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In the coming weeks, tens of millions of students are set to descend on college campuses across the United States in what many universities had hoped would kick-start the first normal and mostly in-person academic year since the onset of the pandemic. The rise of the Delta variant may be complicating those plans, but there is another factor threatening a return to college as usual: U.S. universities may be losing their luster in China, the U.S.’s largest source of international students.

Chinese student applications for the coming academic year shrank 18% compared with last year's cycle, according to data from application platform CommonApp. The decline appears especially pronounced given that U.S. colleges got a 9% boost in applications from international students in this cycle compared with the previous one. School administrators and experts attribute the overall boost in applications, at least in part, to U.S. President Joe Biden's electoral victory over Donald Trump last November and the perception among that the new administration would be more receptive to visa applications from foreign students and employment visas for U.S.-educated students after they graduate.

But dwindling interest from Chinese students still threatens a major and steady source of revenue for U.S. universities.

In the 2019–2020 academic year, 372,000 Chinese undergraduate and graduate students studied at U.S. universities, accounting for 35% of the total international student population. India, the second-largest source of U.S. international students, sent 193,000 students to American universities, accounting for 18% of the nation's total international student population.

The U.S. Department of Commerce estimated that in 2019 international students contributed $44 billion to the U.S. economy. That year, the living fees and tuition expenses of Chinese students accounted for $15.9 billion—a figure nearly equivalent to the amount of money the U.S. government spent on Operation Warp Speed in 2020 to help develop COVID-19 vaccines.

The waning interest from Chinese students is a result of U.S. visa restrictions on Chinese students, an increase in anti-Asian racism in the U.S. amid the pandemic, and rising tensions between the U.S. and China. But a slight drop in applications may not prove calamitous, and even a global pandemic and rising geopolitical pressures may not be enough to fully stem the tide of Chinese students opting to study in the U.S.

A closing door

When college campuses shut down and classes went remote in March 2020, Chinese and other international students faced a difficult choice: Make an expensive—and potentially dangerous—journey home or find a place to stay on campus.

The majority of Hanson's friends left campus, but the then-sophomore at Wesleyan University in Connecticut opted to stay because the cost to go home to Beijing was prohibitively expensive. Hanson, who declined to share his last name because of concerns about his visa status, was suddenly alone in a house that usually sleeps 20 people, isolated from most of his college friends and family in China.

After schoolwork, “I was just trying to keep myself entertained. That was my major job,” he said, explaining he spent time reading or talking with friends on the phone.

But staying on campus early on benefited Hanson when Wesleyan resumed classes in the fall of 2020. His Chinese friends who went home mostly stayed in China because the U.S. required them to fly to a third country and quarantine for two weeks before entering the U.S. At the time, the U.S. government deemed China a high-risk country due to concerns about COVID-19, even though China had largely eradicated the spread of the virus months before. The U.S. lifted the ban on direct flights for Chinese students returning to campus in April 2021. New Chinese international students were almost entirely prohibited from entering, as U.S. consulates around the world largely suspended visa services during those months. Between April and September 2020, the U.S. issued 808 new visas to Chinese students compared to 90,410 the year before, according to the U.S. State Department.

“[Chinese] students and families had to slowly gain awareness that they were not getting visas because no visas were being issued…and that they would have to do the year online,” says Tomer Rothschild, cofounder of Elite Scholars of China, an education consulting firm helping Chinese students get into U.S. prep schools and universities. “Last year was just pandemonium because there were no good answers.”

Rothschild says that parents were less motivated to pay full tuition for online classes from China. Tuition at top private schools like Harvard and Columbia range from $49,000 to $61,000, respectively. And even if students are not paying room and board while away from campus, many colleges still charge thousands of dollars in mandatory additional fees to help maintain their campuses. For Chinese international students taking classes online, “I’m not sure that’s really attractive,” he said, explaining that some of his former students dropped out.

For the upcoming academic year, U.S. consulates in China and around the world have prioritized approving student visas to ensure that international students can return to college campuses. With more U.S. consulates reopened this year, from May to June the U.S. approved 143,000 student visas, including 57,000 for Chinese students.

Rising tensions

But even as consulates process visas, politics may be getting in the way of a full rebound.

In May 2020, former U.S. President Donald Trump banned Chinese graduate students in fields like science and technology with ties to the Chinese military from studying at U.S. universities. American officials allege that such students may pose a national security threat and could steal state secrets from the U.S. President Joe Biden’s administration has continued to impose Trump’s order. Over 1,000 Chinese students have had their visas revoked since Trump implemented the ban. Hundreds of the students have banded together and plan to hire a lawyer to challenge the ban in court, but the Biden administration has defended the order as necessary to protect national security interests.

