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In 2010, Xi Mingze, the daughter of Xi Jinping, now president of China, enrolled at Harvard under an alias. Her presence on campus highlighted a contradiction: even as Beijing denounced western ideology, many families and companies across China continued to invest in US higher education.
That symbolic endorsement now stands in sharp contrast to recent US policy shifts. Last week, President Donald Trump issued a proclamation to stop all foreign students from attending Harvard. A federal judge has temporarily blocked the move and yesterday Trump declared that a trade deal with China would include access for Chinese students to American universities. But the overall message to students and companies abroad is clear: the US is no longer a reliable destination for academic investment.
This marks a disruption to a system that has historically received significant financial and academic contributions from international students. The total cost of attendance at top universities now exceeds $96,000 per year. International students, more than 70 per cent of which come from Asia, typically pay full tuition and have limited access to US financial aid. Their spending, classified as a service export, contributes more than $50bn annually to the US economy as of 2023, according to the Department of Commerce.
Yet despite these contributions, there is a persistent concern that deserving US students are being shut out while 1.1mn international students, 6 per cent of the total US higher education population, take their places. Some critics question why universities receiving tax breaks and public funding cater to international students.
The financial reality is that those students help underwrite the subsidised tuition of many US classmates. Higher education has become structurally dependent on global demand to balance its books. When enrolment of students from Asia drops, as it did during the pandemic, the consequences are immediate: budget shortfalls, tuition hikes, programme cuts and faculty lay-offs.
Even if just a third of tuition revenue from international students subsidised domestic peers, that would roughly amount to $15bn in grants for US students. They also continue to contribute after graduation. Alumni from mainland China and Hong Kong, for example, make up the largest group of foreign donors to US universities. Despite their vast endowments, Ivy League schools would also feel the pressure from declining international student tuition revenue, as donor restrictions limit how and when funds can be deployed to cover such shortfalls.
But tuition is only part of the story. US universities are heavily reliant on global networks of Asian corporate and philanthropic capital. Long-term partnerships with companies such as Samsung, Toyota and Sony have funded AI labs, sponsored faculty chairs and joint research centres. These investments are closely tied to where those groups recruit talent. If that talent pool shrinks, the strategic rationale behind the investments weakens.
Trump’s new restrictions come at a precarious time. International enrolment had already been slipping. By 2019, well before the pandemic and visa disruptions, new international student numbers had declined for four consecutive years. In contrast, during the same period, enrolments in the UK and Australia grew.
Here, perception, as much as policy, is to blame. Families in Asia increasingly view the US as unpredictable, particularly in politics and public safety.
South Korea offers a telling example. In 2010, 75,000 Korean students were studying in the US, representing about one in every 50 of university age. By 2024, that figure had nearly halved. The drop cannot be explained by finances; Korea’s GDP per capita rose more than 50 per cent during that period. Nor can demographics fully explain the decline, as the country’s population only peaked in 2020. Rather, fears over visa uncertainty, hate crimes and gun violence have made US campuses feel less secure and, for many families, less worth the cost.
Meanwhile, America’s academic lead is on increasingly fragile footing. While US universities continue to rank among the world’s best, the margin is narrowing. According to the 2024 Nature index ranking, Harvard still holds the top spot of institutions based on research output — but the next eight universities are all Chinese.
Yet just as global competition intensifies, Trump’s policies risk making it harder to compete. The widening gap between nationalist populists, who view foreign students as security threats, and universities, which rely on them for funding and talent, undermines the foundations of US higher education. Global capital flows, which have long supported American universities, are already starting to shift.