After the mortgage defaults, the issue of “study abroad defaults” has been on the rise on social media since 2023. The study abroad group mainly consists of small and medium-sized business owners and middle-class families. Due to bankruptcies or economic pressures, their children studying abroad have had to choose between returning home or working to sustain their student life.
“I am now considered to be partially cut off,” said Wang Xiang (pseudonym), a Chinese student studying in the United States for his junior year, told Dajiyuan. He currently shares an apartment with others, cooks for himself every day, and has applied for financial aid.
His father used to be in the building materials business and the family used to have an annual income of several million before 2020. However, things have been difficult since 2020, and now his father is on the list of dishonest persons, so the family can only provide him with tens of thousands of yuan per year. His annual tuition is about 60 to 70 thousand US dollars, excluding living expenses.
Two of his good friends had to return to China due to the cutoff. One was a student from Guangdong, who was close to graduation but had to return in 2023. “His family was in real estate, with an annual income exceeding one billion, but then went bankrupt, probably owing billions in debt. Because they needed a large amount of funding for the construction projects, the banks refused to lend for a period of time and they could not get low-interest loans. They had to borrow from private individuals at high interest rates, there were various problems after the bridge loans, and the developers ran away, leading to this situation.”
He also mentioned that another classmate’s father was a vice-minister level official who was imprisoned due to political struggles. However, the student transferred to study in the UK with the protection of some people on the same side as his father, allowing him to continue his studies.
“People you know will share with you, those you don’t know or are not familiar with won’t share this, so you wouldn’t know,” Wang Xiang added. “I estimate there should be tens of thousands of students worldwide facing cutoffs, as the base number is here.”
“Study abroad defaults are a very common phenomenon, this is quite normal,” said Meng Jun, a Chinese entrepreneur based in the United States, to Dajiyuan. “Many of my child’s classmates, from sophomores to juniors, had to return home midway through their studies, as factories closed down, companies went bankrupt, and they had no choice but to return.”
Zhang Ailun, a Chinese student at the University of Sydney, mentioned hearing about some students cutting off due to family reasons. “But among those around me, I haven’t seen any. Perhaps because many of those who cut off just went back to China, so even if there were, they wouldn’t let classmates know unless they were very close friends.”
However, in order to address urgent needs, some students facing cutoffs seek help online. In a post seeking help from a student abroad who had cutoff payments on Reddit earlier this year, the poster described how they were losing sleep every night due to anxiety as the next semester’s tuition and living expenses totaled about 200,000, but their family suddenly faced problems and couldn’t provide any money. They were a graduate student in the US with another year to go.
They had started doing illegal work, but the earnings were meager. The school said they couldn’t provide any financial aid to international students, campus jobs had to wait until the spring semester started, and internships couldn’t be applied for until the summer. The student was faced with the choice of taking a break and working in China to save money, with a maximum of one year off, but the possibility of saving enough to cover tuition back home was slim, and going back might mean not being able to return.
Many netizens offered suggestions: teaching at school could reduce tuition fees and increase wages, working as a document editor while studying, and those in design-related fields could earn extra income; for rent, they could save by sleeping in the living room or couch-surfing, or even live in a car and shower at the gym; for food, microwave meals costing about 300 yuan a month could solve the problem, and so on.
Before 2006, the majority of Chinese mainland students studying abroad were students from elite Chinese universities, mainly coming to the US for graduate studies, relying on scholarships provided by US universities for their livelihood. After about 2006, with the rise of real estate in China and the continuous appreciation of the RMB against the US dollar, there was a sudden increase in the number of small foreign student groups, especially those coming to the US to study for undergraduate or even high school degrees.
The percentage of Chinese students studying for undergraduate degrees in the US continued to rise, from 14.87% in the 2005/2006 academic year to 40.97% in the 2014/2015 academic year, surpassing the proportion of graduate students.
According to statistics from the Chinese Ministry of Education, after 2001, the proportion of self-funded students studying abroad has been over 85%, with the majority of years exceeding 90%. Ordinary small and medium-sized business owners and middle-class families have become the “main force” of the study abroad group.
