Chronicle Looks At Study Abroad Costs
Ther Chronicle of Higher Education mentions the Forum and many member institutions in an article on "Declining Dollar Has Colleges Scrambling to Cover Study-Abroad Costs" by Karin Fischer.
Readers, share your solutions and ideas! How are you tackling this issue.
Readers, share your solutions and ideas! How are you tackling this issue.
1 Comments:
Dear Colleagues,
This article provides an opportunity to try to explain further the estimate about the impact of the weak dollar on study abroad, as well as the financial model that Dickinson utilizes.
First, let me say that my estimate about the impact of the weak dollar was actually a statement about impact on price, not cost. The two, of course, are not the same, and I’ve no doubt that the impact of the weak dollar on the cost of study abroad has been much greater. To the field’s credit, I think we are finding ways to try to keep the price of study abroad as affordable as possible for as many students as possible.
Of course estimating the weak dollar’s impact on price is a difficult task. The impact depends on the type and number of programs that a given institution or organization runs, along with a whole host of other factors such as enrollments, how currencies are purchased, and whether or not an institution’s programs across the globe are, for budget purposes, viewed together, so that currency gains in one area may offset losses in other areas. One might even consider the gains that an organization may be making through investment in foreign currencies during the very time when its program budgets are being hard hit by those very same currencies. My ballpark estimate of 10-15% as the isolated impact of the weak dollar on the price of study abroad programs was based on my experience at Dickinson and discussions with colleagues who run a full menu of study abroad programs around the world where the program operations, budgets, and pricing are interconnected. The impact of the weak dollar on one, specific program located in Western Europe is likely to be much greater.
As to the specific impact at Dickinson, the college’s international program fund (IPF) was created 25 years ago as a way to insure that our study abroad programs would be financially independent and be sustainable over time. The fund helps to provide the general infrastructure and support for all of the college’s study abroad programs, including insurance costs, maintenance of overseas facilities and equipment, program development and evaluation, an annual meeting of our resident directors, faculty and staff training and development, etc… The fund is also there to be utilized in case of emergencies.
The IPF is also where our individual study abroad program budgets are funded from. In order to protect against currency fluctuations in individual program budgets so that programs are sustained over time, our study abroad program budgeting process has always used a 5-year weighted average to set the exchange rate for each program. This method protects the program budgets from currency swings. However, with the downturn in the dollar over the past few years, the deficits caused by the weak dollar have meant that the IPF has made up the differences between the actual exchange and the 5-year average exchange rate.
The IPF is funded by study abroad program fees, and a certain percentage of that goes to the college’s general fund. That amount corresponds roughly to the amount of financial aid that the college provides to students that study abroad. At Dickinson, financial aid is fully portable to study abroad on Dickinson’s programs, and students may study abroad for a full year plus a short-term study abroad program and receive their financial aid.
In order to maintain the international program fund to the level that is necessary—approximately $1 million – we have adjusted the amount of study abroad program fee revenue that will go to the college’s general fund so that the IPF maintains an adequate reserve. The overall adjustment is not a huge amount, but is approximately a 2% decrease. This means that the IPF will retain more of the study abroad program fees and less of it will be going to the general fund.
Dickinson study abroad programs are also helped by the college’s International Endowment Fund (IEF), a restricted endowment that provides support to the overall global education operation. As the dollar weakens, we have decided to channel more funding support to the study abroad programs.
At the same time, we are also planning to expand some of our program options, which will utilize our overseas program sites more fully. For example, we will be opening up a fall semester and academic-year option for students wanting to study on our Cameroon Program, which has traditionally been a spring semester only program. By opening up the fall-only and academic year options to students, we will increase our overall study abroad enrollment and make better use of our program infrastructure. We are planning similar program expansion in some other key areas as well.
Description and analysis of study abroad financial issues are never simple, and I hope that this provides a useful explanation of one college’s approach to the weak dollar.
Cheers,
Brian
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