10-12 pages of text + up to 10 exhibits discussion cases

The Impact of Reducing Saudi Arabia Students on American Universities

Target Course: This case will be useful for both undergraduate and graduate students pursuing courses in or related to finance, economics, sociology, administration, business, and education. Most specifically, the case will be very helpful for students pursuing courses in finance.

Industry: This case is most applicable within the finance and education industries.

Data Sources: For this case study, data will be collected through conducting library research, interviews, consulting, as well as personal experience.

Prior Cases: I am a complete “newbie” when it comes to writing cases. Comment by A. Thompson-Abbott: These items do not belong in your case. It would be better to put them in the case teaching note.

Draft Case Opener Comment by A. Thompson-Abbott: Bold this section and label it “INTRODUCTION.”

Gwen B. Wade, an International Student Services Coordinator at Clark Atlanta University, had just arrived back from Washington DC to have a meeting with SAUDIA Cultures admission. The key topic of discussion during this meeting would be to deliberate on the sharp and unexpected drop in enrolment by students from Saudi Arabia in Clark Atlanta University, and by extension the most universities and institutions of higher learning across the United States. This surprise trend has been experienced within the past six months or so. In a brief interview with her, Wade confided that her university is quite concerned about the declining number of students from Saudi Arabia, which is also their main origin of students taking both short and long courses.

In particular, the university has been receiving large numbers of students from Saudi Arabia for the last ten years or so. According to Wade, this year alone, the number of international students enrolled in Clark Atlanta University has reduced by nearly half. As an illustration, the number of Saudi Arabian students enrolled last year were well above 400 while there are only 270 students this year.

When asked if she thinks the change in Saudi government policy by reducing the amount in scholarships granted by King Abdullah Scholarship Program (KASP) could be the cause, Wade said she thinks so. However, she said that she is yet to ascertain this, and that forms part of the reason why she is here. Comment by A. Thompson-Abbott: This should be the end of the “INTRODUCTION.”

The concerning trend of reduced enrollment from international students has been observed in several other universities. At Wright State University in Ohio, for example, the tuba and French horn professors are out, according to an article published by the New York Times on January 2, 2018. The case is the same for the expert swimming team (Saul 2018). In a similar way, Italian classes at the Kansas state university are shrinking. The once a fortnight newspaper at the University of Central Missouri, the Muleskinner, has resorted to publishing exclusively online for this year. This is in an effort to save printing costs of up to $35,000 (Saul 2018). Comment by A. Thompson-Abbott: This information is great, but you need to create a section for it. Perhaps this section could be labeled “TRENDS IN INTERNATIONAL STUDENT ENROLLMENT.”

Just the same way several universities assumed that the fiscal wreckage resulting from the 2008 depression was a thing of the past, campuses throughout the United States have been compelled to make fresh rounds of reductions. The only difference between the two cases is that the current one has been caused largely by a decrease in international students (Saul 2018). Mostly hard hit are the campuses within the Midwest of the country. This is because most of these are non-flagship public universities which have developed an over-reliance on international students who often pay more than domestic students (Saul 2018).

Established in 1968, Clark Atlanta University is a private, not-for-profit university headquartered in Atlanta, United States (Clark Atlanta University 2016). The university is affiliated to the United Methodist Church and is classified as coeducational and residential institution. Its parent institutions include Atlanta University which was founded in 1865 and Clark College (established in 1869) (Clark Atlanta University 2016). The institution offers degrees under the four key categories (Bachelor’s, Master’s, Specialist, and Doctoral). Comment by A. Thompson-Abbott: Create another section. You could title it “CLARK UNIVERSITY.”

A total of 38 unique areas of study are offered at the university schools which include business school, school of education, school of social work, and the school of business administration (Clark Atlanta University 2016). During the 2014-2015 enrollment, the university enrolled a total of 3,485 students (females accounting for 74 percent and males 26 percent). Out of these, 45 percent are students from within the state, 51 percent from outside the state, and 4 percent international students (Clark Atlanta University 2016). This trend has been persistent and unchanged for quite some time.

