To point A: this is 100% true. When consulting for higher educational institutions, the first revenue stream I evaluate is that from international students. They pay their bills, they pay more than native students, and they graduate with few issues - if they do have issues, you just ship them home.

And I don't mean large, prestigious universities - these rules for foreign students apply to everything from large private colleges/universities to small, regional community colleges.

Absolutely right. Also it costs a hell of a lot less for a wealthy family or a poor-to-moddle-income state to be educated in America and use what they learned in their home state rather than build up equivalent educational institutions at home.

That's why you end up seeing a lot of partnerships with US universities on foreign soil (Yale in Singapore, RIT in Croatia, Cornell in Abu Dhabi...)

EDIT: This also helps wealthy Chinese youths who are so committed to disappointing their parents that they fail to score within the .001 percentile on the Gaokao and have to be shipped off to Harvard instead.

The market solution for student loan rates is to underwrite based on factors such as school attended and major/intended career. For whatever reason it seems this hasn't been done at scale until very recently (with SoFi offering low rates to the Ivies). The fact that an art history major at a lowly ranked state school pays the same loan rates as a computer science major from MIT or a medical school student from Duke implies that the market is inefficient. As a result of that inefficiency (which may be purposeful to prevent discrimination - I'm not sure), more qualified borrowers subsidize less qualified borrowers.

Would another market solution be to have the university underwrite the first 10% or 20% of the loan. In effect, they would be on the hook if the student tried to take on too much debt, etc. As it is, universities seem to have little motivation when the debt is carried by third parties to help their students after graduation.

Absolutely. Generally you want to align incentives as closely as possible. In this case you want the student, their family, the University, and society at large to all be aligned in making sure the student is successful (however you want to define success).

I suspect the market appreciates the art history graduate going through cycles of forbearance and capitalization which allow them to charge higher interest rates on the reliably solvent MIT software engineer.

A bit off-topic, but this is also true of many hospitals. The private insurers and government programs fight with hospitals to drive down rates, so the elite hospitals are aggressively marketing in the Middle East and China for rich patients who can pay the full ticket price. I lived at Children's Hospital with my daughter for ~2 months and ~1/3 of the patients were international.

There is a reverse effect as well, good hospitals in developing countries are aggressively marketing their services for medical tourism by customers in developed nations. I dont know if this has any measurable effects for pricing in those countries.

Foreign students are 1.13 million [1] and the sum total of all students in the US is around 20 million ( age < 25 + age > 25) [2]. How much can they really contribute marginally to tuition inflation given that they are only 5-10% of the population? If foreign workers are taking American jobs, Chinese factories are taking over manufacturing, and international students are leading to tuition inflation, in general, US seems to be coping rather poorly with the effects of globalization. More likely, internationals are like Don Quixote's windmills.

Edit: forgot references

[1] http://www.wsj.com/articles/international-students-stream-in...

[2] http://nces.ed.gov/fastfacts/display.asp?id=98

"Coping poorly" is one way of putting it. I prefer "[the American people were] suckered into bad trade deals with countries with nonexistent labor and environmental standards which forced them to compete on the same level even though foreign competitors were handed enormous advantages as though they were US states but immune from regulation, thereby gutting the American middle class and the necessary tax base necessary to foot the bill for the kind of human investments necessary for a large country to succeed in a global information economy," but I guess your way works too.

The US is rocking the information economy.

You can maybe complain that we aren't employing even more people in the information economy.

Maybe in the coastal cities and Austin TX. Aside from that, our economy is barely budging and people are sliding ever further into debt. That's the thing about rot: if you don't address it early enough it soon consumes everything.

Besides, a lot of our "rocking" of the information economy is because of legacy, not current policies. The US emerged from the Cold War as the sole global hyper power at the same time the Internet was being developed as a commercial tool in the very same country.

If Great Britain hadnt conquered half the world their cultural products (Beatles Bond and Harry Potter) would have very little reach, London would have no more reason than anywhere else to be the global financial centre, and their manufacturing and mining economy would be in equal shambles as today.

My godfather - a historian who specialized in Ancient Rome - often said that "It only takes one generation's loss to lose everything forever."

You missed out "... by the American government".

>How much can they really contribute marginally to tuition inflation given that they are only 5-10% of the population?

Being 5-10% of the population does not imply they only provide 5-10% of the tuition. They might also be more likely to be full time, again meaning they pay disproportionally more.

At elite technical schools, the figure is more like 60% foreign

Yep. My school (which costs $50-60k full tuition and dorm) gives out generous scholarship... But also has so many international students who mostly pay full price that in some cases classes are 90% international.

It was always funny when I was in the cafeteria and found myself being the only non-Chinese.

> constant expensive campus development

I don't understand all the amenities that modern universities have (gourmet meals, private rooms, hot tubs, etc). I didn't have time for any of that - I had to study and work at my part-time job so I'd have gas & pizza money. We weren't wearing hair shirts by any means, but living in the dorms made you appreciate things afterwards.

Regarding the rising debt - it's cynical of me, but I wonder if universities don't care about their graduation rates any more. After all, there'll be another freshmen class showing up in a few months and they'll also be waving federal college aid checks at the bursar. So if students drop-out (or are on academic suspension), it's no skin off the universities' back that the student still owes all that money.