Last week, the Trump administration announced that it plans to charge US employers a $100,000 fee for every international student they hire after graduation. If implemented, the fee would significantly advance the administration’s ongoing efforts to restrict legal immigration to the US. The theory is that this combined with their previous policy changes will help American students find jobs by limiting competition. In reality, these changes will increase the cost of higher education for US students, limit their long-term job prospects, and reduce innovation and entrepreneurship in our country. Here is my reasoning.

A policy that says, 'We don’t want you here'

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The new policy announcement is consistent with several other efforts to make it much more difficult for foreign students to study in the US. Consider the recent string of policy changes:

  • Ended “duration of status” for student visas — F-1 and J-1 visa holders are now limited to four years rather than being permitted to remain for the length of their academic programs. This makes it more difficult for foreign undergraduates to transition into postgraduate programs in the US.
    • Restricted academic flexibility — New rules make it much more difficult for foreign students to change majors, transfer schools, or participate in extended academic programs.
      • Expanded security screening — Student visa applicants are now subject to enhanced screening, including mandatory inspection of their social media profiles and political expression.  They can also experience difficulties reentering the US after a visit home.  
        • Arbitrary student visa termination — The administration has aggressively revoked previously issued student visas without adequate explanation or due process. Although some of these decisions have been overturned in court, most foreign students lack the financial resources to challenge the decision.
          • Country-specific restrictions — Presidential proclamations have periodically suspended student visas entirely for nationals of certain countries, citing national security concerns. However, some of these decisions appear to be connected more closely to trade policy and other unrelated issues, leaving foreign students with even greater uncertainty.

             And it's working 

            These policy changes are causing international buyers of US education to question whether studying in the US is worth the risk. Fifty-nine percent of US colleges report receiving significantly fewer international applications for the 2026–2027 academic year. In fall 2025, new international enrollment had already dropped by 17%, and 35.6% fewer student visas were issued. The decline among Indian students is especially noticeable.

            The best and brightest students are still receiving an education—just not in the US. International education outside the US is booming, with increases of more than 20% in student applications. We have seen this firsthand at Cofounders Capital: the CEO of one of our higher-education portfolio companies decided to stop selling to US universities and focus almost exclusively on international institutions. 

            Long-term effects 

            Although simple answers to complex problems are appealing and easy to grasp, they are almost always wrong. The real cost of these policy changes will be felt across many fronts for at least the next decade. 

            • Fewer entrepreneurs: Studying in the US has long provided a legitimate, merit-based pathway to citizenship. The most talented international students compete for admission to the best US universities. If they excel, they often remain for advanced degrees and are invited to contribute to graduate research projects, especially in STEM fields. At Cofounders Capital, most of the entrepreneurs we meet are students or recent graduates. There is something about a bright, young, expanded mind that gravitates toward entrepreneurship, hard work, and risk-taking. The Kauffman Foundation reports that one in four US entrepreneurs is an immigrant. Immigrants make up about 14.5% of the US population but account for roughly 25% of our startup founders, especially in science and engineering. Even more striking, 55% to 59% of US unicorns—startups valued at more than $1 billion—have at least one immigrant founder. If you want to encourage entrepreneurship in the US, the last thing you should do is restrict the most proven legitimate pathway through which a quarter of our best entrepreneurs arrive here.
              •  Stifled innovation: Entrepreneurs are the lifeblood of American innovation. Our belief in capitalism and venture investing has attracted and supported entrepreneurs from around the world, encouraging them to bring their innovations, technologies, ideas, patents, talent, startups, and jobs to the US. In short, much of American innovation comes not from large corporations but from startup entrepreneurs that are born or migrate here. Although foreign students make up only 6% of the overall university population, they represent up to half of enrollment in STEM-focused graduate programs. Massive cuts to research and SBIR grants, combined with policies that prevent some of our brightest students from participating in research, amount to a one-two punch in the face to American innovation. It is not our ability to manufacture at the lowest cost that drives the US economy; it is our technology. If you want to keep America great and the technological envy of the world, the last thing you should do is limit our educational system or diminish what attracts innovators to our shores.
                •  Higher education costs and student debt: Whatever thinking went into the current policy changes, it did not adequately account for the economics of US higher education. Unlike most in-state students, foreign students typically pay full tuition—often two to three times what domestic students pay. At research universities, foreign students contribute 15% to 30% of tuition revenue, a total contribution of $42.6 billion to the broader US economy. As their numbers decline because of recent policy changes, American students may be forced to pay billions more in tuition to make up the shortfall, adding to the student debt crisis. If you want to keep higher education affordable, the last thing you should do is turn away students willing to pay several times the average in-state tuition rate.
                  • Fewer available jobs: The Trump administration claims that these policies will make it easier for American students to find work. There may be some short-term truth to that claim if US employers are forced to lower their expectations to a smaller pool of qualified candidates. In the long run, however, the opposite is likely to occur. Because international students are more likely to study science and technology and more likely to start companies here, they disproportionately create jobs for the next generation of US graduates. Today, more than half of Fortune 500 companies are led by first- or second-generation immigrant CEOs. We see the same dynamic at a smaller scale in our early-stage venture fund in the Triangle, where nearly half of our startup founders are first- or second-generation immigrants. Even our relatively small fund has invested in dozens of local startups that now employ thousands of workers. Consider the implications: many founders are students or recent graduates; many are first- or second-generation immigrants; and many originally came here on student visas.  Most future unicorn employers will be founded by an immigrant. Every job in the US was ultimately created by someone whose family lineage includes immigrants. If you want to create more jobs in the US, the last thing you should do is cut off one of the principal legal pathways through which future job creators enter the country.

                    Conclusion

                     I am sure there are stated reasons for these damaging policies, but none can legitimately include growing the US economy, creating more jobs for Americans, keeping higher education accessible and affordable, fostering innovation, or maintaining our country’s technological global leadership. These policies amount to an unforced error that will impose incalculable costs for many years to come.