The university experienced a significant increase in the number of foreign students during the seven-year period 2011-2017. About 90 percent of these international students were from Saudi Arabia (Clark Atlanta University 2018). As an illustration, the number of Saudi Arabian students at Clark Atlanta University in 2011 were only 10, gradually increasing to 11 and 32 students in 2012 and 2013 respectively. In 2014, the number increased to 70 while 2015 and 2016 saw a further increase to 118 and 184 students respectively (Clark Atlanta University 2018). According to Wade, the number of students from Saudi Arabia reached a record 400 in 2017. However, this number has shockingly reduced to 270 this year instead of increasing as was expected.

It is reported that over the last half a decade, the total number of international student population has grown at an estimated average rate of about 90.3 percent. Saudi Arabia has been the greatest contributor of the growth having accounted for approximately 90 percent of the total foreign student population (Clark Atlanta University 2018).

Several other universities also continue to feel the impact of the decreased international students enrollment (especially those from Saudi Arabia), a trend that started recently. One key reason for the decline, though not yet confirmed, could be the tightening of some of Saudi Arabia’s government scholarship program. Declines in the enrollment of international students undermines not only the educational experience, it also has a negative impact on the bottom line. In most universities, foreign students pay the full price for tuition. They also typically pay higher rates for out-of-state tuition in public universities. Therefore, it means that any decrease in foreign student enrollment would result in notable financial impacts for universities, and Clark Atlanta University is not an exception.

There are many possible variables which can cause diminished enrollment of foreign students in American universities and colleges. These include, but are not limited to, changes in demographics or national policies in their home countries. Alterations to the country’s scholarship programs or the capacity of higher education for the country. Another possible reason is the increasing competition for foreign students from where fees structures or even quality of education is perceived to be better. Comment by A. Thompson-Abbott: Include the information in this paragraph in the “TRENDS IN INTERNATIONAL STUDENT ENROLLMENT” section.

In the proposed case study, I will endeavor to answer the two key questions arising from the decreased international student enrollments: why is the number of students from Saudi Arabia in American universities sharply decreasing? What are the possible implications of this decrease to Clark Atlanta University and what can be done to curb this? Comment by A. Thompson-Abbott: This information would fit better in the “INTRODUCTION” section. Consider moving it.

More Information about King Abdulla Scholarship Program and an Overview of International Students in the United States Comment by A. Thompson-Abbott: This information should be in its own section. Just label it “KASP.” In terms of placement, I would put it after “TRENDS IN INTERNATIONAL STUDENT ENROLLMENT” section, but before “CLARK UNIVERSITY” section.

During the leadership of King Abdulla, the government of Saudi Arabia had two primary goals which were: to pay extra attention and earmark more funds for education and concentrate more on being receptive to the western world. Consequently, the Saudi Administration started to send more students to universities in America and Europe to study through the King Abdulla Scholarship Program.

This program’s objectives were as follows:

· To attempt and have more receptive

· To give Saudi Arabian youths the exposure and being open to the world

· To increase the country’s skills in English language

A predominant objective of this program was to encourage students to come back to Saudi Arabia and take leadership roles in the country’s employment and assist to change the culture of the country for the better. The government set aside a tune of $6 billion funds for this course. The sponsorship catered for all the needs of students, including tuition, travel, upkeep, and health insurance. Most of the students benefiting from this scholarship were admitted in universities in the United States. The following is a breakdown of the numbers of Saudi Arabian students enrolled in American universities between 2013 and 2017.

· 2013: 70,000 Saudi students

· 2014: 110,000 Saudi students

· 2015: 125,000 Saudi students

· 2016: 80,000 Saudi students

· 2017: 67,000 Saudi students (13,000 will graduate by the end of

2016)

This data is illustrated in the graph below Comment by A. Thompson-Abbott: Consider making this an Exhibit. Put a graph title and label both the X and Y axis. This would make the graph less confusing.

