Why U.S. Universities Need Different Funding Strategies for International Students

The Open Doors funding figures offer a useful starting point for understanding how international education is financed. Its measure of a student's primary funding source identifies the single category contributing the largest amount toward the total cost of attendance, including tuition and living expenses. Consequently, the 82% of international undergraduates primarily supported by personal or family resources may still include students receiving scholarships. Likewise, the 36% of graduate students identifying a U.S. institution as their principal source does not represent the total proportion receiving any form of university assistance.

The more revealing question is why financial responsibility falls so differently across degree levels.

Data from the National Center for Science and Engineering Statistics (NCSES) bring this distinction into sharper focus. In its fall 2024 Survey of Graduate Students and Postdoctorates in Science and Engineering, 68.6% of full-time master's students in the covered research-based science, engineering, and selected health fields relied primarily on self-support, while 24.2% identified institutional funding as their principal source. Among doctoral students, the pattern was almost reversed: only 8.8% depended primarily on self-support, while 60.0% relied on institutional funding and another 24.7% on federal sources.

The NCSES survey covers students of all nationalities and a different population from Open Doors. Nevertheless, considered separately, the two datasets reveal an important feature of American higher education: undergraduate, master's, and doctoral programs operate under substantially different financing arrangements. Even within graduate education, universities may collect tuition from one group of students while providing sustained financial support to another.

These differences arise not merely from students' ability to pay, but from the educational purposes, operating costs, and research and teaching needs associated with different degree programs.

For many international undergraduates, studying in the United States represents a substantial, long-term financial commitment by their families. Tuition, housing, living expenses, transportation, and other costs determine whether an American degree is affordable, while institutional reputation, academic opportunities, and future prospects shape whether the investment is considered worthwhile.

A university's published tuition, however, is not necessarily the price that determines a family's final decision. What matters is the amount the student must actually pay after scholarships and other assistance, and whether the family can sustain those costs throughout the undergraduate program.

Yet international students do not all respond to tuition prices and scholarships in the same way. Chinese students applying to American undergraduate institutions offer a particularly revealing example.

A 2024 study published in the Journal of International Students examined application, admission, and enrollment records for approximately 1,800 Chinese students pursuing U.S. higher education. The researchers found that university rankings, institutional reputation, and location were significant factors in students' college choices, while tuition levels did not show a statistically significant effect in the model. Receiving institutional financial assistance, however, was associated with students' eventual enrollment choices.

These findings are consistent with an important feature of the Chinese undergraduate study-abroad market. Completing a four-year degree in the United States requires considerable financial resources, and families pursuing selective American universities often enter the process with substantial expectations about educational prestige and future opportunities. For some of these families, a university's ranking, reputation in China, and perceived long-term value may carry more weight than differences in tuition.

A higher price may therefore be insufficient to discourage a family from choosing a more prestigious institution. At the same time, an attractive scholarship can still strengthen an admission offer. The study's sample was drawn primarily from selected leading international high schools in China, so its findings are particularly informative about that applicant segment rather than the entire Chinese undergraduate market.

This distinction has important implications for scholarship strategies. Financial assistance does not necessarily influence every applicant through the same mechanism. For some families, a scholarship meaningfully reduces a financial barrier. For others, particularly those with considerable ability to pay, institutional prestige and educational opportunities may remain more decisive.

A separate 2022 study examining 65 four-year institutions in the U.S. Great Lakes region found a significant association between institutional financial aid and first-time international undergraduate enrollment. The size and distribution of assistance also mattered. Together, these findings suggest that scholarship effectiveness depends not only on the amount a university spends, but also on which students receive support and how that support affects their decisions.

Increasing scholarship expenditure does not necessarily produce a higher enrollment yield. If a university already attracts enough applicants willing to pay full tuition, expanding tuition discounts across the board may primarily reduce revenue rather than generate additional enrollment. Conversely, an institution with a competitive educational offering that regularly loses admitted students because of cost may benefit considerably from scholarships that meaningfully reduce the financial burden.

The central challenge is therefore to understand which applicants face genuine affordability constraints and which are primarily evaluating academic reputation, educational quality, or future opportunities. For institutions with strong reputational appeal, additional scholarships may have limited influence on some high-paying applicants. For institutions competing more directly on the effective price of attendance, financial assistance may determine whether an admission offer becomes an actual enrollment.

This is why international undergraduate scholarship policies must reflect the characteristics of the students a university hopes to recruit, rather than assume that every applicant responds similarly to a lower price.

American master's education encompasses a particularly diverse range of academic and professional objectives. Some programs emphasize research training and preparation for doctoral study, while others focus on advanced professional skills, industry connections, and career advancement. These differences shape not only curriculum and student expectations, but also how universities finance their programs.

In many professionally oriented master's programs, tuition represents an important source of operating revenue. Universities compete through academic specialization, faculty expertise, industry partnerships, and career services, while prospective students evaluate program costs, duration, institutional reputation, and expected professional returns.

A 2017 study published in the Journal of Public Economics, drawing on changes in international graduate enrollment between 1995 and 2005, found that international student tuition revenue played an important role in the allocation of educational resources at institutions in the historical market studied. Master's and doctoral enrollment exhibited different financial relationships, with international master's tuition contributing to the support of other educational activities in some settings.

The research points to an important feature of graduate education: for certain master's programs, international students are not only recipients of educational services but also contributors to the institution's tuition revenue and broader resource allocation.

This does not mean that all master's programs rely on full-fee-paying students. The NCSES fall 2024 survey reveals substantial funding differences even within its research-focused graduate fields. Among master's students in computer and information sciences, 76.8% reported self-support as their primary source of funding. The corresponding figure in physical sciences was 46.8%. Such variation reflects differences in academic fields, program organization, research environments, and available funding arrangements.

