Has the U.S. lost its luster in the eyes of international students?

The United States has been the top destination for those looking to study abroad for decades. Before the onset of the pandemic, over a million students flocked from abroad to attend U.S.-based universities. Now, having dropped by 15% at the onset of the pandemic, international student enrollment is beginning to recover. Despite this recovery, the U.S. is losing market share to countries like Australia, Canada, and the United Kingdom resulting in negative economic consequences.

This article explores in detail the domestic and international trends of international students, as well as the economic impacts of these students on the U.S. economy.

Domestic trends in international student enrollment

The U.S. has been the top choice for international students due to its numerous high-quality colleges, universities, and abundant employment opportunities post-graduation. However, various policies enacted at the pandemic’s onset worked to restrict international students rather than encourage them. Many of these policies were later reversed, but the damages remained.

During the 2020-21 academic year, international student enrollment plummeted by 15%, according to Pew Research. Decreases in new student enrollment from abroad led this trend with a 46% decrease over the prior year. Inside Higher Ed reasons that border closings, flight cancelations, or shifts in visa policies are likely at fault.

The past two academic years, 2021-22 and 2022-23, have seen a rebound from the pandemic. International students in the U.S. increased by four and nine percent, respectively.

At the graduate student level, international graduate student enrollment exceeded pre-pandemic levels after growing 17% in 2021-22. This increase marked the first time in a decade that graduate enrollment exceeded that of undergraduates.

A shift in international student makeup

China has been the leading source of international students into the U.S. for over a decade, contributing 35% (over 317,000) of all international students for the 2020-21 academic year. However, Chinese student enrollment has experienced a steep decline in recent years. During the 2020-21 academic year, enrollment dropped 15%, followed by an additional 9% drop in 2020-21.

In the 2019-20 academic year, when Chinese international student enrollment was at its peak, Chinese international students contributed nearly $16 billion USD in economic value to the U.S. with over 370,000 studying in the U.S.

With waning numbers of Chinese students choosing to attend U.S. institutions, the economic health of many universities and local economies may be put at risk.

On the other hand, India, the second largest country of origin for U.S. international students, has seen a significant jump. In 2020-21, India contributed over 167,000 students, 18% of all U.S. international students, a 19% jump going into the 2021-22 academic year.

See the below chart for more information on the changing makeup of international students in the U.S. over time.

While the above countries hold the highest share of U.S.-based international students, many others have surpassed their reported pre-pandemic numbers. India, Canada, Mexico, Nigeria, Bangladesh, Pakistan, and Spain all reported higher than pre-pandemic numbers, ranging between +41% from Spain to +7% from Canada.

The U.S. is losing market share in international education.

The “Big Four” in international education—Australia, Canada, the United Kingdom, and the U.S.— compete for about 37% of global international students as the major English-speaking destinations.

While the U.S. is still recovering to pre-pandemic levels, the other Big Four countries are growing their shares of international students. A Holon IQ report finds that Australia, Canada, and the United Kingdom are taking market share from the U.S. and are likely to continue to do so unless the U.S. can establish a “clear, coordinated and actionable policy and plans.”

Over 100 other countries attract the remaining majority of international students. Some nations, like France and Germany, offer tuition-free or low-cost programs, attracting students that may have otherwise chosen to study in the U.S.

International students generate nearly $30 billion in direct economic benefits annually.

During the 2020-21 academic year, National Association of Foreign Student Advisors (NAFSA) estimates found international student expenditures on tuition paid to U.S. institutions, room and board, transportation, and commercial goods while living in the U.S. to be over $28 billion. The impact on our economy does not stop here. NAFSA data reveals that for every three international students, one U.S. job is created and supported by the above spending. This trend accounted for over 306,000 jobs during the 2020-21 academic year.

The U.S. Department of Commerce reports an even larger impact at $32 billion USD in economic impacts by international students in 2021. With approximately 60% of international students receiving the majority of their funds from sources outside of the U.S. (family overseas, foreign governments and/or universities, etc.), the U.S. gains immense value from these students both in terms of economics and talent.

A 2021 Migration Policy Institute (MPI) report found the availability of work visas to be the main barrier faced by international students wanting to stay in the U.S. to continue working. The report references a 2014 Brookings report that found 45% were able to extend their visas to work in the same metropolitan area as their alma mater.

An NBER article found that 11% of bachelor’s and 22% of master’s graduates find employment in the same state as their alma mater post-graduation. This ratio increases when looking only at STEM graduates (16% and 25%, respectively).

A study by Interstride surveyed the goals of international students studying in the U.S. post-graduation. Only 13% of surveyed students said they wanted to return to their home or go to another country after graduation.

While international student enrollment is recovering to pre-pandemic levels in the U.S., its share of the international talent pool is being absorbed by other nations.