As Trump targets varsities, Raghuram Rajan warns US of long-term economic risks from curbing foreign students
Former Reserve Bank of India Governor Raghuram Rajan has raised serious concerns about the long-term consequences of US political hostility toward universities and foreign students. In an interview with Bloomberg TV, Rajan warned that targeting international student pipelines — as seen in the Trump administration’s recent actions — could erode a key foundation of America’s global economic leadership.
Rajan pointed out that many transformative tech companies in the US have roots in international education. “The Sergey Brins of the world came as students and did wonders for the US economy,” he said, referring to the co-founder of Google. “Universities haven’t made the case that they are so central to US growth, but also central to the distribution of that growth.”
Trump targets universities and endowments
The former RBI chief’s warning comes amid a rising political standoff between elite academic institutions like Harvard and Columbia and former US President Donald Trump. Initially spurred by campus debates over antisemitism, the clash has expanded to include attacks on university endowments and foreign student policies.
On Tuesday, the Trump administration ordered US embassies to halt scheduling interviews for student visas, signaling a push for stricter scrutiny of applicants’ social media. This move is widely seen as part of a broader political agenda to clamp down on immigration and perceived elite institutions.
Job growth at risk, says Rajan
Rajan, who now teaches at the University of Chicago Booth School of Business, cautioned that cracking down on foreign students could also stifle domestic job creation. He cited companies like Alphabet Inc., which employ thousands thanks to immigrant-founded roots and ongoing global talent recruitment. “It’s an environment which is inhibiting the ultimate production that the universities contribute to the US economy,” he noted.
Student visa clampdown could backfire
International students make up a vital portion of the American higher education population. In the 2023–2024 academic year, over 1.1 million foreign students attended US universities — with India and China leading the numbers. These students not only bring diversity and talent but also significant financial contributions through tuition and living expenses.
Rajan drew a sharp analogy between investor behavior and international students’ decisions. “If uncertainty increases, you tend to either postpone the investment or take it to a place where things are more certain,” he said. With rising restrictions and a hostile political climate, the US risks pushing future innovators to countries with more welcoming policies.