When Xiao Zhang went to the U.S. to study in 2019, she never expected that she would one day have to look for odd jobs to help fund her college fees.
The 24-year-old Chinese student is currently studying design in an undergraduate program at a university in Alabama. Her parents have so far spent 1.5 million Chinese yuan, or about $211,500, to fund her overseas studies and living expenses.
But in October last year, her parents told her they were facing cash flow problems and could no longer offer her financial support. At that point, Zhang had enough money just to cover three months of rent. She still needed to pay the tuition fees for one more semester, she said, without specifying the amount.
Zhang is hardly alone. Her experience has become increasingly common.
Since last year, there have been over 4.58 million views with the hashtag "funding for overseas studies cut off" on social media platform "Xiaohongshu," often seen as China's Instagram. As a growing number of overseas Chinese students run into financial difficulties due to the declining wealth of their families, many have gone online to express their struggles and seek advice on how to cope with the situation.
A 2023 survey conducted by New Oriental Education and Kantar shows that among the students and parents intending to pursue postgraduate degrees abroad, 27% of them said their funding plans have been impacted by the pandemic. That's far higher than the 19% who said the same in 2021 and 2022.
"I didn't have time to feel sad because I needed to make money to pay for my tuition fees and rent as soon as possible," Zhang told CNBC in Mandarin.
Zhang's father invested in the pharmaceutical industry during the Covid-19 pandemic but has since incurred huge losses. He saw his wealth and investments shrink and eventually told his daughter he could no longer support her education in the U.S., and offered to pay for her air ticket home instead.
Zhang started looking for part-time jobs such as babysitting or on-campus work, but it wasn't easy. She only managed to secure a temporary job in another state one month later.
"Between November and January, I had to work from 7 am every single day," said Zhang. "I was exhausted and had no time to study during that time. But at least I earned enough money to cover my next semester."
Brighter prospects with overseas degree?
Chinese parents place great emphasis on providing their children with a good education.
As the world's second largest economy grew, it became increasingly integrated with international markets, driving more parents to send their children to study abroad and gain overseas exposure.
According to the latest data released by China's Ministry of Education, the number of Chinese students studying abroad reached 703,500 in 2019 — marking a 6.25% year-on-year increase. In comparison, there were just 117,300 in 2003. The ministry stopped publishing that data after 2019.
"Some parents are professionals like lawyers, doctors or business executives who want the best education for their kids," Zhimin Yan, the general manager of an overseas education consulting firm Shenzhen Botong Management Consulting, told CNBC.
"Some are business owners. They want their kids to learn new and advanced ideas through overseas studies and then return home to help grow the family business."
In 2018, about 90% of Chinese students studying overseas were self-funded and not on scholarships or government funding, according to China's Ministry of Education.
That level of financial contribution has meant that international students from China have become an important group for U.S. and UK universities to attract.
Yan, who has been working in the industry for more than 15 years, said most Chinese parents plan well in advance for their children's overseas studies in terms of finances. It's very rare that they will run out of money and be forced to reduce financing for their children's overseas education, he added.
China's economic woes
China's post-pandemic economic recovery has been lackluster, and many Chinese families are feeling the heat.
Michael Bai is a 21-year-old Chinese sophomore student studying Economic and Social History at the University of Glasgow.
After completing his first semester in December 2022, his father announced that his real estate business had gone bust.
Bai had no choice but to find ways to pay for his bills. He tried many different jobs to cover his costs, including food delivery, working in restaurants, selling products in boutiques, and making bubble tea.
His father had previously made a fortune through property investments, but he was hit badly as a result of the severe downturn in the Chinese real estate sector.
"Things were going well at the beginning," Bai told CNBC. But problems involving one of the resorts his dad took over in a coastal city in southern China began to emerge when it became clear there wasn't enough investment in hotel maintenance and management.
Losses in his real estate business were already mounting before Bai left for the UK to study in 2022. Eventually, the business had to fold up.
Over the past few years, the Chinese government has cracked down on developers to reduce their reliance on debt for growth, triggering a slump in the property market. Real estate and its related sectors once accounted for about 25% or more of China's economic output and a significant share of household wealth.
According to a recent KKR report, China's real estate problems are far from over and will continue to drag on overall economic growth if not addressed quickly. KKR sees China's economy growing modestly at 4.7% this year, with real estate and Covid-related factors dragging down the economy from 1.4 percentage points in 2024 to a 0.7 percentage point drag in 2025.
College fees soar
While students are facing funding challenges, the ever-increasing tuition fees from popular college destinations such as the U.S. and UK have made things worse.
A recent report showed that university fees in the United States have risen significantly for the 2023-2024 academic year compared to 20 years ago, and in some cases doubled.
International students pay higher fees at top UK universities. The UK government has capped tuition prices for local students to access postsecondary education, and tuition fees paid by international students are a critical source of income for universities.
Bai told CNBC he has managed to come out of his financial crisis.
He has since started a business with friends through selling used cars and providing related services and claimed the business venture can generate a turnover of £60,000 (approximately $75,100) a month.
He said the income from the business is enough to support him through his studies, and he plans to stay in the business even after obtaining his degree.
China’s international students under pressure as economic uncertainty looms - CNBC
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