This report uses a new database on foreign student visa approvals from 2001 to 2012 to analyze their distribution in the United States, finding that:

• The number of foreign students on F-1 visas in U.S. colleges and universities grew dramatically from 110,000 in 2001 to 524,000 in 2012. The sharpest increases occurred among students from emerging economies such as China and Saudi Arabia. Foreigners studying for bachelor’s and master’s degrees and English language training accounted for most of the overall growth.
• Foreign students are concentrated in U.S. metropolitan areas. From 2008 to 2012, 85 percent of foreign students pursuing a bachelor’s degree or above attended colleges and universities in 118 metro areas that collectively accounted for 73 percent of U.S. higher education students. They contributed approximately $21.8 billion in tuition and $12.8 billion in other spending—representing a major services export—to those metropolitan economies over the five-year period.
• Most foreign students come from large fast-growing cities in emerging markets. Ninety-four (94) foreign cities together accounted for more than half of all students on an F-1 visa between 2008 and 2012. Seoul, Beijing, Shanghai, Hyderabad and Riyadh are the five foreign cities that sent the most higher education students to the United States during that time.
• Foreign students disproportionately study STEM and business fields. Two-thirds of foreign students pursuing a bachelor’s or higher degree are in science, technology, engineering, mathematics (STEM) or business, management and marketing fields, versus 48 percent of students in the United States. Both large (San Jose, Calif.) and small (Beaumont-Port Arthur, Texas) metro areas figure among those with the highest shares of their foreign students in STEM disciplines.
• Forty-five (45) percent of foreign student graduates extend their visas to work in the same metropolitan area as their college or university. Metro areas that retain high shares of their foreign graduates under the temporary Optional Practical Training (OPT) program tend to be either large diversified economies (e.g., New York, Los Angeles), or specialized labor markets that align closely with foreign graduates’ training (e.g., Honolulu, Seattle, Las Vegas).

These findings suggest that foreign students can provide important economic benefits to their U.S. metropolitan destinations—serving as bridges back to their growing home cities and offering valuable skills to local employers. More metropolitan leaders should emulate leading practices that capitalize on the knowledge and relationships of foreign students to strengthen local economies while also maximizing students’ educational and professional experiences in the United States.

LISTEN: Neil Ruiz discusses this report on the Brookings Cafeteria podcast.

The United States is the preeminent global hub for academic training. In the 2012-2013 academic year the United States hosted a record 819,644 international students, 21 percent of all students studying abroad worldwide.¹ America’s renowned educational institutions, global networks of students and professionals and high-level research and innovation activities combine to attract hundreds of thousands of students each year.

The benefits these students provide their colleges and universities are well understood. Only recently, however, have local leaders begun to appreciate that students from fast-growing foreign economies can also be important anchors in building global connections between their hometowns abroad and their U.S. metropolitan destinations. With knowledge of both markets, foreign students can be valuable assets to local business communities that are seeking to expand globally and the wider metropolitan economies in which they sit.

Recent evidence links skilled migration to transnational business creation, trade and direct investment between the United States and a migrant’s country of origin.² AnnaLee Saxenian pioneered this research agenda by linking the entrepreneurial activities of U.S.-educated foreigners in Silicon Valley with their home regions through what she terms brain circulation.³ Using case studies and surveys, Saxenian argues that immigrant entrepreneur networks play a critical role in technology industries’ international expansion, linking Silicon Valley to new technology hubs in Bangalore (India), Hsinchu Technology Park (Taiwan) and Shanghai (China).⁴ Economists argue that migrants can increase the availability of valuable market information for exporters from origin- and destination-countries, find buyers, learn about regulatory requirements and overcome market imperfections.⁵ Research has also found a relationship between the presence of migrants with college educations in the United States and increases in U.S. foreign direct investment (FDI) to the migrants’ homeland.⁶ Robert Guest argues that the United States’ ability to attract and keep migrants allows the country to tap powerful diaspora networks around the globe.⁷

Fears of a brain drain occurring if high-skilled foreign students from developing countries, especially from small nations, study in the United States and stay also exist.⁸ But new research shows that expatriates can also have a positive impact on their home communities from abroad.⁹ High-skilled migrants can serve as bridges between their origin and destination communities, acting as conduits for knowledge transfer and valuable business linkages.¹⁰

Notwithstanding the benefits from economic linkages through skilled migration, efforts to reform the visa and immigration process to ease the way for foreign students to remain in the United States after graduating remain contentious amid a rancorous debate over broader immigration reform.