The ban targets only a small number of students, but it sends a message that the U.S. is no longer a welcoming place for Chinese students, says Rothschild.

Yusen Zhai, a counselor in Alabama who has focused on the mental health of Chinese students in the U.S. during the pandemic, says that the visa restrictions, a rise in hate crimes against Asians in the U.S., and early media coverage of COVID-19 that associated China with the virus took a toll on the well-being of Chinese students. “This climate led to public fear and alienation of international Chinese students,” he says.

The deteriorating circumstances for Chinese students have made Chinese parents less motivated to send students abroad.

Hanson says that much of his family in China now views the U.S. as an increasingly dangerous and unwelcoming place, and he is not sure if they would still be supportive of his choice to study in the U.S. if he was applying to colleges today.

“It would definitely be hard for me to go…if I were to make the decision to [leave China] and study in the U.S. now,” says Hanson.

Staying power

Top U.S. universities like Harvard and Stanford may not be losing Chinese applicants. Neither school returned Fortune’s request for comment.

"[The top schools] exert a tremendous gravitational pull on Chinese students,” says Rothschild.

But other colleges are struggling.

“The schools that don't have a national reputation, or an international reputation, those schools have had a much harder time recruiting students,” Rothschild said.

Michigan State University (MSU) was one school that capitalized on booming interest in Chinese students in recent decades. From 2006 to 2016, MSU increased its Chinese international student population by a factor of seven, from 602 total undergraduate and graduate students in 2006 to 4,599 in 2016. But from 2016 to 2019, the number of Chinese international students enrolling at MSU fell by roughly 7% each year.

"The last couple of years have been difficult in terms [of Chinese student enrollment numbers] falling off," says Patty Croom, director of international admissions at MSU, a state school with a total enrollment of 50,000. She attributed declining interest from Chinese students to worsening U.S.-China relations and increased interest among Chinese students to study in places like Canada and the U.K.

Croom says that while Chinese enrollment was already declining, it plummeted during the pandemic. From fall 2019 to fall 2020, Chinese student enrollment at MSU dropped by 25%, from 3,226 students to 2,432. MSU has not made enrollment figures public yet for its upcoming academic year, but Croom is not expecting the numbers of Chinese students to return to pre-COVID-19 levels. "The pandemic exacerbated the decline [of Chinese students at MSU]," says Croom.

Schools with smaller populations of Chinese international students are also in a tight spot.

"One of the emerging themes for this year was that pretty much across the board, most institutions saw a steep decline in applications from students from China," says Kristin Crosby, director of international admissions at Ohio Wesleyan University. "It was a huge hit to their revenues," she said. Ohio Wesleyan has not publicly released statistics about its incoming class, but Crosby said that applications are down from Chinese international students in comparison to previous years.

Croom says that the loss of Chinese students to MSU will certainly have negative "financial impacts" given that Chinese students pay higher out-of-state tuition to the university than students from Michigan. But she said it would not be "debilitating" because MSU is a large university that recruits students from all over the world. She said MSU has continued to step up efforts to recruit in China through social media platforms like WeChat and hiring an MSU representative in the country within the past few years. Academically, MSU is also adapting to ensure its students from China eventually come back to Michigan. Last year, MSU partnered with universities in China to allow students to take classes at Chinese universities for MSU course credit, she says.

Given the overall boost in international applications, universities may also be able to make up the deficit in declining Chinese student populations through focusing recruitment efforts elsewhere.

Croom said MSU's reliance on Chinese international students has been "unbalanced" compared to international students from elsewhere, and the university has expanded efforts to recruit from places outside China. "Part of our strategic planning is to make sure that we are diversifying our populations more effectively," she says. MSU's enrollment numbers show that international student numbers, as a whole, did not fall as quickly amid the pandemic as the Chinese international student population. From fall 2019 to fall 2020, overall international student enrollment at MSU declined 19.8%, less than the 25% drop from Chinese students.

Still, U.S. universities seeking students from China have a large pool to draw from. The features of higher education in China that funnel students to the U.S. have not changed.

Chinese students' ability to get into top Chinese institutions like Peking University or Tsinghua University in Beijing is determined almost entirely by how well they perform on a single college entrance exam called the gaokao. Chinese students who live outside major cities also are at a structural disadvantage to earn a spot at prestigious schools because major universities are often located in urban centers that prioritize accepting students who live nearby. Tsinghua and Peking universities each have a roughly 1% acceptance rate, but that figure drops to about 0.1% for applicants who lack a Beijing hukou, or house registered in Beijing city limits. Even with the challenges of studying abroad, students left out of China's elite schools are still incentivized to consider the U.S. for their university studies, Rothschild said.

"The [gaokao and hukou system] account for a big part of why students are going to study abroad," says Rothschild. "These factors are not going to change dramatically."