Last week, the Trump administration announced that it
plans to charge US employers a $100,000 fee for every international student
they hire after graduation. If implemented, the fee would significantly advance
the administration’s ongoing efforts to restrict legal immigration to the US.
The theory is that this combined with their previous policy changes will help
American students find jobs by limiting competition. In reality, these changes
will increase the cost of higher education for US students, limit their
long-term job prospects, and reduce innovation and entrepreneurship in our
country. Here is my reasoning.
A policy that says, ‘We don’t want you here’
The new policy announcement is consistent with several other
efforts to make it much more difficult for foreign students to study in the US.
Consider the recent string of policy changes:
- Ended “duration of status” for student visas — F-1 and J-1 visa holders are
now limited to four years rather than being permitted to remain for the length
of their academic programs. This makes it more difficult for foreign
undergraduates to transition into postgraduate programs in the US. - Restricted academic flexibility — New rules make it much more difficult for
foreign students to change majors, transfer schools, or participate in extended
academic programs. - Expanded security screening — Student visa applicants are now subject to
enhanced screening, including mandatory inspection of their social media
profiles and political expression. They can also experience difficulties
reentering the US after a visit home. - Arbitrary student visa termination — The administration has aggressively revoked
previously issued student visas without adequate explanation or due process.
Although some of these decisions have been overturned in court, most foreign
students lack the financial resources to challenge the decision. - Country-specific restrictions — Presidential proclamations have periodically suspended
student visas entirely for nationals of certain countries, citing national
security concerns. However, some of these decisions appear to be connected more
closely to trade policy and other unrelated issues, leaving foreign students
with even greater uncertainty.
And it’s working
These policy changes are causing international buyers of US
education to question whether studying in the US is worth the risk. Fifty-nine
percent of US colleges report receiving significantly fewer international
applications for the 2026–2027 academic year. In fall 2025, new international
enrollment had already dropped by 17%, and 35.6% fewer student visas were
issued. The decline among Indian students is especially noticeable.
The best and brightest students are still receiving an
education—just not in the US. International education outside the US is
booming, with increases of more than 20% in student applications. We have seen
this firsthand at Cofounders Capital: the CEO of one of our higher-education
portfolio companies decided to stop selling to US universities and focus almost
exclusively on international institutions.
Long-term effects
Although simple answers to complex problems are appealing
and easy to grasp, they are almost always wrong. The real cost of these policy
changes will be felt across many fronts for at least the next decade.
- Fewer entrepreneurs: Studying in the US has long provided a legitimate,
merit-based pathway to citizenship. The most talented international students
compete for admission to the best US universities. If they excel, they often
remain for advanced degrees and are invited to contribute to graduate research
projects, especially in STEM fields. At Cofounders Capital, most of the
entrepreneurs we meet are students or recent graduates. There is something
about a bright, young, expanded mind that gravitates toward entrepreneurship,
hard work, and risk-taking. The Kauffman Foundation reports that one in four US
entrepreneurs is an immigrant. Immigrants make up about 14.5% of the US
population but account for roughly 25% of our startup founders, especially in
science and engineering. Even more striking, 55% to 59% of US unicorns—startups
valued at more than $1 billion—have at least one immigrant founder. If you want
to encourage entrepreneurship in the US, the last thing you should do is
restrict the most proven legitimate pathway through which a quarter of our best
entrepreneurs arrive here.
- Stifled innovation: Entrepreneurs are the lifeblood of American innovation.
Our belief in capitalism and venture investing has attracted and supported
entrepreneurs from around the world, encouraging them to bring their
innovations, technologies, ideas, patents, talent, startups, and jobs to the
US. In short, much of American innovation comes not from large corporations but
from startup entrepreneurs that are born or migrate here. Although foreign
students make up only 6% of the overall university population, they represent
up to half of enrollment in STEM-focused graduate programs. Massive cuts to
research and SBIR grants, combined with policies that prevent some of our
brightest students from participating in research, amount to a one-two punch in
the face to American innovation. It is not our ability to manufacture at the
lowest cost that drives the US economy; it is our technology. If you want to
keep America great and the technological envy of the world, the last thing you
should do is limit our educational system or diminish what attracts innovators
to our shores.
- Higher education costs and student debt: Whatever thinking went into the
current policy changes, it did not adequately account for the economics of US
higher education. Unlike most in-state students, foreign students typically pay
full tuition—often two to three times what domestic students pay. At research
universities, foreign students contribute 15% to 30% of tuition revenue, a
total contribution of $42.6 billion to the broader US economy. As their numbers
decline because of recent policy changes, American students may be forced to
pay billions more in tuition to make up the shortfall, adding to the student
debt crisis. If you want to keep higher education affordable, the last thing
you should do is turn away students willing to pay several times the average
in-state tuition rate. - Fewer available jobs: The Trump administration claims that these policies
will make it easier for American students to find work. There may be some
short-term truth to that claim if US employers are forced to lower their
expectations to a smaller pool of qualified candidates. In the long run,
however, the opposite is likely to occur. Because international students are
more likely to study science and technology and more likely to start companies
here, they disproportionately create jobs for the next generation of US
graduates. Today, more than half of Fortune 500 companies are led by first- or
second-generation immigrant CEOs. We see the same dynamic at a smaller scale in
our early-stage venture fund in the Triangle, where nearly half of our startup
founders are first- or second-generation immigrants. Even our relatively small
fund has invested in dozens of local startups that now employ thousands of
workers. Consider the implications: many founders are students or recent
graduates; many are first- or second-generation immigrants; and many originally
came here on student visas. Most future unicorn employers will be founded
by an immigrant. Every job in the US was ultimately created by someone whose
family lineage includes immigrants. If you want to create more jobs in the US,
the last thing you should do is cut off one of the principal legal pathways
through which future job creators enter the country.
Conclusion
I am sure there are stated reasons for these damaging
policies, but none can legitimately include growing the US economy, creating
more jobs for Americans, keeping higher education accessible and affordable,
fostering innovation, or maintaining our country’s technological global
leadership. These policies amount to an unforced error that will impose
incalculable costs for many years to come.
