Recently, the University of Illinois at Urbana-Champaign announced it purchased a $60-million insurance policy to protect against a potential drop in tuition revenue from Chinese students.
The policy’s purchase marks a new low for Springfield’s treatment of the Illinois public university system. For years, the system rested on regular contributions from the legislature. After contributions declined, the system started relying on foreign students’ outsized tuition payments. Now, the system needs an insurance policy to protect against Chinese student-enrollment decline.
For a long time, the University of Illinois system’s value proposition was clear.
The three campuses, Chicago, Champaign and Springfield, function as a key support for the state’s labor market, educating more than 83,700 students every year and, over time, feeding hundreds of thousands of college graduates into Illinois’ workforce.
Simultaneously, faculty-produced research injects innovation into the economy. The research produced by my school, the University of Illinois at Urbana-Champaign, has literally transformed the world. Supercomputing, the first consumer web browser and touch-screens all call the University of Illinois home. Netscape, Oracle, Paypal, YouTube and Yelp, some of the largest and fastest-growing companies in the world, have founders who started on the Urbana-Champaign campus.
However, the success of the University of Illinois system goes far beyond a simple economic calculus. Public higher education catalyzes class mobility. Recent research by economist Raj Chetty shows that public universities—such as the Illinois UI system, the California UC system and the New York CUNY system—dramatically increase the likelihood of a student in the bottom fifth of the income distribution reaching the top fifth of the income distribution.
I have benefited directly from our strong public higher education system. I was raised by a single immigrant mother on the South Side of Chicago. Attending the University of Illinois exposed me to cutting-edge research in my field and connected me to jobs and internships that I otherwise would not have had access to.
Despite its track record, the future of Illinois public higher education is bleak. On a macro-level, overall state contributions have declined dramatically since the 1980s and are now at an all-time low. More recently, the budget impasse put enormous pressure on Illinois public higher education due to a 61-percent cut in funding for state colleges.
In the face of these short-term and long-term challenges, the University of Illinois system was forced to consider more creative funding sources. Because international student tuition is set about three times higher than in-state tuition, the system started filling the revenue gap by increasing international enrollment, a trend that has steadily climbed over the last decade. Chinese student tuition now accounts for 20 percent of the University of Illinois Gies College of Business’s budget and has become a critical revenue stream.
Understandably, system leadership has become concerned with their over-reliance on Chinese student tuition. This worry has been exacerbated by the increasingly unstable Sino-American relationship under the Trump Administration, hence the need for enrollment insurance.
On the one hand, the ingenuity of the University of Illinois system has to be admired. In the face of a tricky problem, its leadership has come up with a genuinely original solution. The new enrollment-decline insurance policy is the first of its kind and will serve a model for universities dependent on international student revenue.
On the other hand, its purchase should serve as a wake-up call. There are only so many creative solutions that can keep an underfunded university system afloat.
It’s time to take public higher education off the chopping block. You can’t insure against a lost future.
Editor’s note: Beverly resident Thomas Dowling is a Rhodes Scholar, Truman Scholar, Lincoln Academy Laureate and Fulbright participant. A graduate of the University of Illinois Urbana-Champaign, he is currently pursuing a MSc in Comparative Social Policy at the University of Oxford.