Germany recovers an 8x return on investment in international students

A new analysis from the German Economic Institute (IW), and commissioned by the German Academic Exchange Service (DAAD), has determined that "every year of international students contributes around eight times more to the revenue of public budgets in the long-term than the state invests in them."

IW concludes that Germany recovers its investment in educating and supporting international students in German higher education. If 40% of the foreign student cohort remains in the country after graduation, their taxes and other contributions to the German economy will cover the costs of their education within three years of graduation. If that retention rate remains stable over time, that means that each new cohort of students contributes a net of €15.5 billion over their lifetime. "Even with a retention rate of only 30%, income would exceed expenditure by €7.4 billion in the long term," adds IW. "If 50% of a cohort were to remain in Germany in the long term, the surplus would even amount to €26 billion."

"Investing in the education of international students strengthens the skilled labour base and thus economic growth in Germany in the long term. They help to overcome the challenges of demographic change. In addition, the investments are highly profitable from a public sector perspective and strengthen public budgets in the long term," said IW Director Prof Dr Michael Hüther.

"The new IW study impressively demonstrates the economic importance of international students for Germany," added DAAD President Dr Joybrato Mukherjee. "Although most universities do not charge tuition fees, international students make significantly higher contributions to our society over the course of their working lives than Germany invests in their studies and beyond. International students are an asset to our country in many ways, academically of course, but also economically."

Germany has seen steady growth in its foreign enrolment in recent years. DAAD estimates that there are currently 405,000 international students in the country, and 65% of students responding to a recent survey said that they intend to stay in Germany after graduation. The OECD has recently reported as well that Germany has the highest retention rate of international students among leading study destinations (together with Canada). The OECD reports that ten years after starting their studies, 45% of foreign graduates are still in the country.

For additional background, please see:

• "Germany projected to exceed 400,000 international students in 2024/25"
• "Beyond the Big Four: How demand for study abroad is shifting to destinations in Asia and Europe"