The talent pipeline: why U.S. companies should worry about declining foreign student enrollment
Foreign student enrollment at U.S. universities is on the decline for the first time in more than a decade. New enrollment of foreign students at U.S. universities dropped by 1% in the 2018-19 school year, 7% in 2017-2018, and 3% in 2016-17.1 This year, U.S. business schools saw a 13.7% drop in foreign student applicants, while Canada and Europe are increasing their pool of foreign applicants.2
U.S. business leaders are beginning to sound the alarm. Fifty-five deans of U.S. business schools and 15 CEOs of U.S. companies recently signed a letter to President Trump warning that the U.S. is losing global talent because of outdated and restrictive immigration policies.
Foreign students provide a talent pipeline of educated, diverse, skilled workers already acclimated to American life and equipped to join the U.S. workforce, especially in STEM fields, where U.S. companies currently have 3 million unfilled jobs. Foreign students, who typically pay full out-of-state tuition rates to attend U.S. universities with little to no financial aid, anticipate employment in the U.S. after graduation to recoup those costs. Immigration policies that make it harder for foreign students to remain and work in the U.S. after graduation will slow the talent pipeline and divert it to other countries. In a 2018 survey, 83% of U.S. universities cited visa delays and denials as a major concern for lower enrollment.
Options are already limited for foreign students graduating from U.S. universities—and the current administration has further curtailed those options. H-1B denial rates have soared under the Trump administration and the adjudication process has become increasingly challenging and unpredictable. The one-year Optional Practical Training (OPT) program, along with the two-year extension for students holding degrees in STEM fields, are important programs that provide practical training opportunities and an important work-authorization bridge for foreign graduates seeking H-1B visas. The Department of Homeland Security has signaled it intends to limit OPT programs. The agency also plans to restrict foreign students’ maximum period of stay to a fixed period, after which they would need to obtain a different visa status or leave the U.S. This would replace longstanding policy that allows them to stay for the duration of their studies.
Just as there is a global race for high-skilled workers, so is there intense global competition for young minds who will shape the future talent pool. At a time when many countries are easing their policies to attract foreign students—Canada allows three-year open work permits after graduation and a pathway to permanent residency, and the U.K. introduced two-year visas to live, work and seek jobs after graduating from a U.K. university—U.S. immigration policies are moving in the opposite direction. The policies of today will have a lasting impact on the ability of U.S. companies to attract and retain international talent for years to come, and this will inevitably impact the U.S. economy.
1 Institute of International Education (2019), “International Student Enrollment Trends, 1948/49-2018/19,” Open Doors Report on International Educational Exchange; Okahana, H., and Zhou, E. (2019), “International graduate applications and enrollment: Fall 2018,” Council of Graduate Schools.
2 Graduate Management Admission Council (2019), “Early Warning Signs: Winners and Losers in the Global Race for Talent.”
Carla Tarazi is a Partner in the San Francisco office of Berry Appleman & Leiden LLP.
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