Academic institutions across the world are becoming increasingly global. According to 2018 figures from UNESCO, the number of international students grew from 2 million in 2000 to 5 million in 2018. Student migration and international connections have huge benefits for universities, but geopolitics can add an element of uncertainty for universities operating overseas. While they cannot control these external factors, they can take measures to smooth the process and minimise the risk of working across international markets. Managing and processing global payments provides a key example.
In recent years, Asian economies have been making a concerted effort to build their higher education capacity. They want to simultaneously encourage more of the population to study in their home country, and attract more overseas students. As a result, China is now the 3rd most popular destination for overseas students. However, for every international student choosing to study in China, another institution elsewhere loses out.
To offset this, governments in many countries have launched strategies specifically aimed at making their country more attractive to international students, such as post study work rights, visas and increasing English language teaching. Canada, France and Japan are just a few examples of countries that have launched specific programs and measures to target international students versus other countries which are becoming less appealing as study destinations, such as the UK because of Brexit and the US due to immigration policies.
What this means is that ultimately, every time student mobility changes direction because of geopolitical factors, there are universities that win and those that lose on an international level.
Brexit, for example, is making a significant impact both in and out of the UK. A recent Studyportals survey revealed that 63.7% of students in the EU or EEA considered the UK "less attractive" as a study destination because of Brexit.[1] For EU students in particular, the fear is that Brexit could see them classified as overseas students, leading to a fee increase which is likely to deter them from studying in the UK. These fears are significant as EU students represented 30% of UK universities' international student base in 2017/2018[2]. As such, any downwards fluctuations in the number of EU students studying in the UK could leave a significant void in terms of universities' income. On the flip side, this shift in international student mobility is likely to benefit the alternative institutions that would-be students in the UK are now looking to instead.
Beyond the UK, the number of international students studying in the US declined by 2.7 percent from March 2018 to March 2019 according to quarterly data on student visa holders by the US Immigration and Customs Enforcement. One of the biggest declines in student uptake came from Chinese students (2%) who make up the largest proportion of the US international student population. This shift has been attributed largely to visa delays and a tightening in border security[3] - and again has left US institutions wondering how they can replace that revenue.
Beyond student mobility, there are a number of other factors impacting universities' bottom line. The competitive global landscape, for example, is encouraging universities to take on more debt in a bid to race to the top of global rankings. Furthermore, increasingly unstable political situations are destabilising currencies, and making it harder to manage cash flow and international investments due to fluctuating exchange rates.
But it's not all doom and gloom. While universities can't make the current political climate more certain, there are plenty of things they can do to manage international payments and continue to operate efficiently overseas.
Take the process of managing and reconciling tuition fee payments. Previous research we commissioned at Western Union revealed that nearly half of UK university finance and admissions teams see charges incurred from processing international fees as one of their biggest challenges. In fact, some 67 working days are lost each year per institution to university staff matching, processing and reconciling overseas payments. Time wasted reconciling and checking through payments has an inherent monetary cost too. As such, working with a payment provider that does most of this hard work for them can provide significant cost savings.
Fundamentally, it's also important to remember that universities are ultimately businesses, and therefore need to invest in being as commercially viable as possible. As they become more international, managing currency risks and international costs - from study abroad programmes, to research costs, and importing capital equipment - is becoming an increasingly important part of this.
At Western Union, we work closely with academic institutions across the world to offer payment services that ease the international payment process, from minimising the risk of currency fluctuation, to helping finance teams track and manage payments from international students. Our GlobalPay for Students platform brings together multiple payment options that international students can use. In fact, 466,000 students across the globe have used the platform so far, and we have received payments from 220 countries and territories through a number of currencies and payment options. Our FX Barometer tool also enables business of all kinds, including institutions, to plan for currency fluctuations, minimising the risk of international transactions.
While no institution can change the geopolitical situation, they can all do more to predict the possible impact that global events have on their bottom line, and factor this in to their finances. And in a world where technology is advancing like never before, there are hundreds of opportunities to do so.
[1] https://www.universityworldnews.com/post.php?story=20190402085559563
[2] https://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-7976
[3] https://www.studyinternational.com/news/fewer-international-student-enrolments-in-the-us/
