Alejandro Ortiz, Research Associate, WES
Oil prices dropped to a 12-year low in February, throwing oil-dependent economies into turmoil. Given how much oil revenue contributes to the flow of international students coming to the U.S., it’s worth asking how mobility among students from key oil-producing countries will be affected. One obvious starting point for this investigation is the Organization of the Petroleum Exporting Countries (OPEC).
Six of OPEC’s 12 members are among the top 25 suppliers of international students to the U.S. These six countries account for forty percent of world oil exports . During the 2014/15 academic year, they collectively contributed 105,889 international students to U.S. enrollment totals. In other words, as a group, these nations are the third leading contributor of international students to the U.S., trailing behind only China and India.
This article examines the impact of falling oil prices  on international enrollments from the six top sending OPEC members, starting with Venezuela, which sends the smallest number of students, and ending with Saudi Arabia, which sends the largest number.
Venezuela – 7,890 students in the U.S.; 97.7 % of export revenue from oil
With an economy that is almost entirely dependent on oil exports, Venezuela has been profoundly affected by the impact of plummeting prices. One recent low led to predictions that the country could see a drop of 77 percent from its 2012 oil revenues . Seeking to stabilize the economy, Venezuela’s government recently raised domestic fuel prices by a staggering 6,000 percent  and devalued the Bolivar – measures intended to generate revenues to “support social programs such as housing, health services and education,” according to the government.
Venezuelan students  in the U.S. are feeling the effects of the crisis: Many recently received notices denying them funds to pursue their studies abroad. A widespread faculty strike and the closure of 18 Venezuelan universities  may also affect outbound students. In the fall of 2015 some 300,000 students were shut out of their universities, and many who were hoping to study abroad could not, obtain academic records to support their applications.
In the U.S., enrollment numbers from Venezuela have been unpredictable in recent years: They dipped by two percent in 2013, but increased by 14 percent the next year. In 2014/15, as a growing number of academics and young professionals fled the country  to escape political and economic instability, higher education enrollments in the U.S. continued to increase.
Indonesia – 8,188 students in the U.S.; 31.6% of export revenue from oil
Indonesia is recognized as one of the world’s most significant emerging economies due to the rapid growth of its gross domestic product (GDP) and its large population. A 2012 report from McKinsey & Company predicated that by 2030, its economy would be seventh largest in the world. However, the sharp decrease in oil prices has begun to exert pressure on the Indonesian economy – despite the relatively limited percentage (by OPEC standards) of Indonesian export revenues that are tied to oil. In mid-2015, experts anticipated that falling oil prices could result in a potential revenue loss of almost USD$20.24 billion,  and in early 2016, the government announced that falling oil prices had forced it to revise its budget downward . Recent budget deficits and inflationary pressures on the rupiah  have likewise provoked cuts to fuel subsidies.
Indonesian enrollment volume in the U.S. has fluctuated over time. It declined between 2001 and 2011, despite a one-year increase in 2007/08. Enrollments have more recently rebounded, reaching an 11-year high in 2014/15. The potential impact on Indonesia’s historically price-sensitive international student population is, as yet, unclear.
Kuwait – 9,034 students in the U.S.; 94.2% of export revenue from oil
Fuel exports represent 94 percent of Kuwait’s export revenues, and an estimated 90 percent of its governmental budget. In January 2016, with oil prices suffering a record decline , the country’s parliament began to discuss how to “ration spending .” The heavily oil-dependent nation has already cut fuel subsidies, and is likely to implement a range of further austerity measures . Kuwaiti enrollments in U.S. institutions, which have been increasing at a double-digit growth rate each year since 2007 , may start to slow, since many students are supported by government-funded scholarship programs.
Nigeria – 9,094 students in the U.S.; 87.6 % of export revenue from oil
Oil accounts for close to 90 percent of Nigeria’s export revenue and roughly 75 percent of the its consolidated budgetary revenue . Declining prices have had a huge impact on its currency. Between the start of 2016 and mid-March, the Nigerian Naira lost roughly 40 percent  of its value, and students around the globe have begun to feel the impact. In March, the Nigerian government announced the cancellation of the Forex system  (foreign currencies lodged in the central bank) for Nigerian students, affecting their ability to cover tuition fees and other costs of studying abroad.
