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Behind the rise of Indian students at top U.S. universities

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College SavingsAlex Slobodkin Getty Images/iStockphoto

International applications to U.S. graduate schools grew by 2% this year, marking a 10th straight year of gains, according to a report by the Council of Graduate Schools that The Wall Street Journal highlighted this week.

What’s most interesting about the report is the steady decline in applicants from China even as college campuses see a sharp uptick in applicants from India.

The report doesn’t say much about what’s driving the rise other than the fact that the U.S. has some of the best colleges in the world. However, one clue is perhaps to look at India’s higher education system, which has struggled to keep up with the country’s growing population and rising demand for skilled workers.

At 18%, India’s college enrollment rate lags behind China’s at 26%, and schools remain plagued by poor quality of teaching, outdated curricula, lack of innovation, and socio-economic inequalities, according to the British Council. In addition, unlike China, which has focused on investing in roads, bridges and schools at home, India’s track record in this respect has been less than stellar. Even though Prime Minister Narendra Modi’s government has pledged significant resources to the development of India’s foundational infrastructure, these initiatives will take time and may not be able to keep pace with its rapidly growing economy.

India’s economy is expected to grow 7.4% in 2015, outpacing China’s growth in two years, according to the World Bank. At that rate, it’s likely that the migration of Indian students to the U.S. will grow further as they seek training needed to succeed at home.

Another factor impacted by the economy is the ability of Indian students to pay for school. International students are typically not entitled to the many financial aid options available to U.S. citizens. That forces them to rely mostly on merit-based scholarships, which are themselves scarce and hard to get, in order to afford the pricey investment. However, as the Indian economy accelerates and creates more prosperity for the middle class, that should enable more students to be able to pay their own way through school in the U.S.

By contrast, China’s shrinking economy could have the opposite effect of making a U.S. education less affordable for many students there and encouraging them to explore cheaper domestic alternatives instead of studying abroad.

All this suggests that U.S. graduate schools that once focused on China for foreign recruitment may benefit by shifting their focus to India instead.

S. Kumar is a tech and business commentator. He has worked in technology, media, and telecom investment banking.