Curbing Foreign Students Could Cripple US Innovation, Warns Raghuram Rajan
Former Reserve Bank of India Governor Raghuram Rajan has warned that the long-term health of the US economy could be at risk if political factors continue to weaken the flow of international students to American universities.
Speaking in an interview with Bloomberg TV on Wednesday, Rajan stressed that international students have historically been vital to US innovation and economic dominance. He cautioned that current immigration and education policies may jeopardize this strategic advantage.
“The Sergey Brins of the world came as students and did wonders for the US economy,” Rajan said, referencing the Google co-founder. “To some extent, the problem is the universities haven’t made the case that they are so central to US growth, but also central to the distribution of that growth.”
Raghuram Rajan, a professor of finance at the University of Chicago Booth School of Business, warned that restricting the flow of international students could hinder job creation in the US. He pointed out that companies like Google, a subsidiary of Alphabet, employ thousands of people, thanks in part to talent pipelines built through immigration.
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Student Visa Concerns
Rajan's concerns center on the escalating tensions between the White House and US universities, a clash that began with elite institutions such as Harvard and Columbia over antisemitism, but has since broadened into a wider critique of the role of higher education in the US On Tuesday, the Trump administration intensified the dispute by directing US embassies around the world to pause student visa interview scheduling as it considers tighter scrutiny of applicants’ social media activity.
“It is not a great environment,” Rajan said, pointing to growing anxiety among academics and university administrators about visa security and potential political retaliation. “It’s an environment which is inhibiting the ultimate production that the universities contribute to the US economy.”
International students made up 5.9 per cent of the nearly 19 million students enrolled in US higher education during the 2023–2024 academic year. Over 1.1 million foreign students came to the US, with India leading the way, followed by China.
Rajan also compared the choices facing international students to the investment decisions businesses make amid uncertainty. When uncertainty rises, you either delay the investment or move it to a place where things are more stable, he added.
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