One proposal is that the United States should issue green cards (permanent legal residency) to foreign students who graduate from American universities. They assert that these foreign students are studying fields in short supply in the labor market.¹¹ In his book The Immigrant Exodus, Vivek Wadhwa argues that high-skilled immigrants and entrepreneurs frustrated with current U.S. immigration law are either returning to their home countries or migrating to countries with more friendly immigration systems.¹² Proponents of retaining foreign students argue that the current law, which limits the number of visas issued to each country, causes employment-based green card backlogs for Indian and Chinese nationals, often lasting 10 years or more. To avoid these delays they believe the United States should adopt a policy of issuing permanent resident status to foreign graduates of U.S. universities who have obtained an offer of employment.¹³

Others argue that there are enough skilled native-born workers to perform high-skilled jobs and that employers are taking advantage of the visa system and using foreign labor for its low cost and exploitability. In a 2004 study, George Borjas found that foreign students limit opportunities in higher education for white native-born American males, especially at the most elite universities.¹⁴ Borjas also shows that allowing more foreign doctorate degree holders to enter the U.S. labor market lowers the wages of competing workers.¹⁵ Norm Matloff compares former foreign students with Americans of the same education and age and shows that foreign workers are paid less, have fewer patent applications and Ph.D. dissertation awards and are less talented overall than their American counterparts.¹⁶ He argues that allowing foreign students to enter the labor market would depress wages for U.S. workers.

To date, the majority of the analytical research on the foreign student population in the United States has focused on national trends, with little discussion of the different metropolitan areas in which they study or from which they originate globally.¹⁷ The United States is not a unified national labor market, but a collection of distinctive regional labor markets. The large majority of these metro areas are home to thousands of foreign students who would be affected by changes to immigration policy aimed at easing students’ entry into the labor market after they graduate. Moreover, as U.S. metro areas become more globally engaged, the relationship students have with their home markets, particularly large and emerging cities, are a significant potential source of demand for U.S. metro economies. For these reasons, it is important to understand metropolitan trends in where foreign students study, from which cities they come and where many students work temporarily once they graduate.

Using a unique and never previously accessed government database, this report examines these questions for foreign students studying in the United States under an F-1 visa from 2001 to 2012. It begins with background on the F-1 visa program, detailing its intent, rules and implementation. Next, the paper provides an overview of the key terms, data and methodology employed in this analysis (with further details in Appendix A). The next section presents the results of this analysis—national trends of foreign students on F-1 visas, intensity, fields of study, city and country of citizenship, funding streams and retention rates—first at the national level and then with metropolitan and global city variation. Finally, the report concludes with a discussion on policy and practical steps that leaders at the global, national and local levels can take to maximize the economic and educational benefits of foreign students’ presence in U.S. metropolitan markets.

International migration for educational purposes is a substantial fraction of the global movement of skilled migrants.¹⁸ International students include those pursuing language and certificate programs, secondary schooling and associate’s, bachelor’s, master’s, professional and doctoral degree programs.

Since the first Open Doors publication in 1954, the Institute of International Education (IIE) has surveyed American colleges and universities to measure foreign students in the United States.¹⁹ From the beginning of that survey, the United States has remained the leading destination of foreign students worldwide.²⁰ In the 2012-2013 school year, the United States received a record number of foreign students (819,644) studying in its colleges and universities, up 7 percent from the previous year.²¹ Despite this increase, only 3.4 percent of total higher education enrollment in the United States is foreign students—a share that has remained relatively constant over the past 60 years.²² Other popular destinations for student migrants (in descending order) are the United Kingdom, Australia, France, Germany, Japan, China, Italy, Austria and South Africa.²³ In some of these countries, foreign students represent a much higher share of higher education enrollment in 2010 (15.7 percent in the United Kingdom, 21.2 percent in Australia, 11.6 percent in France).²⁴

