Aug 18, 2020 - World

A U.S. university insured itself against a drop in Chinese students

Illustration of graduation cap with a golden star
Illustration: Eniola Odetunde/Axios

In 2017, the University of Illinois at Urbana-Champaign took out an insurance policy to cover the $60 million in tuition that Chinese students paid to the university, in case an unforeseen event precipitated a sudden drop in Chinese student enrollment.

Why it matters: School administrators recognized the risks associated with becoming overly reliant on student tuition from a single foreign country — and amid a global pandemic, their fears have proved justified.

  • This is believed to be the first time a school has insured itself for such a possibility.
  • Back in 2017, Jeffrey Brown, dean of the business school and the main proponent of the insurance policy, was worried about the potential for "a big flu scare that caused none of the students to show up on campus.”

Brown now appears prescient. In the early months of the coronavirus pandemic, many Chinese students returned to China, where many will stay as schools have turned to online-only models for the fall semester.

  • The Trump administration has stated it will deny visas to first-year international students if their universities offer online-only classes, potentially barring tens of thousands of Chinese students from entering the U.S.

"That insurance policy raised a lot of eyebrows when it was first reported on a few years ago, but it started to look smarter and smarter as the trade war heated up. Then it looked brilliant when coronavirus happened," Eric Fish, author of "China's Millennials: The Want Generation," told Axios.

  • "People have been warning universities for years about a financial over-reliance on one country. Not many have seemed to do a whole lot about it."

What to watch: If Chinese student numbers drop significantly, the University of Illinois may try to make a claim this year, according to a report by Reuters.

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