Over the past two decades the number of people studying in countries other than their own has tripled, to more than 6m. International students from China have caused most of that increase. Youngsters flocked to universities in English-speaking countries to expand both their minds and their opportunities. In return they brought valuable brainpower and large piles of foreign cash. Governments have sometimes viewed this bounty as a reason to put less of their own money into higher education. Institutions in Australia, Britain and Canada have grown increasingly reliant on foreign flows to subsidise research and to cover the costs of educating local scholars.

Now the market for international study is about to undergo a huge change. Chinese school-leavers are growing gradually less keen to travel; in their place, Indian students are becoming the main engine of growth. In 2022 Britain issued more student visas to Indian citizens than they doled out to Chinese ones. So did America. In both countries, it was the first time in years that had occurred.

These newcomers have different demands from their East Asian forerunners. For one thing, Indian students as a group are much more likely to want to carry on living and working in their host countries even after their courses end. Economically this could be a boon to labour markets. Politically it could provoke more heated reactions about foreign students in countries already riven by immigration debates.

India’s student exodus is driven by youthful demography and fast-increasing wealth. Given it is home to 1.4bn citizens, the country has more university-aged people than anywhere. Every month, a million more Indians turn 18. Their families are much richer than they used to be: India’s gdp per person rose from $469 in 2002 to $2,410 two decades later, according to the World Bank. The number of middle- and high-income households in India is expanding by around 10% each year, reckons Oxford Economics, a British consultancy.

As aspirations rise, enrolment in India’s own universities and colleges is shooting up. In 2001 some 9m Indians attended higher-education institutions. Now the student body numbers about 43m, having long ago passed America to become the second-largest in the world after China. More growth seems certain: enrolment in tertiary education (the total number of students as a share of the college-aged population) remains below 30%, less than half the rate in China. The government wants this to reach 50% by 2035, which would bring total enrolment to near 75m.

Yet swift expansion has done nothing to improve the poor quality of teaching and research in many Indian institutions. No Indian university ranks among the world’s top 100, judged by any of the most rigorous league tables. These take into account things like the quality of research output. The higher-education system has “islands of excellence”, says N.V. Varghese of the National University of Educational Planning and Administration in Delhi. But it also has an “ocean of mediocrity”. Competition for spots at the best places is furious. Several Indian institutions have rejection rates higher than America’s Ivy League, including the formidable Indian Institutes of Technology.

Many Indian students see better prospects abroad. They are finding it ever easier to finance their ambitions. Banks are growing more willing to issue student loans for foreign study. This is in part because of examples set by a fast-expanding gaggle of non-bank financial firms, says Aman Singh of GradRight, which helps students pick between them. 

These new outfits are less likely to require collateral. Instead they are more inclined to make lending decisions using data about a student’s chosen subject and destination, rather than seeking out information about their family wealth. But plenty of people still end up making big sacrifices. Farmers sometimes sell fields to fund their children’s travels, says Saif Iqbal of ApplyBoard, a Canadian edtech firm.

Driven by these factors—and by overhang from the pandemic years, when many youngsters put their educational dreams on hold—the number of people leaving India for study has lately surged. In the first ten months of 2023 some 760,000 Indians went abroad for foreign study of some sort, reckons the government. That is roughly 30% more than in 2019. In total some 1.5m Indian students reside overseas, it guesses, about 38% higher than before covid-19. America estimates that the number studying at its colleges and universities has grown by some 37% in five years, to 270,000. 

Balancing The Books

The exodus is good news for India and for the countries to which its students head. In public, Indian politicians are inclined to bemoan the departures. But behind the rhetoric everyone knows that students who go abroad generally do well, and “better than they would do at home”, says Mr Varghese. Those who return bring back valuable skills: India’s best universities are full of foreign-educated academics. Those who stay away are seen as flag-fliers for India abroad. The country is proud of former foreign students such as Satya Nadella and Sundar Pichai, the bosses of the American tech giants Microsoft and Alphabet, both of whom were born in India.

Meanwhile, receiving countries—notably America, Australia, Britain and Canada—see a chance to grab talent, particularly in engineering, computer science and maths. Such skilled workers can boost research, innovation and more. According to analysis from 2022 by the National Foundation for American Policy, a think-tank, a quarter of billion-dollar startups in America had founders who came to the country as international students.

Western universities also think Indian students may help to maintain demand for their expensive degrees even as migrations from China plateau. For years analysts have warned that a decades-long boom in Chinese arrivals might be nearing its peak; the pandemic may well have accelerated that. China’s youth population is shrinking. Its own universities are improving fast. And as relations with the West grow more tense, Chinese students abroad may no longer feel as welcome as they once did. There are also related concerns that Chinese employers will stop seeing Western degrees as an asset.

Yet if the newcomers bring opportunity, they also present new risks. The single largest threat is that shifts in the countries that send international students affect how willing voters in receiving countries are to accept them. Debates about immigration in rich countries are increasingly toxic. As the numbers of international students rise, the more often they are drawn into these rows.

Indeed, Indian students differ from their Chinese counterparts in ways that seem likely to inflame these fights. The Indians are far less wealthy, for a start. They usually favour more affordable, lower-tier universities and incline towards shorter courses. They are much more likely, for example, to study at postgraduate level than as undergraduates. That is because funding a one- or two-year master’s is more manageable than funding a full bachelor’s degree overseas. In Britain, a typical Indian student spends only about half as much on tuition fees as a Chinese one.

Indian students are also much keener than Chinese ones to remain in the countries where they have studied after graduation. Most big destination countries operate some kind of “post-study” visa scheme, which permits youngsters to stay on for a few years after they graduate, often with few strings attached. The Chinese, who tend to head home quickly, did not make great use of these. Indians, by contrast, are very keen on them. They look for these schemes when deciding where in the world to study. Their terms can affect how willing lenders are to give Indian students the money they need to pay course fees.

All these differences create complications. Postgraduate students are much more likely than undergraduates to request additional visas for spouses or children. “Post-study” visa schemes, previously little noticed by the public, are growing more controversial. Lower spending per student means that countries have to welcome more newcomers to bank the same amounts of cash. The low- and middle-tier universities that benefit most from Indian arrivals do not have a loud voice in forums where these policies are discussed.

In recent months governments in Australia, Britain and Canada have all tightened rules around foreign students. Canada is temporarily capping foreign enrolment on undergraduate and non-degree courses over worries about housing and visa abuses. Australia has just cut the amount of time it will permit international students to remain in the country after they graduate, and Britain has barred all but a sliver of foreign students from bringing dependants. America is not tightening for the moment however American universities complain that immigration officials are rejecting a high share of Indian applicants. Last year they turned down 36% of all requests for student visas, up from 15% in 2014.

Class Action

Such measures are not unprecedented as governments frequently blow hot and cold about international students. Some think the latest round of tightening is simply another swing in that same old cycle. But Matt Durnin of Nous, a consultancy with offices in Australia, Britain and elsewhere, reckons something more fundamental is afoot. For years Western countries grew accustomed to students who were cash rich, and who headed home the day after graduation. Now they are realising that “the game is completely different”.

The risk is that rich countries will increasingly shun their opportunities to snaffle bright young things. And, worse, that they do so without revisiting the funding settlements that have made their universities ever more reliant on income from overseas. Given the growth-boosting power of big, zingy universities, that would be a foolish mistake.