There are three types of visas allowing foreign students to enter the United States, depending on the type of program and institution in which they enroll (see “Types of Foreign Student Visas”). The most common of these is the F-1 visa program. Introduced in the Immigration and Nationality Act of 1952, the program allows foreigners to study full-time at educational institutions in the United States.²⁵ This analysis focuses on F-1 visas for three reasons. First, F-1 visa holders represent 78.1 percent of all foreign students in 2012.²⁶ Second, the F-1 visa is used for a wide range of full-time academic programs including language training, test preparatory programs and associate’s, bachelor’s, master’s, professional and doctoral degree programs. Third, policymakers are considering changing the F-1 visa into a “dual intent” visa that would allow students studying for a bachelor’s degree or above a direct path to permanent residency with employer sponsorship.²⁷ These proposals are meant to streamline the current immigration system, which currently requires foreign students seeking permanent employment to apply for multiple temporary statuses such as the Optional Practical Training (OPT) program and the H-1B temporary worker program while waiting for a green card to become available.

As with other foreign student visas, there is no limit on the number of F-1 visas that can be issued annually.²⁸ However, national security policies that affect immigrant admissions to the United States cause fluctuations in the use of F-1 visas. The 1993 World Trade Center bombing by a terrorist in the United States on a student visa led to increased tracking of international students.²⁹ President Bill Clinton signed the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA) of 1996 into law as a reaction to these (and other) concerns to mandate new documentation, tracking and reporting of international students.³⁰

In the early 2000s, foreign students attracted scrutiny once again as one of the hijackers in the 9/11 terrorist attacks held a foreign student visa.³¹ In their aftermath, legislators contemplated proposals to deny international students access to sensitive courses and access to research projects funded by the federal government.³² In response to 9/11, the USA Patriot Act of 2001 and the Enhanced Border Security and Visa Reform Act of 2002 included provisions for expanding government electronic monitoring of foreigners in the United States and authorizing funds to maintain a new foreign student monitoring system.³³

The Student and Exchange Visitor Information System (SEVIS) became fully operational electronically in 2003 to track and monitor the status and activities of students on non-immigrant visas and exchange visitors that enter the United States.³⁴ SEVIS places the onus on educational institutions to keep abreast of foreign students’ academic progress, activities and any changes of address or course of study.³⁵ Congress requires all schools to use SEVIS to report whether their foreign students arrive on campus and are actually taking courses.³⁶ Schools also have to update foreign students’ files each term with information on whether they change their academic majors or if they fall behind in progress toward their degrees.³⁷

Process for Applying for F-1 Visa

The process for applying for an F-1 visa involves several steps, the first of which is to apply and get admitted into a SEVIS-certified school. Once admitted, the school becomes the sponsoring institution for a student visa and enters the foreign student’s information into the SEVIS database, generating a paper I-20 form to include in the student’s admissions packet. Once the prospective student receives I-20 form, she applies for a foreign student visa through the U.S. Embassy or consulate in her home country. During this step, the applicant is screened for security risks (terrorist, health or criminal), does not have a criminal record and does not meet any other inadmissibility criteria as outlined in the Immigration and Nationality Act of 1952. After the foreign student is awarded a visa, and upon her arrival into the United States, immigration inspectors confirm her SEVIS record and enter her arrival information into the SEVIS database.³⁸ The sponsoring school is then responsible for confirming that the foreign student is attending classes and must update SEVIS for any changes in her enrollment status, major, or any disciplinary actions.³⁹

Training and Work Programs

The F-1 visa is a non-immigrant visa that does not provide a direct path to permanent residency and has limited use for employment purposes. F-1 visa holders can seek temporary work authorization while a student through on-campus employment, off-campus employment because of severe economic hardship, a special student relief program and certain employment sponsored by international organizations.⁴⁰

Beyond these exceptions, two programs allow current and graduating F-1 visa holders to work for an off-campus employer: Curricular Practical Training (CPT) and Optional Practical Training (OPT).⁴¹ If the F-1 visa holder wants to receive work authorization for a longer period after graduation, they typically apply for an H-1B visa through their employer.

