The 5,629 Chinese students enrolled at the University of Illinois make up nearly half the large international student body,
according to the university's International Student and Scholar Services.

A precarious drop in international students, especially Chinese students going to the US to study, is causing enough consternation at US universities about revenue and academic research to call for unusual measures. In what is thought to be a world first, thepublic research University of Illinois at Urbana–Champaign has paid to insure itself against a major drop in tuition revenue from Chinese students, reported “Times Higher Education.”

In what is thought to be a world first, the Illinois University’s Gies College of Business and College of Engineering signed a three-year contract with an insurer to pay $424,000 every year, for coverage of up to $60 million against a significant drop in tuition revenue from Chinese students.

The University of Illinois apparently came up with the unusual idea in 2015 and implemented it last year, but only received permission from the insurance broker to discuss it in public this month.

Gies College of Business Dean Jeff Brown told “Times Higher Education” that the insurance would be “triggered” in the event of a steep 20% drop in revenue from Chinese students at the two colleges in a single year as a result of a “specific set of identifiable events.”

“These triggers could be things like a visa restriction, a pandemic, a trade war —something like that that was outside of our control,” Brown told the weekly magazine.
 

Downside Protection

It’s a smart “hedge” against the risk of steep decline in tuition revenue from Chinese students which makes up about a fifth of the business college’s revenue.

“Hedging the risk that we face gives us more confidence to be able to continue proactively investing in the very strong relationships that we have in China,” he added.

“We chose the $60 million figure because that roughly is our exposure across the two colleges. If demand had actually completely disappeared, we’d be ‘made whole’ for that year.”

Chinese students account for the largest share, about 30% of the international student body. According to Reuters’ data, there are about 360,000 Chinese nationals who attend US universities, generating roughly $14 billion in revenue.

Despite the number of international students in the US surpassing the one million mark for the third consecutive year, new student enrolments fell by 6.6% in 2017/18, the latest data from Open Doors has revealed. That marks the second straight year of declining new international enrollment at US institutions.

In terms of the origin of students, China (33.2%) and India (17.9%) made up the largest portion of the total, with increases of 3.6% and 5.4% respectively on 2016/17 figures.
 

US Mulls Background Checks for Chinese Students

Meanwhile, there were reports that the Trump administration is considering new background checks and restrictions on Chinese students in the US over espionage concerns.  The Trump administration is considering whether Chinese students should be subjected to additional vetting before they attend US schools, Reuters reported Thursday.

Previously in June, the US State Department cut the length of visas for Chinese graduate students studying aviation, robotics and advanced manufacturing to one year, down from five. According to the sources, the change was made to curb the risk of spying and theft of intellectual property in areas vital to national security.

China’s ambassador to the United States told Reuters the espionage accusations were groundless and “very indecent.”