International students in US, Canada positively impact local economies: report

International students in the United States and Canada continue to contribute to the local economies even after graduating and becoming alumni. They achieve this by either remaining in their host country as skilled immigrants or by returning home and establishing long-term collaborations and partnerships, according to MPOWER Financing’s third annual Social Impact Report.

MPOWER Financing, a mission-driven fintech firm and provider of scholarships and no-cosigner loans to international students across the world, drew data from over 15,000 MPOWER no-cosigner loans made to international and refugee students over the past decade and an accompanying survey.

Report findings

The 2023 Social Impact Report reveals the impact that innovative financing models can have on individuals, educational institutions, host country and country of origin, and the global community more broadly.

Key findings include:

• The data shows that 93 percent of all surveyed students and 96 percent of women say the availability of an MPOWER educational loan has been instrumental to their ability to study abroad.
• Figures show that 70 percent of students report belonging to families with an annual household income of US$12,000 or less, placing them at or below the world median.
• Reports highlight that 48 percent are first-generation college students.
  
• While students from MPOWER represent 163 countries, 85 percent originate from Global South nations such as India, Nigeria, Ghana, China, and Brazil.

Economic impact

MPOWER loans not only enhance socio-economic and global diversity on US and Canadian campuses but also contribute to the economies of host countries. Alongside other international students in the US during the 2022-23 academic year, MPOWER students play a part in the $40.1 billion financial impact that all international students have on the US economy, as calculated by NAFSA.

MPOWER estimates that the impact of international students in Canada was CAD35.7 billion (about $26 billion) for the same period.

Skilled immigrants often bring about more business deals with businesses in their country of origin or return to their home countries, bringing foreign expertise and global best practices with them — a phenomenon known as Brain Circulation, influencing businesses in their new home.

Nearly half of all world leaders, with the US as the top destination, were educated abroad, enabling them to serve as bridges between nations and increasing the likelihood of embracing democratic values, as emphasized in the report.

Recommendations to stakeholders

The report concludes by urging higher education institutions, policymakers, the private sector, and donors and philanthropists to take action in enhancing opportunities for students to study abroad:

• Higher education institutions are encouraged to adopt a comprehensive financial approach that includes promoting various funding options such as government and private scholarships, institutional aid, and global student loans. This financial strategy aims to support and attract a diverse international student body. Additionally, schools should consider reducing or eliminating deposits for students from low-income countries and backgrounds.
• Policymakers are urged to prioritize immigration reform in the US, establishing a clear pathway linking higher education and skilled immigration to maximize the economic contributions of international students. Efforts should be made to increase staffing and streamline processes in overloaded consular offices, particularly in regions like sub-Saharan Africa, aiming to eliminate lengthy waiting times for visa appointments. The US Department of State should enhance training and guidance to improve visa adjudication and address high visa decline rates at specific posts.
• The private sector is encouraged to invest in the asset class of global student loans, contributing to the expansion of the global talent pool, workforce growth, and fostering innovation and entrepreneurship. This becomes crucial, particularly as the US and Canada confront demographic decline and a shrinking domestic workforce, emphasizing the growing reliance on global talent. Furthermore, companies with a global client base should acknowledge the significance of international students in their workforce and actively engage in hiring them while sponsoring visas.
• Donors and philanthropists are urged to provide additional scholarships and engage in private philanthropic initiatives targeting various underprivileged student groups. The goal is to enhance educational accessibility and prevent “brain waste,” which refers to the loss of human capital. Special attention should be given to displaced and refugee college students who are particularly vulnerable.

Economic impact

International students are becoming increasingly important to local economies throughout the United Kingdom, according to a new report.

The study, “The Costs and Benefits of International Higher Education Students to the UK,” was a collaborative effort between Universities UK International, the Higher Education Policy Institute, Kaplan International Pathways, and London Economics.

Commissioned to investigate the economic impact of international students on the UK, the report revealed that the total economic benefits of hosting these students escalated from £31.3 billion ($38.96 billion) to £41.9 billion ($52.15 billion) between 2018-19 and 2021-22, representing a 34 percent increase.

Even after accounting for an estimated impact on public services of £4.4 billion ($5.48 billion), the economic benefits of hosting international students significantly outweigh the costs, yielding a total net benefit of £37.4 billion ($46.55 billion) to the UK economy.

The net economic impact of international students has increased dramatically over the past few years, with a 58 percent increase since 2015-16, from £23.6 billion ($29.37 billion) to £37.4 billion ($46.55 billion).

Key driving force

The growing number of new and returning international students is also the key driving force behind Australia’s robust recovery from the COVID-19 pandemic.

“International education continues to be one of Australia’s greatest success stories,” Universities Australia Chief Executive Catriona Jackson said.

She welcomed the growing number of students, their companions, and families who have chosen Australia as their destination to immerse themselves in its rich offerings.

“We are steadily regaining the pre-pandemic strength that we once held, and this is undoubtedly positive news for both universities and the nation as a whole. Australia greatly benefits from the knowledge and perspectives that international students bring, as they opt for a world-class Australian education,” stated Jackson.

According to the latest data released by the Australian Bureau of Statistics, April witnessed a significant influx of 42,830 students, surpassing the numbers from the same month in the previous year by a remarkable margin of 21,700.

Provisional estimates also indicated that May welcomed an additional 44,260 students.

Moreover, the education-related travel industry proved to be Australia’s largest services export in 2022, with a staggering increase of over AUD4.6 billion ($3.13 billion) compared to the preceding year, as per separate ABS statistics.

In addition to the academic and cultural contributions they bring, international students also play a vital role in the Australian economy, said Jackson.

She noted that these students supported over 250,000 jobs and injected an astounding AUD40.1 billion ($27.29 billion) into the economy before the COVID-19 pandemic.