And the problem isn't just money, it's quality of life of grad students. The reason Michio's students are all foreign is because of the horrible working conditions of PHD students. He and his fellow professors are part of the problem.
As somebody who was in an american PhD program, lemme just say that these programs are basically sweatshops and exploitation facilities similar to the medical residency programs. An environment where 80hr work weeks are the norm, and PHD applicants are indentured servants making less than minimum wage. Fix this and you will have more native PhD applicants.
I'm not even kidding , but a bunch of PHD candidates are legitimately suicidal because of the sht work conditions, especially in stem. I remember doing 86 hours of work in my lab in addition to mandatory teaching + 16 hrs TA work and only getting paid a 24k stipend for my labor. I Sat there wondering to myself why am I doing this, effectively being paid less than minimum wage?
It was not uncommon for candidates to leave campus to go home and get into car accidents because of sleep deprivation.