A 2022 “Chinese Student Study Abroad Intention Survey Report” by New Oriental showed that families with an annual income of “110,000 to 200,000” had the highest proportion of students studying abroad, followed by families with an income of “210,000 to 300,000”, together accounting for nearly 40%; families with an income of 800,000 or more studying abroad accounted for only 4.03%.
However, after 2022, the proportion of “ordinary employees” and “middle management” families has been steadily declining, with the decline in “middle management” families particularly noticeable, while the proportion of high-income families has been increasing, reaching 28% in 2024.
Wang Xiang believes that the statistical results are mostly based on salary calculations, and many officials’ salaries fall into this category as well, but their gray income may be higher. “Many middle-class families may have come out for a master’s degree, after all, the duration is short, the normal requirement is about a year and a half.”
Yu Jie, a Chinese student studying in Canada, told Dajiyuan that most families of students studying abroad are middle class or above. “Most of the classmates around me come from families with annual incomes ranging from 100,000 to 300,000 yuan. The father of a friend from Beijing used to be a police officer in Beijing, with an annual income of over 300,000 yuan. Others either own companies in China or work in government departments, and so on.”
Yu Jie explained that he started studying abroad from junior high school and the annual cost was about 200,000 to 300,000 yuan, similar for both junior and senior high school. His father works in a state-owned enterprise, and the family income is around 100,000 to 200,000 yuan.
“With incomes ranging from 100,000 to 300,000, they should be considered middle-class families. The reasons for sending children out to study are diverse: some want to get a degree, some want to experience a different lifestyle, some feel that the academic pressure in China is too great, and some parents want to send their children abroad to cleanse their minds,” he said.
Zhang Ailun said, “I know that most study abroad families are mainly engineers or management members, and those in computer network-related fields can be considered a higher-income group domestically. There are also some children of officials, and the proportion may be over thirty percent. There are also small and micro-enterprises, but they face the greatest default risk, after all, officials and the like can maintain stable income. My parents have an annual income of over 200,000, and my father works in a state-owned enterprise.”
Meng Jun, the Chinese entrepreneur, mentioned that Chinese people value their face, and a family with an annual income of 300,000, which is about 20,000 yuan a month, is actually not enough to sustain a child studying abroad. Whether the child goes to high school or university, they generally cannot attend public schools and have to enroll in private schools, with the annual tuition in the US is about 40,000 to 50,000 U.S. dollars, plus living expenses totaling about 60,000 to 70,000 U.S. dollars per year, which is equivalent to around 400,000 to 500,000 yuan.
“They usually sacrifice and save to send their children abroad. Some families can’t afford to send their children to China’s top universities after graduating from high school, so they send them to foreign universities, support them for four or five years, let them finish their studies, and then return. But they didn’t expect a pandemic, unstable income, if the family had assets to sell, it would be slightly better, but if they had no assets left, then what do they do?”
Meng Jun stated that families with an income of over one million in China are fundamentally different from those with incomes under five hundred thousand, and they no longer belong to the study abroad group. They have to find ways to immigrate in order to send their children abroad, which is the most basic thing to do. These people are not just confined to the system but also include those whose businesses have grown or become public companies, or have accumulated wealth.
The impacts of the three-year pandemic and crackdown on private enterprises have had the greatest impact on small businesses and the middle class, with many Chinese families feeling increased financial pressure after the pandemic.
A 2023 survey jointly conducted by New Oriental Education and Kantar showed that 27% of students and parents planning to study abroad for graduate studies were impacted by the pandemic, much higher than 19% in 2021 and 2022.
From the reports on study abroad defaulting students by domestic and foreign media, it is clear that the majority of defaulting families mainly include middle-class individuals engaged in real estate, education, and factory production.
Zheng Linglu, a sophomore at the University of California, San Diego, saw her mother, who used to operate five K12 education schools in a second-tier city, start losing money at the onset of the pandemic due to offline gathering bans, and then face further suppression of the education industry in the following year. Her mother had invested in physical catering businesses and lost a lot of money.