These patterns suggest that universities should pay attention to the financial model of a particular program rather than treat the master's degree as a single category. Research-oriented master's programs may be connected to laboratories, research teams, and preparation for doctoral education. Professionally oriented programs may place greater emphasis on coursework, practical training, industry engagement, and post-graduation employment. Even within the same discipline, institutions can operate under markedly different cost and funding structures.

Students' willingness to pay also depends on the value they expect to receive. For a master's program that relies heavily on tuition revenue, lowering the price is not the only way to improve international recruitment. A well-designed curriculum, a reasonable time to degree, meaningful industry connections, and credible career support can all influence whether applicants consider the overall cost justified.

Where a program offers distinctive training and attractive professional opportunities, students may be willing to make a substantial financial investment. Conversely, if the program's educational strengths and career prospects are poorly defined, offering a modest scholarship may do little to improve enrollment.

Competition for international master's students is therefore not simply a contest over scholarship amounts. It is also a competition over whether programs can demonstrate their educational and professional value. Tuition pricing, financial assistance, curriculum, and career development support need to form a coherent proposition that prospective students consider worth the investment.

The financing of research doctorates differs more fundamentally from undergraduate education and many master's programs. Doctoral students generally undertake years of coursework, research training, dissertation work, and other scholarly responsibilities. Many also contribute to laboratory research, externally funded projects, and undergraduate teaching through research or teaching assistantships.

Funding these students therefore serves more than a recruitment purpose. Universities and faculty members provide financial support to train future researchers while also sustaining the human resources required for ongoing academic research and instruction. Doctoral support is closely connected to how research programs operate and how universities maintain their scholarly activities.

The NCSES 2024 Survey of Earned Doctorates provides direct evidence concerning international doctoral funding. Among 17,846 research doctorate recipients holding temporary visas who reported their primary source of support during doctoral study, 48.9% identified a research assistantship or traineeship, 23.3% a teaching assistantship, and another 19.9% a fellowship, scholarship, or dissertation grant. Only 4.5% reported relying primarily on their own resources.

For the international doctorate recipients covered by this survey, research- and teaching-related support clearly formed a central part of doctoral financing.

International doctoral students also play a substantial role in the American research workforce. Among 2024 research doctorate recipients who reported citizenship status, temporary-visa holders accounted for 61.1% in computer and information sciences, 53.9% in engineering, 51.5% in mathematics and statistics, and 40.3% in physical sciences.

These figures highlight the extent of international participation in doctoral training across several important scientific and technical fields. For research universities with active laboratories and funded projects, recruiting qualified international doctoral students and supporting them through assistantships or other funding arrangements may serve both talent development and ongoing research needs. The number of doctoral students an institution can support is therefore linked to faculty research funding, project requirements, and instructional responsibilities, rather than simply the size of its scholarship budget.

The connection between international doctoral education and the United States can extend beyond graduation. According to NCSES estimates, 73% of science and engineering doctorate recipients from academic years 2017–2019 who held temporary visas at graduation were residing in the United States on February 1, 2023. The corresponding rate was approximately 75% in life and health-related fields, computer and mathematical sciences, and physical sciences, and 80% in engineering.

These figures measure continued U.S. residence rather than employment or research activity. Nevertheless, they show that a substantial share of internationally mobile researchers trained at American universities remain in the country years after graduation, highlighting a connection between doctoral education and the longer-term U.S. talent pool.

For doctoral applicants, meanwhile, the quality of a funding offer cannot be judged solely by its nominal amount. Whether support covers reasonable living expenses, includes tuition remission, continues for an adequate period, and is backed by stable research and supervision arrangements can all affect an applicant's decision.

For universities, doctoral recruitment must be aligned with research grants, faculty supervision, teaching requirements, and the institution's ability to support students over several years. Funding that is closely connected to genuine research and educational needs serves a purpose considerably broader than offering a discount to attract applicants.

International undergraduate, master's, and doctoral students do not constitute a single market with uniform financial resources or funding needs. Their educational objectives, program costs, and career expectations differ substantially, meaning that the same institutional expenditure may produce very different outcomes across degree levels and programs.

In undergraduate recruitment, scholarships can help reduce the financial burden on families and improve the likelihood that admitted students enroll. Yet their effectiveness also depends on families' ability to pay and the importance they place on institutional reputation. For tuition-dependent master's programs, financial assistance must be considered alongside program costs, anticipated career returns, and institutional revenue objectives. In research doctorates, sustained funding is often essential to conducting research, supporting teaching, and recruiting the academic talent universities need.

A particularly important challenge arises when a university's funding strategy does not address the actual obstacle facing prospective students. Administrators may increase scholarship budgets in the hope of improving enrollment, while applicants remain uncertain about the overall cost, the program's educational value, employment prospects, or the reliability of financial support.

For applicants with substantial financial resources who place exceptional value on institutional reputation, additional scholarships may have limited influence on their choices. For students facing meaningful affordability constraints, a substantial award may change the outcome entirely. Research doctorate applicants may have a different concern altogether: they need not only an affordable education but also the stable financial and academic conditions necessary for several years of research.

We therefore believe that the starting point for an effective international student funding strategy is not how much a university should increase its scholarship budget. It is which barrier the funding is intended to remove, which educational or institutional objective it is meant to support, and whether the investment creates value for both students and the university.

This is the deeper significance of the funding differences visible in Open Doors. The international student market is not simply divided into students with different capacities to pay. It encompasses multiple forms of higher education with distinct educational objectives, financing structures, and institutional interests.

For U.S. universities seeking to strengthen international recruitment, understanding those differences is far more valuable than applying a uniform increase—or reduction—to scholarship spending.