America's colleges face a looming crisis: The vital role of international students

American higher education is heading for a significant challenge, facing a ‘demographic cliff’ that could drastically shrink student populations, warns a new policy brief from the National Foundation for American Policy (NFAP). Without the crucial contributions of immigrants and their children, as well as international students, both undergraduate and graduate student numbers could plummet in the coming years, potentially leading to widespread college closures and fewer opportunities for all students.

The report, authored by Madeline Zavodny, a Research Fellow at NFAP and Professor of Economics, highlights that the number of US-born traditional college-age young adults is expected to drop sharply starting in 2025 due to declining birth rates after 2007. Projections show a potential 15% fall in this demographic between 2025 and 2029 alone.

A shrinking student body?

The NFAP analysis projects that by 2037, without immigrant-origin students, the undergraduate population in the US could be nearly 5 million smaller than in 2022, shrinking to about two-thirds of its current size. Graduate student numbers could face an even steeper decline, becoming at least 1.1 million smaller, or only about 60% of their current size. Such dramatic drops would be ‘catastrophic’ for many institutions, especially those in regions already experiencing population declines.

"Losing up to one-third of undergraduate enrolment and almost two-fifths of graduate enrolment would be catastrophic for many colleges and universities," states the analysis. This could result in fewer educational opportunities for US students, a reduction in higher education-related jobs, and a smaller pool of college-educated workers in the nation.

International students: A financial lifeline and innovation driver

International students play a vital role, not just in filling seats but also in providing substantial financial support to universities. In 2023-24 alone, international students contributed almost $44 billion to the US economy and supported over 378,000 jobs. Many public universities, facing cuts in state funding, have increasingly relied on international students' higher out-of-state tuition fees to maintain their programs and even reduce tuition for in-state students.

The report also dispels the myth that international students ‘crowd out’ American students. In fact, research suggests the opposite: higher tuition paid by international students allows public universities to expand their offerings, potentially increasing the number of US students they can enrol. For example, for every additional international undergraduate student at a public university, in-state freshman enrollment increases by two, on average.

Furthermore, international students are crucial for innovation and entrepreneurship. Master's programs with more foreign students tend to lead to more businesses being created by graduates. They also boost US innovation through patents and publications, especially in STEM fields. Immigrants who attended a U.S. college or university account for 75% of those who founded US companies receiving venture capital funding.

Changing demographics and future outlook

The share of immigrant-origin students (first and second-generation immigrants) in US higher education has been steadily rising. In 2022, first-generation immigrants made up 11% of undergraduate students, and second-generation immigrants accounted for 24%. This growth in immigrant-origin students has been critical in offsetting declines in the number of third-plus generation US-born students.

While international student enrolment rebounded after a dip during the first Trump administration and the pandemic, it remains slightly below its 2016-17 peak. The report warns that another reduction in international students could severely impact many US higher education institutions, jeopardising academic programs and employment in local economies.

With some other English-speaking countries now looking to reduce their international student numbers, the US has a "strategic opening" to attract more. This, combined with post-graduation work opportunities like Optional Practical Training (OPT), could ensure a stronger US-educated workforce, particularly in critical STEM fields that drive economic growth and innovation.

The message is clear: the future health and vitality of American higher education, and by extension, the U.S. economy and workforce, are increasingly tied to the continued presence and contributions of immigrants and international students, concludes the NFAP analysis.