Germany’s migration debate currently revolves mainly around restriction, control and return policies. At the same time, the country is trying to facilitate skilled immigration and persuade international graduates to stay. A new study by the German Economic Institute (IW) shows why this distinction matters economically: International students initially cost the state money — but over the long term, they may contribute considerably more than they receive.
81,800 students — and a €23.1 billion surplus
The analysis focuses on the international student cohort that began studying in Germany in 2023. Around 116,600 people from abroad started university that year. Of these, approximately 81,800 were enrolled in degree programs with the intention of obtaining a German university qualification, while around 34,800 were primarily exchange or visiting students.
For those 81,800 students, the German Economic Institute estimates a direct contribution to economic value added of almost €127 billion over the course of their working lives. For public finances, the model calculates a long-term positive balance of around €23.1 billion.
The calculation includes factors such as the cost of university places, future tax payments, social-security contributions and public benefits received later in life.
Particularly striking is the point at which the initial public investment is expected to pay off. According to the model, just two years after graduation, the taxes and social-security contributions paid by the former students would already exceed the person-specific public expenditure they had received up to that point, including the cost of their largely tuition-free university education.
However, the figure is not quite as straightforward as it first appears.
If the IW also includes additional non-person-specific government expenditure associated with a larger population — such as additional transport infrastructure — the long-term surplus falls from €23.1 billion to around €18 billion. The break-even point then shifts from two to three years after graduation.
Even under this more conservative scenario, the balance remains clearly positive.
A university place does not automatically become a skilled worker
The decisive factor is not simply how many international students come to Germany. It is how many graduate and subsequently remain in the country to work.
The IW therefore attempts to estimate how an international student cohort develops through to the end of working life.
According to its analysis, around 59 percent of the international students examined are still living in Germany up to nine years after arrival. Roughly three quarters of this group obtain a university degree.
From this, the institute concludes that about 45 percent of an incoming cohort are available to the German labor market as academically qualified workers after completing their studies.
Some still leave the country later. The IW estimates that roughly three quarters of those graduates who initially remain will stay in Germany permanently. Across the original cohort, this results in an estimated 34 percent who could remain in Germany as academically qualified workers until retirement.
Put differently, out of 1,000 international students starting university, the model expects around 340 to remain in Germany long term as highly qualified employees. About 280 are assumed to leave during their studies, another 270 around graduation and 110 in subsequent years.
The figures therefore show not only what Germany gains. They also reveal how much potential the country continues to lose.
A solid data base — but still a model of the future
That distinction matters when interpreting the multibillion-euro figures.
The study does not show that the 2023 cohort has already generated €23.1 billion for Germany. It models future employment biographies under a series of assumptions.
One of the main sources for the retention analysis is Germany’s Microcensus. Around one percent of the population is surveyed regularly; in 2022 the sample included about 975,000 people, according to the IW. Because participation is generally compulsory, non-response rates are comparatively low.
The dataset allows researchers to differentiate by education, employment, income and migration background, among other characteristics.
The results were also compared with analyses based on Germany’s Central Register of Foreign Nationals. Earlier studies using that database found that around 45 to 46 percent of international students from non-EU countries were still in Germany ten years after arrival. The datasets do not measure exactly the same groups, however, and cannot be compared directly.
There is another factor worth disclosing: The study was commissioned by the German Academic Exchange Service, or DAAD, whose mission includes promoting international academic mobility.
That does not invalidate the analysis. But the study’s policy recommendations should be distinguished from the underlying data.
Migration is not one single economic category
The study arrives amid a political debate in which very different forms of migration are often grouped together.
Germany’s federal government is currently pursuing two objectives at the same time. Irregular migration and asylum-related migration are to be reduced and more tightly controlled. Skilled labor and educational migration, by contrast, are being facilitated: Procedures are to be accelerated, qualified workers are to gain easier access, and international students are to be encouraged to remain in Germany after graduation.
From an economic perspective, that distinction is significant.