Previously, her mother had saved millions for her education and entrepreneurship. At first, it was assumed that the money for entrepreneurship was gone, but there should still be money for study abroad. Soon it became apparent that she might need to sell their last self-owned house and use pension funds to afford her education.
Before her mother encountered a crisis in her business, Zheng Linglu’s greatest joy was traveling with her best friends, renting a small cabin near Big Bear Lake in Los Angeles for over 900 dollars a night and spending a week in front of the fireplace during Christmas. Now, she had to decline her friends’ travel invitations.
In the end, Zheng Linglu chose to stay and continue her studies, as her family could still pay for tuition and most of the rent. She applied for a part-time office assistant job paying $18 per hour to control expenses. She rationed herself to one meal a day after 2 p.m., also picking up almost expired vegetables at school and going to school club events on holidays to get free food.
He Ye’s family ran four factories mainly involved in processing. During the pandemic in 2022, they faced power restrictions, could only operate at specific times, or were simply not allowed to operate, resulting in many orders having to be refunded, leading to negative expenditures. By September and October, he received multiple graduate school offers, with the first acceptance notification coming from Boston University. When He Ye’s father reviewed the budget and saw the expenses of over 600,000 yuan a year, he simply said, “No money.” He then learned that the family had no more orders left. He Ye ultimately chose to study abroad for a second master’s degree, relying on part-time work to support himself.
Grace Wang, a 21-year-old studying international business for an undergraduate degree in Finland in 2023, had ventured into tree planting to support her studies. She wakes up around 6 a.m. every day, spending the entire day planting trees in the wilds of Finland. She had never done such physical labor before, but now she plants 800 saplings each day, earning 0.11 euros per tree, essential for continuing her studies. Her parents operated an overseas study agency in China, which steadily declined during the pandemic and ultimately went bankrupt at the end of last year.
Yu Jie believed that during the three-year pandemic, families running small businesses faced severe impacts. Even the impact on public sector employees was not small, as many of these employees have seen pay reductions.
“The extent to which they are affected depends on how much their parents are affected. Part-time work is possible, but the duration is limited, for example, in Canada, it’s only 20 hours, and you won’t earn much by working yourself. If the family’s finances are broken, working part-time, cutting expenses, you can barely survive, otherwise, you have to return to your home country.”
From a purely income perspective, the Chinese middle class may not be able to afford study abroad costs, but wealth is different. Chinese family wealth is mainly tied to real estate, which accounts for 70% of Chinese family wealth. The collapse of the real estate market in China signals a shrinking of wealth for many individuals.
Meng Jun said, in China, there are limited investment channels, mainly real estate and the stock market. Recent policies from the Chinese government to save the real estate sector have rescinded property purchase restrictions, reduced down payment ratios to 15%, but have not been able to reverse the downward trend in real estate. The stock market is a meat grinder, with the struggle to defend the three thousand point mark continuing for years. No stock market in the world is like that.
Meng Jun explained that the Chinese middle class is vastly different from the Western middle class; the protections for medical care and education in the West are very complete, whereas in China, medical care and education are major problems. If you fall ill in China, can it be solved by medical insurance? If there is a cancer patient in the family, the entire household would be drained, and having medical insurance won’t solve the problem.
“For the aristocrats and the truly wealthy, they won’t be affected. They would have already transferred all their assets overseas. They won’t be like these self-made middle-class ordinary families, whose lives were turned upside down in a night due to a pandemic, leading to bankruptcy, unemployment, and company closures, all of which are problems that the CCP themselves created.”
Wang Xiang believes that the main reason for the middle class falling into default is due to political decisions from above and the pandemic lockdowns. These have caused significant bankruptcies, as the CCP has always aimed to draw closer to authoritarian states, causing geopolitical tensions, which in turn resulted in democratic nations not wanting to engage with China.
He expressed that the design of domestic policies is flawed; if you don’t have money, owe money, you end up on a blacklist, which makes it harder for you to earn money and repay your debts, creating a vicious cycle.
“More of your funds become assets of the aristocracy. Like in the construction industry, where the bank, the contractor, the workers, and the suppliers don’t earn money, and the developers don’t have money. Ultimately, doesn’t the money all end up in the accounts of the aristocracy?”