This school year, American colleges and universities saw a 17% decline in new international student enrollment. If you set aside the year of the pandemic, that’s the steepest decrease in over a decade. This reduction is making waves far beyond the halls of higher-ed. Based on my recent analysis, it represents a nearly $1 billion hit to the U.S. GDP – a hit that’s particularly concentrated in the Main Street sectors that form the backbone of many communities.
The employers taking the largest hit are in the restaurant industry (700 jobs), retail (350 jobs), and residential and commercial property rental (345 jobs), and auto repair (100 jobs). This is where the science of input-output analysis meets the art of economic impact analysis. We don’t know exactly which specific firms will be impacted. But from my experiences on campus across the country, these are exactly the types of main street college town businesses that exist near campus and serve students of all types.
My analysis quantified the impact of new international students’ non-tuition spending. The results? Hosting 21,587 fewer new international students (277,118 this year as opposed to last year’s 298,705) means 7,300 fewer jobs and $500 million in lost labor income.
Further analysis reveals which occupations are most heavily impacted. Of the 7,300 jobs that are affected, 390 are retail sales worker jobs, 370 are food and beverage server jobs, 290 are home health aide jobs, 280 are health care diagnostics jobs, and 260 are material moving worker jobs. This only takes into account non-tuition spending. The effects of lost revenue will hit higher education institutions as well.
What are the structural reasons that the economic footprint of new international students is so wide-ranging? As a whole, international students are high-spend consumers, shelling out significant sums on housing, food, transportation, healthcare, and retail. The dollars spent by international students cycle through local economies. For example, a landlord uses the student’s rent money to buy pizza, and the pizza shop owner uses the money the landlord spent on dinner to buy a new shipment of cardboard pizza boxes – and so on.
Collectively, this year’s 277,118 new international students’ spending supports 93,000 jobs and $12.6B in GDP. The would-be international students who faced visa application issues or got caught up in President Donald Trump’s immigration crackdown will spend their money elsewhere, whether it’s in their home countries or in other study-abroad destinations.
This demand shock hitting local economies and service jobs may seem quiet now, but as the school year goes on, and the spending shortage ripples through local economies, the implications are grim for local consumer spending, small business revenues, commercial real estate around campuses, and even tax collections. College towns and metro areas with large university footprints will see the strongest effects, especially in states with historically heavy international enrollment, like California, Texas, New York, Florida, and Illinois.
Business leaders and government officials need to think about the myriad ripple effects of changes to international enrollment statistics in higher education. The broader linkages to both the local and national economy are underappreciated. Needless to say, fewer international students today can mean fewer skilled workers in sectors like tech, healthcare, and engineering tomorrow. What’s just as important, and maybe less apparent, is the immediate threat to jobs and GDP upstream of enrollment that a decline in new international students represents.
New rules that make it harder for students to get visas and proposed caps on international students at some institutions present a threat to the U.S. Economy at large and to small businesses in our communities – not just institutions of higher learning. We cannot ignore the economic tradeoffs of national policy changes at the local level. Beyond the immediate economic impacts, my experience as a professor at campuses large and small have informed my view that international students enrich their communities in ways other than just the number of dollars they spend at local businesses. The perspectives they bring on both a personal and intellectual level are invaluable. They have spurred my thinking on topics from economics and development to the personal and profound. We are richer for their presence.
International students are part of student spending in communities across the country and the number of new international students limits Americans’ ability to work and thrive, too. It is imperative that we not ignore or underestimate how this demand shock prompts a material headwind to growth in key regions.
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