Foreign students boost our economy in myriad ways

Foreign students boost our economy in myriad ways
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Higher education in the United States has been the envy of the world for decades. For years, more foreign students have received their college and university education in the U.S. than in any other country.

Even considering the additional out-of-state and out-of-country costs, foreign students find American education much more valuable than their home-country options. 

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For its own citizens, the American education system has also produced a workforce that is always among the leaders in competitiveness, entrepreneurship and innovation. This has resulted in the U.S. economy being the largest in the world since 1871. 

Yes, China has experienced exponential growth over the past few decades, but in nominal GDP, the U.S. is far ahead. Perhaps that is why China sends so many students annually to participate in the U.S. education system. 

The duality of exporting higher education and developing the U.S. workforce to be internationally competitive is important for the country.

In support, the U.S., unlike many other countries, has a specific International and Foreign Language Education (IFLE) office within the U.S. Department of Education. IFLE is all focused on country’s international competitiveness.

But how important is the American education export? The answer is that some 1.1 million foreign students contribute $42 billion in export revenues to U.S. colleges and universities (e.g., tuition, fees, room and board).

Foreign students make up 5.2 percent of all higher education students in the country. Last year, some 330,000 students came from China and 170,000 from India, but over the years, students come from virtually all of the world.

The remaining countries combined hosted 3.5 million foreign students, with the United Kingdom (506,000), China (442,773), Australia 372,000), and Canada (309,530) in the top-five. 

For the U.S., this means an education trade surplus of $34.2 billion since fewer U.S. students take part in study abroad (U.S. Bureau of Economic Analysis). The impact on the United States is powerful — foreign students helped sustain over 455,000 U.S. jobs in the last year. 

But the practical numbers are even more impressive. The value of the education exports alone ($34.2 billion) is almost double the revenue from America’s top agricultural export, soybeans ($21.6 billion).

However, when other student spending is factored in (e.g., about $10 billion for food, cars, clothes and discretionary items), education’s total export value rivals that of U.S. pharmaceuticals ($51 billion) and automobiles ($53.6 billion; although the auto sector contributes $159 billion in trade when suppliers and parts are included). 

What is troublesome, though, is that many U.S. policymakers have little awareness or interest in education exports. Some say that education helps drive U.S. international competitiveness, but many politicians continue to explore nationalistic measures that would likely result in a significant decline of foreign students in the United States.

The beauty of the duality of exporting higher education and making the U.S. workforce more internationally competitive is that there is synergy between the two. Many universities have students from more than 100 countries on campus. Such a “global campus fabric” brings in education-export dollars and creates a dynamic global education environment. 

The U.S. will not be able to educate its workforce to be as internationally competitive without foreign students on campuses. And the country’s trade balance would be worse off with a decline in foreign students. 

Yet, nationalistic tendencies, trade barriers and political uncertainty appear to be the new normal (United Kingdom is facing similar education uncertainty with Brexit). And that scares off potential education-export participants.

Some 1.1 million students come to the U.S. each year, but only 332,000 Americans study abroad. While the U.S. is near its peak in foreign student enrollment, new student enrollment has dropped since 2016. 

This is a trend that spells trouble for U.S. higher education and the education-related trade balance. What happens when the current foreign-student enrollees graduate in the next couple of years. Is the country and its political leaders strategically planning for a solution? Or is that left to university administrators?

The factors to overcome to stop the new foreign-student decline are not easy to tackle. Some of these include rising costs of U.S. higher education but, more importantly, student visa delays and denials and a political environment that draws on nationalistic rhetoric that makes life more difficult for foreign students.

The duality premise means that this foreign-student decline likely would also result in a decline in the country’s international competitiveness. 

Tomas Hult is a professor at Michigan State University and executive director of the Academy of International Business. In 2016, Hult was selected as Academy of Marketing Science’s Distinguished Marketing Educator, as the top marketing professor worldwide, and in 2019 he received MSU’s Outstanding Faculty Award.