In Study Abroad, Gifts and Money for Universities
August: As overseas study has become a prized credential of the undergraduate
experience, a competitive, even cutthroat, industry has emerged, with an army of
vendors vying for student money and universities moving to profit from the boom. |
At many campuses, study abroad programs are run by multiple companies and
nonprofit institutes that offer colleges generous perks to sign up students:
free and subsidized travel overseas for officials, back-office services to
defray operating expenses, stipends to market the programs to students, unpaid
membership on advisory councils and boards, and even cash bonuses and
commissions on student-paid fees. This money generally goes directly to
colleges, not always to the students who take the trips.
Critics say that these and similar arrangements, which are seldom disclosed,
typically limit student options and drive up prices for gaining international
credentials compared with the most economical alternative - enrolling directly
in a foreign university, paying generally lower tuition to that institution and
having the credits transferred. Some campuses require students to use one of
several affiliated providers, but some even have exclusive arrangements with
study-abroad agents, further limiting options.
Many of these perks are similar, if not identical, to ones uncovered in
multiple investigations into the student loan industry, where lenders gave colleges bonuses tied to loan volume,
seats on advisory boards and free travel to conferences in the race to get on
so-called preferred lender lists. The similarities raise questions about how
many aspects of higher education involve such little-known incentives that may
have large impacts on the college experience.
For example, the American Institute for Foreign Study offers college
officials a free trip to one of its overseas sites for every 15 students that
sign on and a 5 percent share of the fees that students pay, according to a copy
of its agreement with the University of Mary Washington; if fewer than 15 sign
on, the payback is 2 percent. According to its Web site, the institute has deals
with universities nationwide, including the University of California, Berkeley; Fordham and Pace in New York, and Rice in Houston.
Amy Bartnick-Blume, a vice president of the nonprofit Institute for Study
Abroad, which is affiliated with Butler University in Indiana, said the
institute gave colleges with which it has "exclusive agreements" up to $500 per
student for restricting them to the institute's programs in a given region. The
practice in effect shuts out the competition. Ms. Bartnick-Blume said that the
colleges decide whether to pass the savings on to students and that the
institute had no way of knowing how many do.
"We're all wringing our hands about how to make it possible for lower income
kids to participate in study abroad," said Barmak Nassirian, associate executive
director at the American Association of Collegiate Registrars and Admissions
Officers. "But one of the reasons it costs so much is all this institutional
No regulations govern study abroad programs, except a voluntary code of
ethics from an industry trade group that limits members to "gifts that are of
nominal value and that do not seem intended to influence professional
But Brian Whalen, the president of the Forum on Education Abroad, another
industry group that is charged with creating standards for study abroad
programs, said more transparency was needed so that students knew about
arrangements with outside providers that had an impact on their costs or
Dr. Whalen, who is also the executive director of study abroad at Dickinson
College in Carlisle, Pa., said overseas site visits for educators, when given in
exchange for student participation in a program, crossed an ethical line. As for
payments from outside providers, he said, the danger is that colleges may come
to rely on the money. Then, he said, study abroad officials may think, "If it
goes away, we're going to be in trouble with our office."
"It creates an incentive to bring up the numbers of students using a certain
organization," Dr. Whalen said.
Officials at universities and study abroad agencies, though, defend the
system, saying the perks are relatively minor, do not obligate a college to
choose a particular program and are so common that they do not sway decisions.
Ms. Bartnick-Blume of the Butler institute described the financial incentives
as recognition for helping the institute do its job better. When colleges
promote Butler exclusively or as a major program in certain countries, she said,
the institute can spend less time and money recruiting students on the campus
"since we know we have a very captured audience for those students."
Students, while cherishing their overseas experience, are sometimes the system's
most bitter critics. Few, if any, are aware of the perks dispensed by study
abroad providers, but they complain generally of the high costs of studying
overseas and do not understand how providers get selected by universities.
Partly in the hope of saving money, Brendan Jones, a former student at
Columbia and now a contractor specializing in architectural salvage, studied at
Oxford University several years ago through an outside company, rather than through
a program approved by Columbia.
