Editor in chief at IamExpat Media
Every year, tens of thousands of international students come from abroad to study in Germany. Far from being a drain on the country’s finances, a new study has found that these foreign students actually provide a multi-billion-euro boost to the German economy, since so many of them remain in the federal republic after graduating.
Over the long term, each new cohort of foreign students in Germany contributes around eight times more to the revenue of public finances than the state invests in them. This is the primary finding of a study conducted by the German Economic Institute (IW) on behalf of the German Academic Exchange Service (DAAD) that was released this month.
According to the report, the approximately 80.000 international students who were due to graduate from German higher education in 2022 will pay almost 15,5 billion euros more in taxes and duties over the course of their lives than they will receive in benefits from the German government.
This figure is so high because the retention rate of international students in Germany is exceedingly high in international comparison. Indeed, a recent OECD found that Germany currently has the highest retention rate of international students in the world, together with Canada, with 45 percent of foreign students still living in the country 10 years after starting their studies.
However, even with a lower retention rate, international students would still bring a net gain to the country. If the retention rate fell to 30 percent, income would still exceed expenditure on international students by 7,4 billion euros in the long term.
International students don’t even need to remain in Germany for as long as 10 years to bring an economic benefit: the IW study found that if 40 percent of each year’s foreign student cohort remained in the country after graduation, their taxes and contributions to social security would cover the cost of their tuition fees and other government investments in higher education after just three years.
"The new IW study impressively demonstrates the economic importance of international students for Germany. 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," said DAAD President Joybrato Mukherjee in a press release.
Noting that if the retention rate of international students was increased to 50 percent, it would bring the budget surplus as high as 26 billion euros, the DAAD is calling on the government to attract as many international students as possible to Germany by offering an attractive range of scholarships for international students, forging close cooperation between universities, companies and policymakers, and providing a welcoming environment.
"We must provide international students who familiarise themselves with Germany during their studies and want to stay here after graduation with the best possible support in starting a career," said Mukherjee.