The Effect of In-State Tuition on International Student Enrollment: Evidence from the Heartland

Abstract

In 2008, the Minnesota State Colleges and Universities (MSCU) system modified residency criteria for tuition determinations and allowed institutions to charge international students in-state tuition. We use IPEDS data and a difference-indifferences design to determine the impact of the policy change on new international student enrollment in MSCU public four-year colleges relative to those in neighboring states, the Heartland, and all other states. We also derive a synthetic control group and compare the results. The findings indicate the MSCU policy allowing international students to pay in-state tuition drew 385 new international students to the state in the policy's first year. Domestic student enrollment did not change, so we infer the policy resulted in an increase in net revenues. We discuss the benefits of expanding in-state tuition to international students, including how it can attract international students to less selective and regional college and universities, increase the cultural diversity of campus and local communities, and expand access to higher education to a more socioeconomically diverse population of students seeking to study in the United States. ecruiting international students to U.S. higher education institutions is thought to be a means of generating revenue that helps to address fluctuations in state appropriations and student enrollments. Typically, international students are willing to cover tuition and fees and pay for many other goods and services while they study in the United States. However, because costs are a significant factor in their decisions about study abroad location and destination institution (Tan, 2015; Wilkins et al., 2012), providing more attractive tuition and fee packages (e.g., resident tuition and fees, or 150% of resident tuition and fees rather than non-resident tuition fees) may be a draw for international students. In 2008, the Minnesota State Colleges and Universities system (MSCU) began to allow its 37 public colleges and universities (seven four-year colleges and 30 two-year colleges) to offer international students in-state tuition rates, with the goal of increasing the number of international students and tuition revenue. Specifically, MSCU's Board Policy 2.2. State Residency revised how residents and nonresidents were classified, which had implications for eligibility for receiving in-state tuition benefits. The policy afforded MSCU institutions the opportunity to set their own criteria for determining the residency of students, including making international students eligible for in-state tuition rates. We examine how in-state tuition for international students (ISTIS), which reduces the sticker price for international students, changed new international student enrollment across four-year MSCU campuses. We do so by using data from Integrated Postsecondary Education Data System (IPEDS) and the Institute of International Education (IIE), which tracks the number of international students enrolled at each U.S. institution. We use a difference-indifferences design to determine international student enrollment changes following the introduction of the ISTIS policy. We compare public four-year institutions in Minnesota to control institutions in neighboring states, to institutions in other states in the Heartland (specifically, states in the Midwestern Higher Education Compact), and to institutions across the U.S. We also derive a synthetic control group using synthetic difference-indifferences methods (Abadie et al., 2010). R