At the end of August 2007, U.S. Secretary of Education Margaret Spellings visited Chile and Brazil to encourage high school students in those countries to consider applying for admission to U.S. colleges and universities. She and other U.S. officials made similar trips to India and China during the past year. While this element of the immigration policy debate has attracted less attention than border fences, factory raids and arguments over the meaning of "amnesty," Spellings' visits remind us of the (sometimes overlooked) impact of international students on the U.S economy.

In this post we discuss how international students contribute to the U.S. and local economies – briefly review the recent decline in international student enrollment in U.S. colleges and universities – highlight trends in international student enrollment in New York City institutions – and suggest some ways in which the decline in international student enrollment might be reversed.

We invite your comments, and your suggestions about how the U.S., the country's colleges and universities, and state and local officials should deal with this issue.

The economic impact of international students

International students contribute to the vitality of America's local and regional economies in several ways. They have an immediate impact through the money they spend on tuition and living expenses – much of which comes from outside the country. In this respect, their short-term impact is similar to that of foreign tourists on an extended vacation. The Association of International Educators, for example, estimates that international students had a net impact of $1.79 billion on the New York State economy in 2006 through spending on tuition, fees and living expenses.

Far more important in the long run, however, are the skills that international students bring to the U.S., and develop while they are here. While attending U.S. colleges and universities, many of them work as research or teaching assistants; and many hold part-time jobs or internships with local businesses. After they graduate, many international students take jobs at U.S. companies and research laboratories: about 61 percent of foreign-born students who received doctorates in science and engineering fields in 1998 were still in the U.S. in 2003.

This international talent pool is important to the U.S. economy for a number of reasons:

  • International students are a significant portion of all science, engineering and math students in the U.S. – especially at the graduate level. Nationwide, the number of jobs in these fields grew three times as fast as all civilian jobs during the 1990s.
  • At a time when fewer U.S. students are pursuing math and science degrees, international students are taking up some of the slack – especially at the doctoral level. In 2003, foreign-born students earned one-third of all science and engineering doctorates in the U.S. and 55 percent of engineering doctorates.

    These trends are holding steady. During 2005-06, 16 percent of international students studied engineering, 8 percent studied math and computer science, and 9 percent studied the physical and life sciences. As the baby-boom generation's engineers and scientists retire, U.S. companies will increasingly need to look at the global talent pool in order to remain competitive. The harder they find it to hire international talent at home, the more likely they will be to shift their research and development work to countries where it is more readily available.

    • International students' fields of study in the U.S., 2005-06

  • International students – like other high-skill immigrants to the U.S. – have language skills and connections with their home countries that can be a source of competitive advantage for U.S. companies doing business in a global economy. In a 2002 survey of Silicon Valley, Annalee Saxenian found that by the late 1990’s engineers born in India and China ran 29 percent of the region’s high-tech businesses – businesses that accounted for more than 72,000 jobs. Saxenian argues that international connections allowed their companies to locate more potential suppliers, tap into the global labor supply (and the network of foreign-born workers now living in the U.S.), and sell products in overseas markets.

International student enrollment in U.S. institutions has declined since 9/11

The United States has long been the leading "exporter" of higher education. In 2002-03, U.S. colleges and universities enrolled more than 586,300 international students. During the past three years, however, enrollment has declined by 3.7 percent to about 565,000 in 2005-06 – the first decline in international student enrollment in more than 30 years. Both economic and political factors have contributed to the decline.

  • Several years of strong economic growth in the late 1990s drove record numbers of applications from international students hoping to participate in America's dynamic economy – particularly in the technology sector. The "dot-com" bust in 2000, however, dampened some international students' interest in studying in the U.S.
  • In the aftermath of September 11, the U.S process for obtaining a student visa became much more demanding, adding a face-to-face interview requirement, increasing the number of fields for which high-level clearance is required, and more closely monitoring applicants from countries considered "high risk." The State Department modified the process somewhat in 2005, in order to speed up its review of student visa applications,; but it could take several years to see how this affects the number of international applicants to U.S. colleges and universities.

International student enrollment in the U.S., 2005-06

As international student enrollment has declined in the U.S., other countries have seen sharp increases. Colleges and universities in the United Kingdom, Australia, France, Germany, and Canada are actively marketing themselves to international students. In 2006, for example, Australia enrolled more than 172,300 international students at its colleges and universities – a 41 percent increase from 2002.

At the same time domestic university enrollment is growing substantially in countries – such as China, India and Korea – that have for years sent the largest number of international students to the U.S. For example, the China Daily reports that undergraduate enrollment in Chinese institutions grew from 5.5 million in 2000 to 15.6 million in 2005 – a whopping 181 percent increase.

These trends suggest that U.S. colleges and universities face increasingly stiff competition for top international students.

International students in New York City

The New York City metropolitan area attracts more international students than any other U.S. region. In 2005-06, more than 50,500 international students were enrolled in institutions in the New York area. If metropolitan New York were a state, its international student enrollment would be second only to California.

