Moody’s Warns of Credit Risk for Colleges Reliant on International Enrollment
07/03/25
As the president’s campaign against international students persists, the ratings company says that certain institutions, especially those already operating on slim margins, may face financial consequences
Just over one in 10 higher education institutions enroll at least 20 percent international students.
Colleges and universities with a high percentage of international students face a credit risk as the federal government continues to target international students, according to a
new report from Moody’s Ratings.
Those most at risk include the 11 percent of American institutions where international students make up more than 20 percent of the student body, the ratings agency said, as well as institutions that are already struggling financially. (In total, 6 percent of students at U.S. institutions come from other countries.)
“The reduction in international students presents a credit risk for universities heavily reliant on this demographic because of potential declines in tuition income, as international students typically pay full tuition fees,” the report states. “Additionally, with declining numbers of high school students over the next several years in the U.S. leading to fewer domestic students, universities intending to fill the gap with more international students may fall short.”
The report follows the Trump administration’s months-long attack on immigrants and international students specifically, which began with the sudden removal of thousands of students from the Student Exchange and Visitor Information System, putting their legal status at risk. Since then, the administration has
implemented a travel ban that includes 12 countries, prohibiting students from those countries from studying in the United States, and has targeted international students at Harvard University specifically, attempting to end the university’s ability to host international students. The State Department has also
increased scrutiny into student visa applicants’ social media presences.
It’s unclear as of yet how those factors will impact international enrollment in the fall. According to a
recent report by the Institute of International Education, an approximately equal number of colleges and universities said they expected their international enrollment in the 2025–26 academic year to increase (32 percent), decrease (35 percent) and stay the same (32 percent) from this year’s numbers. But the percentage who expect a decrease was much higher than last year, when only 17 percent of institutions thought they might lose international students.
The hit to the sector may not be as significant as it would be in countries like the United Kingdom and Australia, where about 25 percent of all students are international, Moody’s reported. Still, if the U.S. lost 15 percent of its international student population, a substantial number of colleges could experience at least moderate financial repercussions, according to one projection.
About one in five colleges’ and universities’ EBIDA (earnings before interest, depreciation and amortization) margins would shrink by 0.5 to two percentage points, according to the ratings agency’s calculations.
“For entities that already are under fiscal stress and have low EBIDA margins (the median EBIDA for private nonprofit colleges and universities was 11.7 percent in fiscal 2024 and 10.7 percent for publics), a change of one or two percentage points could push them into negative territory, especially if they are heavily discounting domestic tuition or losing enrollment because of demographic shifts,” according to the report. “Also, many small private schools may need to contend with federal changes to student loan and aid programs, further depressing domestic enrollment prospects and stressing budgets, especially for those with low liquidity.”
The report stresses that this model does not account for any steps the institutions might take to mitigate those losses—especially at wealthier institutions. (Fifty-four percent of institutions with at least 15 percent international students are highly selective, while 25 percent are nonselective.)
“Institutions that are highly selective, or those with considerable reserves, may better absorb the impacts by adjusting operations or increasing domestic enrollment,” it states. “Some elite institutions are less reliant on tuition, deriving income from endowments, fundraising or research, thereby mitigating the financial impact
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