Paying for an International Education – Expensive: Yes. Easy to Understand: No

An interesting take on HSBC’s research that indicated Australia tops the league of costly study destinations…

“The cost for international students to acquire a degree has become a more and more debated issue.  One reason is that the worldwide revenues attributable to international higher education have reached around USD 120-140 billion.  When schooling, language, and vocational training are added in, total revenues are estimated to exceed USD 200 billion (ICG, 2013).  International education has become a large, global business.

Costs for individual students to participate in international education of course vary widely.  One year of high quality academic language or higher education studies can run from as little as USD 14,000 to more than USD 60,000.  Understanding these costs has attracted attention, most recently in an overview published by HSBC which received widespread media coverage.

Flawed and unrealistic

Unfortunately, the data presented by HSBC appear to be both flawed and unrealistic.  For one, many international students are required to demonstrate a minimum level of funding in order to obtain a study permit.  To indicate student cost of living amounts which run significantly under such thresholds is not helpful, and would clash with legal requirements.

In addition, some cost of living data presented by HSBC simply bears little relation to actual cost of living as established by respective higher education institutions, governmental bodies, and other research.

For example: Germany can be a “cheap” country to study in for international students, but a monthly cost of living level of USD 524 as indicated by HSBC does not map remotely to the reality of living in cities which are home to Germany’s ten largest universities (which include Berlin, Cologne, Hamburg, and Munich).

Rent alone in these cities would reach or exceed this cost level (the average rent for students in Germany is USD 406.  Source: 20. Sozialerhebung by the Studentenwerk (a report sponsored by the German government).

10 institutions hardly representative

HSBC’s tuition research was based on scoping a country’s ten largest institutions by enrollment.  This is hardly a representative sample in a country such as the United States, which is home to more than 4,000 higher education institutions, nor does this relate to international enrollments.

Not surprisingly, the supposed tuition averages indicated for many countries are neither an accurate portrayal of average fees, nor particularly helpful.

International students in the United States can find themselves courted by institutions which will offer full scholarships while most others will be asked to pay annual tuition fees exceeding USD 30,000.  Anyone fortunate enough to be admitted to Columbia University faces a tuition bill of nearly USD 47,000 per year.

Getting it right

Getting it right requires a bit more of an effort.  Earlier this year, ICG completed a commissioned research project on international tuition fees which took nearly 2,200 hours to complete.

Results have been presented at various conferences, including EAIE and AIEC conference in Canberra (the EAIE presentation can be accessed at ICG’s homepage under September Updates,

The outcome of this research is contained in the International Tuition-Based Competition Database (ITBCD) which contains tuition fees for more than 7,000 individual undergraduate and graduate degree programs, added fees per program, and actual cost of living calculations.

The latter alone required 400 hours of research and analysis.  The point is that an international comparison of tuition fees and cost of living requires many data points, a proper methodology, and a recognition that supposed averages can be utterly misleading.

What this research shows is that the total cost of obtaining the most popular degree amongst international students – a Bachelor of Commerce or Business – at a ranked international university ranges from USD 120,000 to nearly 300,000.  Most degrees required an investment of USD 150,000 at minimum.

International students who enroll in non-tuition systems such as universities in Germany will still face a minimum investment of USD 45,000 into cost of living in most major cities.  Clearly, for most international students it is not cheap and possibly very expensive to study away from home.

With the aforementioned caveat of not using averages to make too many assumptions, countries can be broadly characterized as follows.

–       Australia overall is a highly expensive country which nonetheless can provide good outcomes to its graduates.

–       The United States is characterized by the widest spread of costs from quite reasonable to very expensive, and institutions ranging from world leading universities to little more than vocational training institutions.

–       Canada’s international tuition fees are often below the corresponding mean, but cost of living in Vancouver and Toronto has negated this advantage largely.

–       New Zealand offers good value (outside of Auckland) based mostly on its moderate tuition fees, though some program fees appear to be poised for notable upticks.

–       The United Kingdom offers middle-of-the road tuition fees costs with London setting a high cost note for both fees and cost of living.

–       The Netherlands offers lower-end tuition fees with middling cost of living levels, offering overall a compelling value proposition.

–       Germany offers great value based on its no-tuition fee setting, but much less outcome.

With a consortium of universities having signed on to ITBCD, we expect to publish updated results in the spring of 2014.  In the meantime, the only safe assumption is that being an international student will be more expensive in 2014 than it was in 2013.

Daniel J. Guhr is Managing Director of the Illuminate Consulting Group in the USA.