Through the CPT program, students on F-1 visas can work full-time or part-time while completing a degree program. Employment must be integrally related to an established curriculum, be in the student’s major field of study and be approved by the designated school official who coordinates with the employer.⁴² CPT participants are usually limited to working 20 hours or fewer per week during the regular terms, while full-time employment is usually authorized during the summer.⁴³ Graduate students in advanced candidacy status are typically allowed to work full-time during the regular term if employment is an integral part of their degree programs.⁴⁴ Students who enroll in full-time employment under the CPT program for more than 12 months would be ineligible to apply for optional practical training (OPT) post-graduation.⁴⁵

The OPT program allows F-1 visa holders to work full-time in the United States for up to 12 months (for non-science, technology, engineering and mathematics (STEM) degree holders) or 29 months (STEM degree holders) after receiving their U.S. bachelors, masters, or doctoral degree.⁴⁶ There is no limit on the number of OPT authorized per year, but the program requires approval by the foreign student’s school and the Department of Homeland Security. F-1 visa holders are eligible for this post-graduation work authorization after each successively higher degree program they complete.⁴⁷ This program was designed to be part of the educational process by providing practical work experience for recent graduates with F-1 visas to sharpen and add to the skills they learned in school.⁴⁸ In 2008, President George W. Bush extended the period of OPT for STEM students to help bridge the gap between OPT and pending H-1B visa petitions.⁴⁹ As of November 2013, there were an estimated 100,000 F-1 students using the OPT program.⁵⁰

The H-1B visa is a non-immigrant employment-based visa that allows employers to hire foreigners to work in specialty occupations on a temporary basis. Specialty occupations are defined as “requiring theoretical and practical application of a body of highly specialized knowledge and the attainment of a bachelor’s degree or higher (or its equivalent) in the field of specialty.”⁵¹ Visas are granted in up to three-year increments with the option to extend up to six years. Referred to as a “dual intent” program, the H-1B visa allows foreigners to work temporarily on a non-immigrant visa while taking steps toward permanent residency through employer sponsorship or other means.⁵² Visas are issued to employers on a first-come-first served basis with an annual H-1B visa cap set at 65,000, with an additional 20,000 visas for workers with advanced degrees from U.S. institutions.⁵³

This section explains the main data sources, key terms and methods used in this report. Further details are available in Appendix A.

I-20 Form Data on Foreign Students on F-1 Visas
The primary data source for this study is the I-20 forms generated by U.S. Immigration and Customs Enforcement (ICE). Those forms contain information from the Student and Exchange Visitor Information System (SEVIS) submitted by schools that foreign students attend under an approved F-1 visa from 2001 to 2012. Obtained through a Freedom of Information Act (FOIA) request, these data contain the student’s country of birth, country of citizenship, course of study and level of education, the institution code/name/location for where the student will study, estimated cost of term, means of support and home city and country.⁵⁴

Interpretation and Limitations of the F-1 Data
The F-1 visa approvals data are limited in several important respects. The first and foremost is that the SEVIS database contains records of every F-1 visa approved and the school is responsible for continually updating the database. Each incoming foreign student in F-1 status is represented by one record in SEVIS for the duration of their degree program. If the school does not update the information in the SEVIS database, there could be inaccuracies, though unlikely due to the high profile of national security concerns.⁵⁵ Second, a small proportion of F-1 visa approvals could be duplicates in the database if the foreign student violated the terms of an F-1 visa and re-entered the same school and program under a new SEVIS record after having left the country for a certain period of time. Third, F-1 visa approvals are for foreign students for one school and a specific degree program. If a foreign student continues to stay in the United States to pursue another degree program, even if this new degree program is at the same school, that student would be issued a new F-1 visa approval, creating the possibility of duplicates. Fourth, F-1 approvals could contain foreign students who were granted Optional Practical Training (OPT). Colleges and universities are responsible for entering information and monitoring the employment activities of F-1 visa holders who were approved for OPT, even if the new graduate no longer lives in the area.⁵⁶ Finally, the database has a field for the source of financing for each student’s expenses. The cost of attending the school, including tuition and estimated living expenses, is included for every F-1 approval in the dataset. These data are used to estimate the economic impact of foreign students on U.S. metropolitan areas. The data also include the student’s means of support and education financing (e.g., personal funds, scholarships, assistantships), but due to inconsistencies this report analyzes only data on costs.

Despite these constraints, the F-1 visa approval data remain the best available indicator of the universe of full-time foreign students coming to study in the United States. Each F-1 student record in the database measures the number of foreign students on F-1 visas entering per year, comprising the flow of incoming F-1 foreign students.⁵⁷ This differs from a stock measure of the foreign studen