S. International Trade Administration, Tradestats Express, State Exports Data, Global Patterns of a State’s Exports, http://tse.export.gov/TSE/TSEhome.aspx , viewed on August 2, 2013. Virginia import data is from U.S. International Trade Administration, “Global Patterns of a State’s Imports,” (Accessed from http://tse.export.gov/stateimports , viewed on August 2, 2013).)) A U.S. Commerce Department report declared “Exports support jobs for Virginia’s workers…Exports sustain thousands of Virginia businesses…Foreign investment creates jobs in Virginia….Virginia depends on world markets.” ((“Virginia: Exports, Jobs, and Foreign Investment” International Trade Administration, U.S. Department of Commerce, July 2013.))
The current Governor of Virginia, Robert F. McDonnell, has been a vocal advocate of international outreach. Recently, he said, “In this market, it is mandatory that we continue to expand the presence of international companies in the Commonwealth, as well as explore new export opportunities. That is how we will continue to create good jobs for the citizens of Virginia” (March 7, 2013). Early in his term as Governor, he said, “Over the past six years, 49 percent of new capital investment of projects worked by Virginia has come from international companies. International companies help us create jobs for our citizens and strengthen and diversify Virginia’s economy” (June 10, 2010).
Another Governor of Virginia, Thomas Jefferson, (also our third President, second Vice President, and first Secretary of State) learned from his sojourns outside of the U.S. and actively promoted international engagement, trade, and the exchange of new ideas and technologies. In founding the University of Virginia, he envisioned “…an establishment which I contemplate as the future bulwark of the human mind in this hemisphere” ((http://www.monticello.org/site/jefferson/quotations-university-virginia.)) —not county, state, or nation, but hemisphere. From the beginning, he sought a global presence.
International Students at Darden
This brings us to Darden’s place in all this. We recently enrolled Darden’s newest full time MBA graduating class (2015) from 37 countries. And 37% of the 2015s were born outside of the U.S. In the 2012-13 academic year 33% of all Darden students were international (I dislike “foreign” because of its association with a host of prejudices). The vast majority of the top 100 global business schools report international percentages at similar or higher levels.
What motivates Darden to recruit an internationally-diverse class of students?
- It is right for the students. I challenge any parent: given what you know about the trends in the global economy, would you be satisfied to have your child educated only with people of your own country? The professional world into which American and international students will graduate requires managers and leaders who are globally confident and competent. One learns so much about navigating across borders from studying with internationally-diverse classmates. Our best American applicants demand an internationally diverse classroom and network. They know that the future will require both understanding of and cooperation with other nations.
- It is right for the companies who recruit our students. Darden’s corporate partners actively look to hire our international students. No wonder. Our analysis shows that the top 15 corporate non-financial recruiters at Darden report an average of 45% of their revenues originating outside of the U.S. America’s business economy is not an island unto itself; it is hugely dependent on global trade. American firms of all sizes must look beyond our borders. Some 46.6% of the sales of the S&P500 companies originate internationally. ((“S&P500 Foreign Sales Edge Up,” Insights, McGraw Hill Financial, Summer 2013, p. 15.))
- It is right for our society. International students contribute much more than the measures of student spending indicate. They promote global awareness among American students. They spur innovation and creativity (diversity does this generally). They found companies and create jobs here. Generally, international students carry values that are quite consistent with the heritage of America. These students are optimists, pioneers, and risk-takers who leave their familiar lands, languages, and cultures to strive for a better life. They are drawn to the American Dream as much as many Americans—and the international students help to sustain that dream. Since Darden is financially self-sufficient, it delivers these benefits to society without funding from taxpayers or the University.
- It can help the native countries of our international students. America spends 1% of its Federal budget on foreign aid and humanitarian assistance. Educating international students is a high-impact complement to such aid. As the saying goes, “Give a man a fish, and he will eat for a day. Teach a man to fish, and he will eat for a lifetime.”
- It is right for Darden. Our vision for Darden is succinct: “World-class impact and stature.” Our Mission calls us to “improve the world by developing and inspiring responsible leaders and by advancing knowledge.” We want to make a positive impact in the world. Educating international students helps us fulfill our Mission and Vision.
Darden actively supports the aspirations of international students. In 2009, the market for loans to international students froze because of the Global Financial Crisis. International first-year students at Darden were stranded by the freeze because they were unable to finance the second year of their MBA studies. We responded by developing a custom loan program for them. Lending to international students has still not thawed. Darden continues to collaborate with a lender, Discover’s Custom Loan Program. Around two-thirds of our international students ((Discover’s Custom Loan Program is open to domestic students as well. To my knowledge, no domestic students have used this program because of the availability of private and government loans in the U.S. on better terms.)) borrow some amount under this program—and when they do so, they still have plenty of their own capital at stake because this program limits borrowing to less than the full cost of attendance. Since 2009, Darden’s experience with this custom loan program has been good.
I tell any applicant that borrowing to finance one’s education should be a last resort. Draw down one’s savings: in a previous post I gave evidence that investing in your own human capital yields one of the highest returns you can earn. Next, you should lean on family, friends, spouse’s employment, part-time employment, crowd funding—whatever. Borrowing should be a last resort. We formally counsel international students about the implications of their borrowing, and of the consequences of a failure to service their obligations in timely fashion. The penalties of default are not pretty: damage to credit history, legal exposure, and loss of self-respect.
But in the absence of such a loan program or other sources of financing, Darden would be accessible only to the socio-economic elites in other countries. We want to attract to Darden excellent students regardless of their financial capabilities. This loan program promotes access by the global brightest and best.
Conclusion
I have not seen any rigorous research that affirms the premise with which this post began, that enrollment of international students displaces domestic students. It could be that there is enough slack capacity in American higher education to accommodate all prospective domestic and international students. The premise warrants research—the folks who assert the premise should show proof. But suppose that the premise is true. Then we must make tradeoffs. This post has sketched some of the benefits of educating the international student. And I think those benefits warrant recruiting a globally-diverse class of students.
In 1869, Mark Twain traveled abroad and discovered the benefits that travel can bestow–Darden does a lot to engage our students with the world beyond America. But Twain’s insights apply equally in reverse. Those who host international students win the liberalizing benefits of the inbound travelers. Twain said that these benefits include the acquisition of “broad, wholesome, charitable views.” But our experience at Darden shows that the list of benefits could be extended considerably to include such attributes as keener appreciation for the challenges and opportunities of global engagement; greater global confidence and competence; and quite simply, more “street smarts.” The Darden Community gains a lot from its international students, alumni, faculty, and staff members. Let us celebrate them.