Though things sure aren’t looking good for US universities, Wisconsin has it unusually bad. Decades of plummeting investment in higher education has left it among the US’s 10 worst states. Fear of debt mean Wisconsin students are balking at paying for college, denting revenue even more. But what can Wisconsin universities do to drum up funding?

The University of Wisconsin-Milwaukee has a plan. Its recruitment partnership with a Chinese education ministry agency is helping it reap millions in tuition dollars by creating a boarding school for Chinese students to learn English before enrolling at the university. The school, called Wisconsin International Academy (WIA), is hoping to convert an $8-million, 162-room Hilton hotel into a dorm for Chinese students. But the planning commission of Glendale, the Milwaukee suburb where the Hilton is based, is denying the application (pdf).

The Hilton deadlock hints at tensions that can arise as more and more of the US education system faces demand from wealthy Chinese parents. Rapidly rising living standards mean not only that more Chinese parents can afford US educations. They can afford boarding school price tags—WIA costs $30,000-40,000/year—and college. As of 2011, around 24,000 Chinese high school-aged students were studying in the US; in 2008, there were almost none.

On the face of it, the Hilton plan seems broadly beneficial. UMW gets more tuition. Chinese parents get English-speaking, US degree-holding offspring. Cernet, the Chinese government subsidiary behind the deal, turns a tidy profit while freeing up more classroom seats in China. And the owners sell at above market value.

City of Glendale - Plan Commission What all the fuss is about.

But some of the 12,872 residents of Glendale are less thrilled. The owners are selling for personal reasons, but the hotel has 70% occupancy, and since it’s the destination of choice for two big corporate parks, turning it into a dorm could cost nearby businesses customers. The hotel is “essential for our business,” wrote Jennifer Holt, a frequent visitor to her company’s Glendale office, on Facebook.

The Hilton is also a favorite for hosting local weddings and other posh events. And most of all, it brings Glendale $250,000 a year in hotel room taxes.

A recent city council meeting exemplified the debates over Chinese investment, Matt Gibson, the boarding school’s principal, pushed the positives. According to meeting minutes (pdf, p.15), Gibson noted that Glendale businesses like Swarovski, a luxury jewelry store, appreciated students not just for their behavior, but because they have “disposable income and they enjoy spending it.” Gibson also flagged that Chinese parents visit frequently and that “they are people of means” who often “bring along investors with them,” including one now interested in launching a high-end Chinese restaurant.

On the other hand, Glendale’s mayor was worried about the Chinese government’s involvement in the Hilton bid. Jian Sun, a WIA executive, said the investment came from Cermax Corp, a consortium of Chinese and American investors. Though there’s some indication that Cernet may own Cermax, Sun assured the committee that “no single penny from the Chinese government” would be invested, according to the meeting minutes. Glendale will find out whether that satisfied city leaders after August 26, when the city council rules on the proposal.