In May of this year, the U.S. administrative authorities announced that Harvard University would no longer be allowed to enroll international students — a move widely seen as retaliation for the university’s falling out with the federal government. At the same time, the U.S. government decided to suspend all new visa interviews for international students, regardless of which university they planned to attend. The consequences of this decision run deep: beyond damaging the country’s reputation and scientific capacity, the absurdity of the situation has sent accountants across the U.S. higher education system into a state of panic.
Even before Donald Trump was re-elected president, many American universities were already facing financial trouble. After years of surging college enrollment, the nation’s enthusiasm for higher education has sharply declined. In December 2024, Moody’s, the international credit rating agency, reported that one-third of private universities and one-fifth of public universities in the U.S. were operating at a loss. The share of high school graduates choosing to pursue college dropped from 70% in 2016 to 62% in 2022.
At the same time, an urgent demographic crisis is adding fuel to the fire. Projections suggest that by 2030, the total number of high school graduates in the U.S. could drop by around 6%, and by 2041, the decline could reach 13%. The impact will vary by region. Due to historical factors, some states in the Northeast and Midwest have an oversupply of colleges, yet their number of high school graduates may fall by as much as one-third.
International Students Easing Financial Pain
Bringing in international students doesn’t cure the root problem, but it does help ease some of the financial strain. Today, more than 1 million international students are studying in the U.S.—roughly double the number in 2000. William Brustein, who has worked at multiple public universities, notes that international undergraduates often pay significantly higher tuition than domestic students—sometimes as much as three times more at certain public institutions. More than half of foreign students are enrolled in graduate programs, and these programs often generate substantial profits for universities.
Although the U.S. hosts more international students than any other country, it appears there’s still room to grow: international students make up only about 6% of all higher education enrollment in the U.S., compared to over 25% in the U.K., Australia, and Canada—its primary competitors.
Unfortunately, the outlook for U.S. higher education is bleak. The latest trend shows a sharp drop in international student enrollment this fall, as applicants increasingly turn to countries with more welcoming policies—pushing U.S. universities into a deeper, more prolonged slump.
Lower-Tier Colleges Face Bigger Problems
Who gets hit first if the U.S. economy heads into recession? Some ultra-elite institutions like Harvard and Columbia—where about 28% and 40% of students, respectively, are from overseas—might face some challenges. But these schools have plenty of ways to balance their budgets. Last year, tuition and room-and-board fees from both domestic and international students accounted for only about 20% of Harvard’s total revenue. In contrast, at lesser-known private colleges, that figure often exceeds 80%.
Top-tier universities rarely see demand drop during economic downturns, and their domestic students are often willing and able to pay more. But second- and third-tier institutions face a tougher road. While they may enroll fewer international students, those students often play an outsized role in keeping the schools profitable. For years, U.S. public universities have been increasing international enrollment to offset cuts in state funding. The most prestigious schools can attract out-of-state American students who pay higher tuition, but others are left with no choice but to pay agents and marketers to bring in international students.
A sharp drop in international student numbers could damage the U.S. higher education system as a whole—even colleges that have never enrolled foreign students won’t be immune. If top-tier universities shift to admit more local students in response to the new environment, colleges lower on the food chain will find it even harder to balance their books. In the U.K., a recent tightening of visa rules caused international student numbers to plummet. Last year, nearly 40% of British universities projected they would run operating deficits.
If this leads to the closure of low-quality or unpopular institutions, it may not be a great loss. But if it makes once-affordable degrees inaccessible to students who need them, that’s a real concern. The fallout from Trump’s clash with the Ivy League could be far broader than even he anticipated.
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