Has the Indian outward-bound student bubble burst?

In a downward revision in international student trends, the number of Indian students looking to study abroad will not rise dramatically – even as the Indian economy grows – the British Council has said in its latest report from the country.

New British Council research in a report released today, Inside India – a new status quo, has identified a greater inclination by Indian students to stay at home for higher education studies.

In particular, huge recent growth of in-country provision in India has “disrupted” a once stable and constant flow of outbound Indian students.

“India has many aspiring world-class higher education institutions competing for globally ranked positions alongside those in the UK and the US, and a far smaller proportion of households that can afford to pay for overseas education in an increasingly competitive recruitment market,” the report said.

Past projections were based on analysis of previous outbound mobility statistics and the assumption was that these would continue.

“A lot of UK institutions expected, as they did with China, that there would be a continual and increased flow of Indian students into the UK higher education sector and that that would be the status quo, with growth-on-growth every year of 10% to 5%,” said Richard Everitt, director of education and society at the British Council India.

Instead, the research points to different decisions being made by Indian families, he told University World News.

“When we look at the last two to three years, it’s a noticeable change,” he said, but added that the downward trend – institutions in the UK are noting drops of 25% to 30% in inward-bound Indian students – is only now being factored into the analysis.

“There's always some lag time with official data,” and short-term data may have pointed to other factors that may have been temporary, he said.

But now “there has been much wider acceptance across the higher education sector [in the UK] that this has been a significant downturn. And particularly given that India is a provider in the world’s global talent pipeline, it is of significant concern for higher education institutions across the UK,” Everitt said.

Reasons

The changes that began to show in 2009-10 data appear to be deep and long lasting, although it is not yet understood why sentiment changed so quickly. The report looks at some of the reasons.

Notably, India’s own institutions are now “fierce competitors” for Indian students “on an unprecedented scale”, and they are competing with each other for the best Indian students, said the report, which includes a survey of almost 10,400 students in Indian cities.

“Studying at home is generally less expensive than studying overseas, and cost is a factor that has shown in our study to be the most pronounced influence on students’ study decisions,” the report explained.

The British Council found that two-thirds of students said high cost and lack of scholarships were the greatest deterrents to studying abroad. “India has always been a very price sensitive market, but never more so than now,” the report said.

“The depreciation of the rupee and subsequent reduced spending power of Indian households has profoundly affected the size of the outbound Indian student market, potentially to only 0.4% of the total number of households, and will continue to do so as the currency continues to be valued at its current rate.”

An August 2013 study compiled from publicly available data by HSBC calculated the combined average cost of university fees and living expense in a number of countries.

Using this data as a basis for further calculations, the British Council estimated the average increase in the cost of studying in Australia, the US and the UK between January 2012 – when the rupee remained at an 18 month stable value of Rs45.29 to the US$ – and the August 2013 high of Rs68.85 to the US dollar.

Currency depreciation alone increased the annual cost for Indian students in Australia by US$11,629, in the US by US$10,780 and in the UK by US$9,156 – and these are considered to be conservative estimates of the financial impact of depreciation.

Signals

There were some signals in the past, but these were initially regarded as temporary blips.

Australia noticed a drop off in Indian students after racial attacks in that country in 2010.

Small declines in Indian students opting for the UK were put down to increased attractiveness of the US, and to UK policies in tightening visas, particularly for those wanting to work for a period to pay off vast debts accrued; to the falling value of the rupee, and policies such as those against London Metropolitan University, which made the UK seem unwelcoming to international students.

In 2010-11 – a year before the UK experienced a drop in numbers – the US had already experienced the beginning of its fall “by a small but significant 1%”, according to the report.

This decrease has continued and grown, with the latest figures showing a 4% drop in Indian students to the US. “Unlike in Australia or the UK there are no striking reasons that can be used to evidence this decrease,” the report said.

But what few predicted was that Indian students looking for a quality education would increasingly prefer India itself.

In particular this trend has hit the numbers of postgraduate students looking to study abroad. Within India itself the number of students studying at postgraduate level increased by 47% from 1.8 million in 2009 to 2.7 million in 2010.

Within certain subjects, the figures are even more impressive. The number of undergraduate management students within India grew by 287% from 153,041 in 2009-10 to 592,143 in 2010-11. Undergraduate and teacher training degrees grew by 252% in the same period from 518,185 to 1.82 million.

Postgraduate education and teacher training grew a staggering 451%, postgraduate technical subject enrolments by 165% and management enrolments by 159%.

This year 370 scholarships were launched by the UK for Indian students to try to attract more students.

But according to Everitt, UK universities will have to look to “a more diversified international student mix” and become less dependent on large countries like India.

“There will continue to be a segment of Indian households that can afford to finance an overseas education and seek it as a highly valued opportunity. This segment has decreased and may continue to do so, contrary to popular views of the boundless untapped potential in India for international students,” the report said.