Figure 1: Source: Abujami, Belal. 2016. "Saudi Scholarship Program 2016 Update." Saudi Scholarship Program 2016 Update.

As it is evident from the graph above, U.S. universities enrolled the highest number of King Abdulla Scholarship Program beneficiaries in 2015. The 125,000 students enrolled during this period contributed a total of $3.2 billion to the economy of the United States (Abujami 2016). The number of students reduced from 125,000 in 2015 to 80,000 in 2016, leading to a decrease of 30% of the amount of money contributed to the country’s economy by Saudi students. In 2017, it was expected that the number of Saudi students enrolled in American universities would further decrease to 67,000, translating to a drop of 50% in the funds contributed to economy compared to 2015 (Abujami 2016).

When the scholarship program was launched in 2005, it was scheduled to continue until 2020 and meant to cover all expenses and tuition fees for doctoral, graduate, and undergraduate students. In 2015, for every ten students of Arabian origin studying overseas, nine were under the support of King Abdulla Scholarship Program. The number of students sponsored under the program in various universities abroad were more than 200,000.

In the recent past, the Saudi government has been compelled to make stricter the regulations of the scholarship due to a downturn in the country’s economy. Some of the new rules include the requirement that those benefitting from the scholarship should be limited to those admitted in any of the top 200 universities worldwide. Alternatively, beneficiaries should be enrolled in a course that is rated among the top programs worldwide. Comment by A. Thompson-Abbott: Put this information in its own section. You could call it “CUTS AND CHANGES TO KASP.” Comment by A. Thompson-Abbott: Create an exhibit with this information.

Although the government did not stipulate the scale of the cuts, it made it clear that the new regulations are part of its measured to save money. Formerly, total spending on education was 45 percent but the measures would reduce this to 12 percent. According to the Institute of International Education, Students from Saudi Arabia are among the top foreign students in the United States in terms of numbers. Countries such as India, China, and South Korea are the only ones above Saudi Arabia in terms of numbers of students sent to study in the United States.

Decrease in applications from students in Saudi Arabia are bringing significant challenges in staff recruitment and retention, as well as revenues in several American universities. Universities which are no longer entitled for the King Abdulla Scholarship are expected to deal with the most immediate financial effect of these changes in policy.

The English Language Institute at Eastern Washington University is facing a problem that is similar to the crisis at Clark Atlanta University; decrease in revenues due to reduced number of international students from Saudi Arabia. The number of students who enroll to study the program of intensive language for international students in Cheney, Wash has plummeted by more than 50 percent in the recent months. As a result, this institute reduced its part-time teaching staff from eight to two. In addition, some positions for student workers within the institution were eliminated.

The director of the institute, Neil Heyen, said that the number of students with government scholarship from Saudi Arabia, which forms the main market for the institute, has significantly dropped overnight. While the high numbers of enrollment from Saudi Arabia students was not expected to last forever, it was not predicted that that drop-off would be such sudden.

In the recent past, universities in the United States, including Clark Atlanta University, have attracted a wave of international students to increase tuition revenue and offset budget cuts by the state. The inflow of these students, who pay up to two or three times the tuition paid by local students, has caused controversy where some Americans have complained that they are finding it harder to get places in U.S universities. On the other hand, some foreign students, especially those with Muslim backgrounds, can find it hard to settle in the United States, due to their religion.

Additional Challenges Comment by A. Thompson-Abbott: Move this information to the “TRENDS IN INTERNATIONAL STUDENT ENROLLMENT” section.

Other challenges experienced by universities in the United States as a result of the reduced numbers of students from Saudi include fluctuations in foreign currency, the highs and lows of far-flung economies, as well as competition resulting from the mushrooming institutions of higher learning in the home students of the foreign students.

