International Students May Skip the US: Why That Hurts the Economy

Trump administration policy changes to the Department of Education could cost the American economy billions of dollars, largely through disrupted student loan repayment systems and a sharp drop in international student enrollment that industry estimates put at roughly $44 billion a year in lost revenue.

A Department in Retreat

Since Trump returned to office, the Department of Education has moved toward dissolving itself, a step that actually requires Congress to sign off. Shortly after the announcement in March 2025, the department said it would cut half its staff as part of what it called its final mission. That phrase alone tells you how far along this process is meant to go.

The plan calls for shifting management of the federal student loan portfolio to the Small Business Administration. The Health and Human Services Inspector General, tasked with government oversight, has already flagged a problem: the SBA cut its own workforce by 40% recently and, in the Inspector General's words, is not equipped to handle a loan portfolio of this size. The warning was blunt, predicting erratic and inconsistent management of loans that will prove costly to both borrowers and taxpayers.

Repayment Plans Stuck in Limbo

The Saving for a Valuable Education plan, known as SAVE, has spent months tangled in litigation, and a court recently upheld the block on the program. It still appears as an option on the Federal Student Aid website, but borrowers can no longer actually enroll in it. Roughly 8 million people already in SAVE are sitting in interest free forbearance, waiting for either a legal resolution or for servicers to figure out how to bill them the correct amount each month.

That uncertainty compounds a separate shift: collections on defaulted loans resumed on May 5, 2025, after being paused on and off since the pandemic began. Anyone who skips payments or fails to set up a plan risks wage garnishment starting this summer. More than 5 million borrowers currently in default are affected, and many of them may not even realize their loan servicer has changed since they last logged in.

Comparing the Moving Pieces

Why International Students Matter to the Economy

International students cannot tap federal student loans the way U.S. citizens can, which means they pay their own way, often at full price. That spending adds up. During the 2023 to 2024 academic year, these students pumped nearly $44 billion into the economy and helped support more than 378,000 jobs nationwide.

Since late March, more than 1,200 international students have had their visas or legal status revoked, part of a broader crackdown that has also touched campus free speech policies. If prospective students start viewing the U.S. as unwelcoming or unstable, they will simply enroll elsewhere, and the tuition dollars and job support that come with them will follow.

What Borrowers Can Do Right Now

For anyone repaying federal student loans amid this Trump student loan policy shakeup, the practical move is to keep records. Document every payment, particularly if you're on an income driven repayment plan, since servicer transitions can create gaps or errors in your history. Staying in contact with your servicer, confirming who that servicer actually is, and checking your account status regularly can help you avoid missed payments turning into wage garnishment.

How Much Will This Actually Cost the Economy?

Nobody has a precise dollar figure for what dismantling the Department of Education and destabilizing loan servicing will ultimately cost the country. The clearest number available, the potential $44 billion annual loss tied to international enrollment, is itself an estimate based on one academic year. Whether Congress approves the department's elimination, and how quickly the SBA can absorb loan servicing without the errors the Inspector General warned about, will determine how much of that cost becomes real.