In 2010, according to the OECD there were more than 4.1m “sea turtles” abroad, to take the Chinese slang for overseas students and apply it to students of all nations. Prospective international students, and their parents, face a staggering choice of locations. While the educational offering is crucial, it is not always the sole consideration. Students may look for cities where they have access to good work experience opportunities after graduation, or where there is an appealing social scene; while parents may be interested in recouping some of the cost of their child’s education through astute real estate or financial investments.

A new index created for China’s Bank of Communications by the Economist Intelligence Unit takes all these factors into account, and ranks 80 university cities around the world by the overall potential return on an undergraduate education at the top institutions in those cities. The index considers:

• Educational returns: how highly valued the education is by employers worldwide, balanced against whether it represents value for money.
• Financial returns: how open the investment environment is to non-nationals, and how high are policy, economic and currency volatility risks that may affect returns on investments.
• Real estate returns: the potential of the local real estate market, the likely returns on investment in the form of rent and how taxes will affect those returns.
• Work experience: the openness of the local job market to overseas skilled applicants, whether overseas students are supported by their university in seeking jobs and whether the local economy offers high-pay, low-tax opportunities.
• Social experience: whether students are exposed to world-class cultural experiences and can study among a truly multicultural student body. These represent opportunities to learn—and network—beyond the lecture hall. Safety is also taken into account.

When all these potential returns on an investment in an overseas education are taken into account, the city of Montreal in Canada beats well-known destinations such as Boston (US, which includes Cambridge, Massachusetts) or Oxford and Cambridge (UK) to the top spot in the Sea Turtle Index. Why? Primarily, thanks to Canada’s open policy environment. The question of openness is considered in each index category. Montreal benefits from Canada’s deliberate policy of encouraging graduates to stay on to seek work and contribute to the economy of an otherwise aging nation. Foreign nationals are also given access to local investment opportunities without penalties aimed at deterring, or milking, overseas investors.

The rather small number of US cities featuring in our top 10 reflects the relatively poor performance of US cities when it comes to both value for money spent on education and policy openness. Tuition fees in the US are by far the world’s highest, yet upon graduation the lack of a job-seeker visa programme limits the potential to take advantage of the still high-paying local job markets to earn some of this money back. In fact, in the last few years, both the UK and US have developed something of a reputation for deterring, rather than courting, foreign students, thereby limiting the pool of talent entering these countries.

Soon, they may start to feel the heat of competition from other parts of the world. Richer Asian cities perform well in the Sea Turtle Index, with Hong Kong taking third place and Singapore, Seoul, Taipei and Beijing all featuring in the top 30.* Institutions in these cities have moved rapidly up the global university rankings in recent years, and with Asia as a focal point for global business, the combination of a competitive degree with an understanding of Asian languages and cultures could be potent. It is this, along with the large and growing pool of students in the region able to afford tertiary education, which has attracted some leading western universities to open campuses in Asia. Crucially for many students and their parents, particularly in developing countries, tuition and living costs in top Asian education destinations are often just a fraction of those seen in the west, while postgraduate employment prospects in this fast-growth region are relatively good.

We may start to see the same phenomenon eventually in other parts of the emerging world, but for now the South American and Indian cities featured in the index are pushed down by factors such as relatively high crime rates and lack of policy openness to overseas investors.

Of course, for some people the quality of the education will always trump all other factors, but if rich Asian and developing world university cities can continue to narrow the gap with the traditional world-leaders—which will take more than just money, linked as education and research are to the cultural and legal environments in which they exist—then the global competition for students will inevitably heat up, making the other factors covered in the Sea Turtle Index increasingly relevant.

Download the whitepaper here.

*Note: To ensure a more interesting cross-section of regions was represented in our findings, we only considered a limited number of university cities per country in the index. Therefore the rankings are out of the 80 cities included, not out of all cities worldwide. For more details on methodology, see the white paper.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Economist Intelligence Unit Limited (EIU) or any other member of The Economist Group. The Economist Group (including the EIU) cannot accept any responsibility or liability for reliance by any person on this article or any of the information, opinions or conclusions set out in the article.