Generally, the year 2014-2015 saw an increase of 10 percent in the total number of foreign students enrolled in universities across the United States. However, analysis predicted that there would be turbulence in the near future. This came to pass when the Saudi Arabian administration announced change of rules regarding King Abdulla Scholarship Program. Further, various other countries have been working on their university infrastructure at home, thus making it possible for them to absorb more students who would have been otherwise admitted in universities abroad.

For instance, China alone supplied about 33% of the total number of international students in the United States universities. However, the country is now building its education infrastructure, thus enabling students to study at home. In 2016, the student population from China in the United States grew at a lower rate of 10.8 percent compared to the growth during the previous year. This was the slowest increase in student enrollment over the past ten years. In the meantime, foreign students from India, which is also another stop source of international students in the United States, are vulnerable to volatility of their currency, which threatens to put U.S. education out of their reach.

Figure 2 Comment by A. Thompson-Abbott: Make this an exhibit and reference it.

Impact on University Revenues Comment by A. Thompson-Abbott: I would title this “IMPACT ON CLARK UNIVERSITY’S REVENUES.”

Wade confides that as the university loses students, then there is a negative impact on the revenue from tuition. In his university, the number of Saudi Arabian students enrolled last year were well above 400 while there are only 270 students this year. He suggests that in order to mitigate the revenue deficit, some budgetary decisions and adjustments must be made.

Students from foreign countries such as Saudi Arabia pay at least twice or thrice as much as local students pay. This means that international students pay at least $6,445 as tuition fees, and the lost revenue is approximately $837,850. Wade added that the university may be compelled to reduce the number of instructors in the computer and English language departments, where majority of international students were registered. He also contemplates that maintenance expenses and cut funds from other departments, for instance the campus newspaper.

The Situation across the Country

The number of new international students across the nation has dropped by an average of 7% in the past fall. This is according to initial figures from a study carried out across 500 colleges by the Institute of International Education. About 50% of the colleges studied reported that they experienced drops in foreign student enrollment.

The fact that the revenue streams for universities are diminishing means that the financial position may be awful enough to push down some of the universities’ bond ratings. According to Moody’s Investor Services, this would make it more costly for the universities to do borrowings. Recently, Moody’s modified its credit outlook for higher education from ‘stable’ to ‘negative’.

According to Moody’s, increasing uncertainty for foreign student enrollment originates from unstable immigration policies. As a result, moody warns that universities whose brand is not recognized globally would be hardest hit. It is true that some top elite private and public colleges have been affected, the major impact will be on the second-tier institutions.

Wade’s Dilemma

Wade and other administrators at Clark Atlanta University are facing the bitter reality of decreasing tuition revenues caused by drop in international student enrollment. The administrators have contemplated various ways of mitigating this problem. It is almost inevitable that most of the staff in the affected departments will be laid off. However, it may be hard to decide if programs designed for international students will continue running, given the fact that such programs will now have fewer students than before. What will happen to some courses which will fail to attract a sufficient number of students? How will the university continue offering such programs without hurting its budget? These are some of the questions that Wade and colleagues need to answer in order to come up with a viable decision. Comment by A. Thompson-Abbott: Describe some of the solutions. Describe some of the program offerings that might be impacted

List of Figures

Bibliography Abujami, Belal. 2016. "Saudi Scholarship Program 2016 Update." Saudi Scholarship Program 2016 Update. San Diego, California: American Council for International Students. Clark Atlanta University. 2016. Clark Atlanta University at a Glance. Accessed April 25, 2018. http://www.cau.edu/about/cau-quick-facts.html. —. 2018. Clark Atlanta University International Student Report. Accessed April 25, 2018. https://www.collegefactual.com/colleges/clark-atlanta-university/student-life/international/. Saul, Stephanie. 2018. "As Flow of Foreign Students Wanes, U.S. Universities Feel the Sting." The New York Times. January 2. Accessed April 25, 2018. https://www.nytimes.com/2018/01/02/us/international-enrollment-drop.html.

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