Though he was warned beforehand that Columbia would not grant credit, he was
surprised when it did not relent because the college he attended at Oxford,
Magdalen, was ranked higher than the one where Columbia sent students.
Columbia said it only allowed students to go on programs it had vetted and
"I went crazy trying to find a way to make it work," Mr. Jones said. Faced
with the prospect of repeating his junior year at Columbia, he graduated,
instead, from Oxford.
More than 200,000 American students flock to foreign universities a year, an
increase of nearly 150 percent over the last decade.
The industry lacks a central registry of study abroad providers, but experts
put the number of major players at just under 100. Nor does any group track
which universities use outside study abroad providers and which contract
directly with a foreign institution; colleges often do both, depending on the
Many public universities, especially, encourage students to deal directly
with the foreign institution to lower costs, even if they also have arrangements
with outside providers. Experts in the field say private colleges are
increasingly taking the opposite tack, charging full at-home tuition and doling
out a fraction to an outside provider or university abroad, pocketing the
Many colleges are also moving to build direct relations with overseas
universities, in effect cutting out the middleman and increasing their revenue.
Still, arrangements with outside agencies carry many advantages. They allow
universities to feature programs at far-flung corners of the globe and provide
services to students on-site, even where the university itself has no presence.
They ease the transition to foreign cultures, provide guided tours and a ready
social network, and help in emergencies. They also protect the university in
case of liability.
To promote their preferred providers, many colleges require students to use
them, sometimes denying financial aid or credit to students taking alternate
routes, even at top-tier universities.
Officials at universities and study abroad agencies see the perks as part of
their normal business.
Kathleen McDermott, director of global programs for liberal arts
undergraduates at Columbia, said trips subsidized by outside providers posed no
conflict because "our business is to evaluate programs."
"You get real access," she said, "in a way you wouldn't necessarily have done
if I were on my own."
Recalling a flood and an earthquake in Tanzania and a water shortage in
Uganda during one trip, she said lodgings were typically spartan and schedules
packed. "This is an important part of the process of understanding what's going
on," she said.
Since 1998, Dr. McDermott said she had taken six such trips: one to Argentina
and Chile, another to Uganda and Tanzania, and visits to Cuba, western China,
Jordan and Morocco. The trips were sponsored, she said, by various providers.
The Butler institute sponsored one of Dr. McDermott's trips; Columbia, along
with about 120 other institutions, is a member of the its national advisory
Ms. Bartnick-Blume of the Butler institute said subsidized trips were not a
conflict because they did not formally oblige colleges to send students to
institute programs. While exclusivity agreements may limit student choices, she
said, universities also restrict the programs they approve for other reasons,
like liability issues or a preference for dealing with a few, trusted providers.
In offering cash back, she added, providers are responding to demands from
study abroad officials, who are under increasing pressure not only to cover
their office's expenses, but also to generate revenue. "They're going to the
competition, asking for these things," she said.
Even college officials who participate in the system acknowledge a thicket of
issues. Christopher Musick, who directs study abroad programs at the University
of Mary Washington, in Fredericksburg, Va., said he urged students at his public
institution to apply directly to a foreign university and save money. But Mary
Washington also signs affiliation agreements with providers, receiving help with
marketing and back-office expenses.
Officials at Rice and Berkeley said they accepted money from providers,
including the American Institute for Foreign Study, to use as scholarships,
disbursed at their discretion but not necessarily to those whose business earned
the money. The institute decline to comment.
Ronald Mendez-Clark, who runs study abroad at Fordham, said the university
had agreements with many providers, including the American Institute, but did
not choose any programs because of incentives.
Some critics come from within the industry. Robert Schuettinger, president of
the Washington International Studies Council, which operates study abroad
programs with many colleges, said subsidized travel and other perks were
unethical and stifled competition. His company does not offer trips abroad, and
he said he feared that this caused it to lose business. But his company does
give discounts to universities for volume, which he called the industry
Mr. Nassirian, of the registrars association, said colleges could have
legitimate reasons for restricting students to only some overseas institutions.
"But what is objectionable," he said, "is, if the student decides at his or her
own risk to go overseas, the outright refusal to take credit from a legitimate
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