By some estimates, as many as 40 percent of Nigerian students abroad are  supported to some degree by scholarships funded primarily by oil and gas revenues. Many who are now studying on government-funded scholarships have already felt the squeeze. In January, some 375 students in Russia, China, Ukraine, Cuba, Hungary, Egypt, Morocco, and Algeria petitioned the Ministry of Education to cover unpaid fees for 2015. According to one report , affected students “can no longer study properly due to perpetual hardship, starvation and hunger.”
Iran – 11,338 students in the U.S.; 70.5 % of export revenue from oil
Iran holds the fourth-largest proven crude oil reserves in the world. When international sanctions ended in January, the country re-entered the global economy in a major way .
The impact on Iranian student mobility, which has been on the rise in recent years, is likely to be positive. In March 2014, the U.S. authorized academic exchanges  between the U.S. and Iran and lifted key sanctions  relating to academic opportunities. Numbers followed suit: As of 2014/15, the tally of Iranian students in the U.S. had almost quadrupled from its 2008 total of 3,060.
In terms of predicting possible mobility trends, insight into the mix of Iranian students now studying in the U.S. is also relevant. Almost 80 percent of Iranian students now in the U.S. study at the graduate level,  and most are enrolled in STEM-related fields . Push factors such as the low number of graduate-level institutions in Iran,  together with pull factors such as U.S. immigration regulations that are extremely attractive to STEM students , are likely to amplify the impact of the end of sanctions. The net result will likely be an increase in the number of Iranian students seeking to study in the U.S.
Saudi Arabia – 59,945 students in the U.S.; 87.4% of export revenue from oil
Crude oil represents 87 percent of Saudi exports. Low oil prices have caused unprecedented budgetary shortfalls, and resulted in an overall government budget cut of 14 percent  for 2016, as well as a 12 percent cut to education spending.
In the face of such belt-tightening, the nation’s sizable youth population is facing an era of lowered expectations . Speculation about the fate of the multi-billion dollar King Abdullah bin Abdulaziz Scholarship Program  (KASP) has been particularly acute as institutions scramble to understand the impact of new restrictions on eligibility . In 2015, the program supported more than 200,000 international students around the globe – roughly 90 percent of Saudis students. Almost all of the Saudi students in the U.S. in 2014/15 were supported by the scholarship program.
There have been other signs that Saudi Arabia’s commitment to education may be undercut by oil-inspired budgetary woes. The recent cancellation of the International Exhibition & Conference on Higher Education , which had been the Gulf region’s leading international recruitment event hosted in Riyadh for the last six years, is one such sign. Another is the decline in Saudi enrollments in Intensive English Programs  in the U.S. Most members of the American Association of Intensive English Programs report significant declines  in Saudi enrollments in 2016. These numbers are widely viewed as a leading indicator of shortfalls in the overall enrollments in the coming months.
Implications for higher education
Whether or not oil prices have already touched bottom , some experts think it will be many years before oil prices return to USD$90 or USD$100 a barrel .
What does this mean for higher education institutions that rely on students from these six OPEC nations? The implications vary according to the mix of students at any given institution:
- Institutions that host students from Venezuela and Nigeria should be aware of financial constraints on current students and of potential increases in dropout rates. They should also be aware that, due to strikes and other disruptions at their home institutions, prospective students are also likely to face difficulties in obtaining academic credentials.
- Institutions that are highly dependent on Saudi enrollments should start taking steps to address the strong likelihood of fewer new applicants from Saudi Arabia, and/or increases in student dropout rates.
- Institutions that host students in Intensive English Programs should monitor enrollments from affected countries, since such enrollments are usually reliable predictors of near-term enrollment trends.
- All institutions should monitor changing mobility trends among students from Iran and Indonesia, which may be less (or differently) affected by drops in the price of oil.