Reduced tuition fees for international students may pose credit risks

According to a new report by Moody’s Rating, a high percentage of universities in international students face credit risks as the federal government continues to target international students.

The most risky ones include international students making up 11% of U.S. institutions whose student groups account for more than 20% of students, and institutions that are already struggling financially, the scoring agencies said. (In total, 6% of U.S. institutions are from other countries.)

“The reduction in international students brings credit risks to universities because of the potential decline in tuition income, as international students usually pay full tuition,” the report states. “In addition, universities that intend to fill the gap may fall into more international students as the number of high school students declines in the U.S. in the coming years, resulting in a decrease in domestic students, and universities that intend to fill the gap may fall into more international students.”

The report comes after months of attacks on immigrant and international students by the Trump administration, which began with a sudden evacuation of thousands of students from student exchanges and visitor information systems, putting their legal status at risk. Since then, the government has imposed a travel ban, including 12 countries, banned students from those countries in the United States, and targeted international students at Harvard University, in an attempt to terminate the university’s ability to host international students. The State Council has also added scrutiny of social media for student visa applicants.

It is unclear how these factors will affect international enrollment in the fall. According to a recent report by the International Institute for Education, universities in about the same school said they expect their international enrollment to increase (32%), decrease (35%) in the 2025-26 school year and remain the same as this year (32%). However, the percentage of expectations declines is much higher than last year, when only 17% of institutions believed they could lose international students.

Moody’s reports said the blow to the industry may not be as important as countries like the UK and Australia, where about 25% of students are international. Nevertheless, if the United States loses 15% of its international student population, a large number of universities may suffer at least moderate financial impact.

According to calculations by rating agencies, about one in five universities’ Ebida (earnings before interest, depreciation and amortization) will reduce profit margin by 0.5 to two percentage points.

For entities already under financial pressure and low eBida margins (median EBIDA for private nonprofit universities and universities was 11.7% in fiscal 2024 and 10.7% in the public), a change of one or two percentage points could push them to negative territory, especially if they are in the event of large or failure in income due to their reported large discounts as they are under demagrapems ships ships ships ships ships ships ships ships ships ships” “In addition, many small private schools may need to compete with federal changes to student loans and aid programs, further curbing domestic enrollment prospects and emphasizing budgets, especially for those with low liquidity.”

The report highlights that the model does not consider any steps the agency may take to mitigate these losses, especially in wealthy institutions. (54% of international students have at least 15% of institutions with high selectivity, while 25% are non-selective).

“Institutions with high selectivity or large reserves can better absorb the impact by adjusting operations or increasing domestic enrollment,” IT notes. “Some elite institutions are less dependent on tuition fees and earn income from donations, fundraising or research, thereby mitigating financial impact.”