International student enrollment, top ten metros, 2005-06

New York City's major research universities, in particular, attract large numbers of international students. In 2005-06, Columbia University ranked second among U.S. colleges and universities in international student enrollment, with 5,575 international students; and New York University, with 5,502 international students, ranked fourth. Other New York-area institutions with large international student enrollments include The New School (1,888), CUNY Borough of Manhattan Community College (1,679), and the Fashion Institute of Technology (1,018).

New York City's large concentration of international students makes the City especially susceptible to changes in international student enrollment patterns. New York City's colleges and universities enrolled 3.6 percent fewer international students in 2005-06 than during the peak year of 2003-04. Any long-term decline in America’s attractiveness to international students – or any further restrictions on their access to these institutions – could hit New York especially hard.

International student enrollment, top ten institutions in New York City, 2005-06

Implications and recommendations

Maintaining America's attractiveness to international students – and the country’s ability to take advantage of the talents and aspirations they bring with them – will require the combined efforts of U.S. colleges and universities, federal policy-makers and state and local governments.

  • Concerns about security are legitimate – but complicated and delay-prone application procedures in fact do little to enhance security, and conflict with the nation’s long-term economic interests. The State Department should continue to focus on simplifying the process, and making it more predictable.
  • For foreign students who have completed one or more years on the foreign campus of a U.S. college or university such as Weill-Cornell Medical College's campus in Doha, Qatar, the U.S. government could offer an expedited student visa that could allow the student to finish her studies on the U.S. campus – removing the requirement for a face-to-face interview, for example.
  • U.S. colleges and universities with facilities or affiliates in other countries that are used primarily for "study abroad" programs should also use them as resources for recruiting international students to their U.S. campuses; and, like Weill-Cornell and Carnegie Mellon, consider opening international campuses in emerging markets.

For those international students who choose to study in the U.S., federal, state and local governments can do more to help them pursue a career in the U.S. after receiving a degree. Steps could include:

  • Student visas in the U.S implicitly encourage foreign students to return to their home country after receiving a degree; some other nations, in contrast, have built-in mechanisms to encourage that cultivated talent to remain. The U.S. should consider allowing foreign-born students who earn bachelors or higher degrees at accredited U.S. colleges and universities to remain in the U.S. for at least two years after receiving a degree.
  • Each year, the U.S. reserves 20,000 H1B visas for international students who earn a master's degree or higher. More than 36,000 international students earned master's degrees (27,600) and doctoral degrees (8,700) in science and engineering fields alone in 2003. As has been proposed in recent immigration bills, the federal government should expand the number of H1B visas reserved for foreign students who have matriculated U.S. universities – and make the process of obtaining these visas as easy as possible.
  • Many countries, including Canada, have merit-based immigration rules that help to attract skilled foreign workers in rapidly-expanding industries. Recent immigration bills have included provisions to make the green card application process merit-based rather than employer-based.
  • In order to boost local economic development, some universities – often in partnership with state and local governments – aimed at encouraging students to remain in the local area after they graduate. Some, for example, offer incentives (such as grants or assistance in repaying loans) to students who take jobs with local companies Expansion of such programs could be help local communities capture more effectively the future economic potential of highly-educated international students.
  • In addition to being two of the top five U.S. institutions in international student enrollment, Columbia University and New York University are among the most space-constrained campuses in the U.S. If Columbia and NYU are to remain attractive to international students, they will need more student housing, additional faculty, and academic and research space. The City should continue to work with the two universities to help them meet their needs for additional space – while also mitigating impacts on the neighborhoods around their campuses.

Attracting international students to the U.S. – and giving them an opportunity to stay after receiving a degree – is a step that in the near term will help the U.S. companies and communities remain competitive. But in the long run, it would be a mistake for the U.S. to assume that it will always be able to compensate for a domestic shortage of scientists and engineers by attracting and developing foreign-born talent.

As talented young people in fast-growing countries such as China and India find that the range of opportunities available to the at home is expanding, they may be less inclined to come here. And as noted above, other countries – especially those where the native-born labor force is shrinking – will also be competing for these students. For the U.S. to remain competitive in the long run, it will thus need to address a decline in native-born students who are both interested in – and prepared for – engineering and science careers.

This will require a range of initiatives, including better preparing elementary and secondary math and science teachers; updating math and science curricula to focus on applying knowledge to solve problems rather than memorization; and addressing the racial and ethnic divide in math and science education.

Readers should thus keep in mind that keeping the U.S competitive in the global market requires simultaneously attracting talent from abroad and also providing adequate opportunities to U.S. born students. Pursuing these objectives simultaneously may not be easy; we are interested to hear your ideas on how the U.S. might do so.

As of the summer of 2007, the United States is far from relinquishing its position as the top "destination" for the world's students to receive an undergraduate or graduate education. But enrollment trends in the U.S. and abroad – taken together with Secretary Spellings’ international recruitment visits – suggest that foreign-born students with skills and interests that are in high demand by U.S. companies are increasingly looking elsewhere for a college education. We have offered some suggestions for how the federal government, states, cities, and colleges and universities might be able to address this problem and we welcome your comments.

Further reading