‘Trump Effect’ or ‘Oil Armageddon’: Why are fewer foreign students choosing US?

22 Nov 2017

The United States has always been seen as the crème de la crème of higher education. With prestigious Ivy League colleges, immersive fraternity and sorority campus culture and a plethora of opportunities upon graduation, the US has it all.

Or at least it did, up until this year’s university intake. According to a recent study conducted by Open Doors, for the first time, 3 percent fewer international students chose to study in the US than in 2015.

So, what has caused this sudden change? The ‘Trump effect’ has been blamed for the U-turn in international student studying in the US. Having a leader who is adamant to ‘Make America Great Again’, even if this means banning entire nationalities from entering the country, is unsurprisingly rather unpalatable to prospective international students, who can choose to study anywhere in the world.

But if Trump’s unsavory tactics are really to blame for the swerve in international students favoring the US, why are some nationalities, such as Nepali and Indian students still choosing to study there? Perhaps there is a more complex reason affecting student decisions.

The study notes that the biggest decrease in international students to the US came from those in Saudi Arabia and Brazil.

14% drop in Saudi students and 32% drop in Brazil students. Are we over emphasizing Trump effect? In recent years these govs have invested heavily in scholarship money to send students. abroad. Perhaps that money drying up? https://t.co/qAFcU7P0pP

— Politics & Education (@PoliticsAndEd) November 13, 2017

The question then becomes, what do Saudi Arabia and Brazil have in common? The answer: oil.

Both Saudi Arabia and Brazil have economies that are kept afloat by oil. Easily the most sought after resource in the world, having oil reserves is both a blessing and a curse. When the global economy is flourishing, these countries can cash in on the fuel that fuels the world.

Brazil and Saudi Arabia rely on oil extraction to fund their economy. How do price fluctuations affect scholarships? Source: Eike Klingspohn/Unsplash

Brazil

And that’s exactly what Brazil did. After existing as a military dictatorship for 21 years, the Socialist Workers Party came into power in 1985. This new leadership offered Brazilians a dawn of prosperity that had never been seen before.

The revived government made use of neo-developmentalism economics to sail the country into new waters, explained Socialist Worker. By investing into infrastructure and petroleum extraction projects, the winds of opulence propelled Brazil towards new horizons. The Socialist Workers Party created jobs prospects, increased minimum wage, and established higher education scholarships for disadvantaged groups.

However, it wasn’t long until Icarus flew too close to the sun, and the global economy came crashing down.

As though the world’s financial bubble had been popped, recession swept up even the most flourishing economies in 2008. The days of investment and prosperity were replaced with austerity and redundancies, as a dark fog of hardships settled over the business world.

As a result, Brazil was forced into fiscal adjustment in 2014. Public spending was cut, which saw the contraction of generous scholarship schemes.

Education investment is still suffering from the wreckage of 2014, as federal funding for science and technology sinking more than 50 percent in the past five years, according to Science Mag.

Saudi Arabia

And the picture isn’t much different in Saudi Arabia.

In a country which traditionally has a top-down structure, the Saudi population are rewarded with generous sanctions in return for obedience to the Islamic pillars on which the country was built.

However, to operate a society in this way, an abundance of budget needs to be reserved. This is easily done when the global economy is flourishing and oil is in demand. Competitive oil prices mean the government can reserve cash flow to distribute to their people.

But, as the world economy began to lose momentum in 2008, the budget available to the Saudi Arabian government also began to shrink. Less economic activity means that less people need oil to fuel cars to enjoy leisure activities, less people are travelling to work in cars and buses, and less machinery is needed to produce output, on a global scale.

All of this means that there is less demand for oil. And less demand for oil ultimately means less revenue from oil sales. Within three years,Business Insider UK reported the price for a barrel of oil nosedived from US$107.65 in 2013 to $33.62 in January 2016.

With less budget to work with, but sustained expectations of relations between the rulers and the people, the Saudi government came under great strain. After attempting to float oil prices in Saudi to maintain the necessary budget, the government eventually cracked.

Saudi Crown Prince Mohammed bin Salman attends the Future Investment Initiative conference in Riyadh, Saudi Arabia October 24, 2017. Source: Reuters/Hamad I Mohammed

The Saudi economy was eventually forced into austerity to prevent a complete economic crash, and with this scholarships had to be revoked. The government stopped funding students to study in the US, and even offered students scholarships to move back from the US to study in their home.

As part of Vision 2030, an initiative committed to reforming Saudi’s reliance on oil to sustain the economy, the government is committed to becoming a skills-based economy. The initiative recognizes the need for having the most educated members of society living and contributing to Saudi’s progress, reports the Fair Observer.

Although the effects of having an oil-based economy differ between Brazil and Saudi Arabia, the issues remain the same. Relying on oil for economic growth subjects the countries to instability. For now, international scholarships to the US are not a priority for these countries.

But hopefully, with time and through initiatives including Vision 2030, the countries will have a more stable economy and can once again turn to investing into world-class education for their citizens.