The Trump administration has made numerous proclamations about recapturing or preserving traditional manufacturing jobs in an effort to shrink the US trade deficit and make America great again. Most are populist cries to bolster old industries, such as automobile manufacturing, that purportedly have been ravaged by unfair global competition. It’s too bad we romanticize businesses lost to progress and ignore vibrant sectors in which the US is still justifiably great and even dominant. “Like what?” you may ask. How about higher education?
While American colleges and universities are often vilified as hotbeds for liberal elitism, we forget that our 8,000 learning institutions constitute an enormous economic engine. US manufacturing has been declining in importance since the 1970s, but higher education has countered that trend dramatically. Our postsecondary schools will generate more than $550 billion in revenues in 2017, growing to $700 billion by 2024—a multiple of the American automotive industry’s contribution to the economy. The 4.1 million people working at colleges and universities—from teachers and scholars, to administrators, to food service professionals, to engineers and construction workers—is roughly the same number as those employed directly and indirectly in the US auto sector.
Importing international student = exports
Even if we acknowledge that higher education is a major employer and growing contributor to the US economy, we think of it as a domestic sector with little impact on trade imbalances, right? Wrong. When a foreign student enrolls in a US school, the tuition, room, and board paid by that student is de facto an export. And unlike manufactured goods, the US has been exporting more and more higher education in recent years. Nearly one million international students are now enrolled in America, up from 650,000 in 1998. International students contributed more than $35.8 billion to the US economy in 2015 and this has potential to grow, in president Trump’s words, big league.
Attraction of US higher education
Why such a surge in international students? Partly, it is the result of global progress. Rising income, health, and education levels in China, India, and other emerging markets have produced more academically-prepared teenagers. In fact, secondary students in China and other Asian countries ranked among the world’s best in the 2015 Program for International Student Assessment (PISA). But the attractiveness of the US as an education destination is a result of the quality and unique characteristics of our colleges and universities.
American schools dominate most global higher education ranking systems. Foreign students and their parents see a US degree as a passport to higher earnings and prestige versus local degrees, providing greater job mobility in home countries or abroad. English is often the language of influence in scholarship, industry, science, and other fields, so improved language skills are also highly valued for economic advancement.
Compared to other high-quality English language education systems like those found in the UK or Australia, the US undergraduate system has unique attractions for international students, despite its relatively high cost. Most universities around the world require students to choose their major before commencing study, and have deep-dive, single-subject curriculums. In contrast, at US schools, students can (and often must) study a variety of subjects before selecting a major. In a recent multi-year research project, I found international students were attracted to the American-style “liberal arts” philosophy, which they felt was not only more personally enriching but also developed the creative, flexible, and analytical thinking needed to thrive in modern knowledge economies. Further, the number and range of colleges and universities in the US is unsurpassed in the world: we have schools at every level of selectiveness, size, and cost, in every conceivable climate and locale.
Strengthening US higher education
Higher education is one of America’s great treasures, but it’s facing structural challenges. Most colleges and universities are contending with a teenage American applicant pool that is expected to contract by 15% over the next two decades. Demographic problems are aggravated by skyrocketing costs which have outpaced inflation for decades. At public institutions, financial support from states and municipalities has shrunk from 60.3% of operating costs in 1975 to 34.1% in 2010. Rising institutional costs and declining government support are reflected in increased tuition and fees. Therefore, of the diminishing number of college-aged Americans overall, even fewer can afford the cost of a US degree without borrowing huge amounts. Hence the highly publicized student debt bubble.
Financially- and academically-capable international students are essential to the health of US higher education. And we have room for many, many more. International enrollments comprise less than 5% of all students in the US, compared to 25% in Australia where the government has promoted foreign student enrollment to boost the economy.
The public institutions that historically have raised so many Americans into the middle-class and beyond could be the biggest beneficiaries of more foreign enrollment. Most use a two-tier tuition system based on state residency, charging non-residents (including international students) significantly higher tuition. In some states, an additional surcharge is levied on non-US students above the non-resident tuition rate. Premium tuitions from overseas students, therefore, help keep in-state resident tuitions more affordable.
But international students add value far beyond their tuition checks. My study found that education experts overwhelmingly agree that overseas students strengthened US colleges and universities in other critical ways: they raised overall academic caliber of classes (which boosted school ratings and reputation); they increased campus diversity (especially in areas where local communities were socio-economically homogenous); and they fostered a greater global perspective in classrooms and on campus.
This added value—economic and social—that foreign students bring to US colleges and universities has been highlighted in recent weeks. President Trump’s two controversial travel ban attempts were both challenged by many activist groups, but some of the most vociferous—and eventually successful—legal challenges came from states that argued the ban had negatively affected their colleges and universities. Whether lawsuits were brought on behalf of individual students, faculty members, schools, or the states themselves, all argued that restricting entry of foreign students caused myriad damages. In fact, universities are already seeing some fallout in terms of declining international applicants, due to a sense that the US is becoming a less hospitable place for international students under the new administration.
The higher education/immigration/productivity nexus
Campaign rhetoric and the popular press often focus on the loss of American jobs to foreign workers. But in reality US industry is scrambling to find enough skilled workers to maintain global competitiveness. A recent annual survey notes that that 46% of America’s largest companies report critical talent shortages, the highest levels in more than a decade. Foreign students are connected to the US labor pool beyond the benefits they confer to their US schools. Of the one million foreign students here, some 150,000 undertake the Optional Practical Training (OPT) program that allows them to work in the US for one year to complement their undergraduate experience. Recognizing shortages of skilled workers in STEM fields, in 2016 the US Department of Homeland Security extended OPT for international STEM students to 36 months.
The administration has already announced a suspension of expedited processing of H1-B visas as part of a broader effort to dismantle the program. To meet the needs of industry—including the key industry of higher education—immigration policies must be crafted to safely allow more students and workers—as well as students who will become workers—a reliable path into the US. This should be a bipartisan goal; indeed Arizona Republican senator Jeff Flake has proposed offering automatic Green Cards for international graduates of US masters and PhD programs in critical shortage areas like STEM.
Keeping America great
Instead of keeping international students out, or sending them home after graduation, we should devise ways to welcome more talented young people to college and university here, and strive to keep them in the country. Without an American education and an ability to remain in the US, admired immigrant entrepreneurs such as Elon Musk of Tesla and Sergey Brin of Google, or talented CEOs like Satya Nadella of Microsoft and Safra Catz of Oracle, would have never been able to make their great contributions to our country.
American higher education has been the envy of the world for decades. It doesn’t take a college degree to realize that US schools produce people with knowledge, skills, and capabilities that boost our nation’s productivity and prosperity. More international students equals stronger colleges and universities, more productive workers, more American jobs, and higher GDP—ad infinitum, in a virtuous cycle. Let’s hope the new administration sees the benefits of exporting our unique educational product by welcoming more international students and reforming immigration policies intelligently. That would go a long way toward keeping America great.