New Trump policy on student visas may drain US economy of $400 billion every year, study finds

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A new Trump administration rule limiting how long international students can remain in the United States could cost the US economy up to $400 billion in annual output while weakening the country’s innovation and entrepreneurship, according to a report by the Peterson Institute for International Economics.

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The rule, issued in July and due to take effect in September, replaces the long-standing “duration of status” policy with a fixed stay of up to four years for most international students.

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Under the new policy, students seeking to continue their studies or remain in the country for post-graduation work must apply for an extension.

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According to a post by the Economic Times on Wednesday, PIIE said the new policy gives US authorities greater discretion over whether international students can extend their stay under the Optional Practical Training programme, which allows graduates to work in jobs related to their field of study.

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The report warned that the change could significantly reduce the number of highly skilled international graduates entering the US workforce, particularly in science, technology, engineering and mathematics (STEM).

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It noted that foreign STEM graduates educated in the United States make an outsized contribution to innovation and economic growth.

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“US-trained foreign STEM graduates patent inventions at four times the rate of typical college graduates and establish high-growth startups at six times the rate of US-born graduates,” the report stated.

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The institute estimated that if the United States experiences a sustained one-third decline in annual international student enrolment, the economic consequences would be substantial.

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“PIIE estimates that if the US experiences a sustained one-third decline in annual international student enrolment, the economy could lose between $200 billion and $400 billion in output each year, equivalent to roughly 0.7% to 1.3% of GDP,” the report said.

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The report also highlighted the importance of international education to the US economy, describing higher education as one of the country’s major export industries.

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It noted that higher education accounts for about five per cent of US services exports and warned that a decline in international student numbers would reduce export earnings while slowing innovation, entrepreneurship and long-term productivity growth.

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“The report also points out that higher education is an export industry for the United States, accounting for about 5% of US services exports,” it said.

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The Peterson Institute argued that discouraging international students from choosing US universities could have lasting consequences for the country’s global competitiveness by reducing the pipeline of highly skilled talent that drives research, innovation and business creation.

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