Saudi Arabia’s decision to reduce funding and tighten eligibility requirements for its $6 billion scholarship program will have a negative impact on the global higher education sector, Moody’s Investors Service said in a note on Tuesday.
“Universities that are no longer eligible for the King Abdullah Scholarship will experience the most immediate financial impact of these policy changes,” Moody’s said, adding that those universities “will be hard-pressed to replace these price- inelastic students in an increasingly competitive market for international students.’’
Several small universities worldwide, especially in the United States, have become reliant on Saudi students to generate income. By fall 2014, as many as 60,000 Saudi students were studying in U.S universities, making the kingdom the fourth- largest country of origin for foreign students studying there.
Top US universities, however, are expected to remain the main academic destinations for Saudi students, as well as other English-speaking programs in the United Kingdom and Australia.
The King Abdullah Scholarship fund, which will end in 2020, covers full academic tuition and stipend for undergraduate and graduate students and their families. Up to 90 percent of Saudis studying abroad are sponsored by the program.
On February 1, the Saudi government limited the use of the King Abdullah Scholarship to the world’s top 50 academic programs in a specific specialization or the top 100 universities. In 2015, as many as 200,000 Saudi students were studying abroad.
The move came after the world’s largest oil exporter slashed its education budget for the 2016 fiscal year by 12 percent to SAR 191 billion from SAR 217 billion last year. The spending cuts were aimed at shrinking the country’s budget deficit and offsetting the impact of lower oil revenues.
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