International students do not generally require lengthy procedures to establish whether foreign qualifications are equivalent to German ones. Those who complete a bachelor’s degree, master’s degree or doctorate in Germany leave university with a German qualification. They have also already spent several years in the country, often developed professional contacts and had time to learn the language and understand the labor market.
Higher education can therefore function as an upstream recruitment channel for skilled immigration.
Germany needs immigration despite a weak economy
The relevance of this becomes clearer when looking at Germany’s labor market.
Despite the weak economy, the Federal Employment Agency still identified 157 occupational groups with skilled-labor shortages in 2025. Around half of all registered vacancies were in shortage occupations.
At the same time, the proportion of foreign employees working in these occupations has doubled since 2014, from seven to around 14 percent. The agency expects immigration to become even more important as the baby-boomer generation retires.
That does not mean international university graduates can solve Germany’s entire labor shortage.
Many of the occupations facing the most severe shortages are in nursing, skilled trades, construction, childcare, hospitality and road transport — fields that do not necessarily require a university degree.
University-based educational migration can therefore address only part of the problem.
It is particularly relevant, however, for highly qualified jobs in research, engineering, technology and knowledge-intensive services.
In a separate trend projection, the IW estimates that Germany could face a shortage of around 723,000 skilled workers by 2029 if recent developments continue. The institute explicitly stresses that this is not a forecast, but a projection based on existing trends.
Germany attracts students — but does not keep all of them
Germany is not currently struggling to attract international students.
According to a rapid survey conducted by the DAAD, around 420,000 international students and doctoral candidates are expected to be enrolled at German universities in the 2025/26 winter semester — more than four percent higher than a year earlier.
The DAAD estimates that around 99,000 international students newly enrolled, an increase of nine percent year on year. The projection is based on responses from 212 universities representing around 78 percent of all international students in Germany.
The more important question, therefore, is why so many leave again despite relatively favorable starting conditions.
Among universities surveyed by the DAAD, 79 percent cited difficulties with entry and visa procedures as a relevant obstacle. Seventy-one percent pointed to a shortage of affordable housing, while 63 percent identified the cost of studying and living as a problem.
Language barriers, social integration and the transition from university into employment also play a role.
At this point, Germany’s migration debate takes an unusual turn.
For this particular group, the main question is not how to limit migration. It is how to persuade people who already live in Germany, obtain German qualifications and are needed by the labor market to remain in the country.
More educational migration also creates new risks
An uncritical conclusion that “more international students are always better” would be too simplistic.
Germany’s Expert Council on Integration and Migration warned in May about the downsides of liberalized educational and labor migration rules. Reports of heavily indebted international students, precarious employment and misuse of student residence pathways have increased.
If studying becomes primarily a route into poorly paid employment, liberal access rules can also make exploitation easier.
Dropout rates are another issue.
According to available university data, 15.7 percent of international bachelor’s students who began in 2020 had already dropped out within the first three semesters. Among master’s students, the figure was 9.2 percent.
Comparable official data covering the entire duration of study are not yet available. The IW considers an overall dropout rate of roughly 25 to 30 percent plausible.
Expanding educational migration therefore requires more than simply providing additional university places. Preparatory programs, language training, academic support, affordable housing and a functioning transition into regular employment are equally important.
The migration question is not only about numbers
The study does not settle Germany’s broader migration debate. Refugee migration, family reunification, labor migration and international educational migration differ too fundamentally for that.
But it demonstrates why the total number of migrants says relatively little about their economic impact.
International students initially represent an investment for the state. Universities cost money, higher education is largely tuition-free and not every graduate remains in the country.
At the same time, Germany occupies an unusually favorable position. Hundreds of thousands of young people voluntarily choose its universities, spend several years in the country and acquire qualifications that can be used on the German labor market without additional recognition procedures.
Even under the more conservative calculation that includes additional public infrastructure costs, the IW expects a long-term fiscal surplus of around €18 billion from a single incoming cohort.
The policy challenge therefore does not begin and end at the border.
It also begins at universities, in the housing market, in language courses, at immigration offices and with the first employment contract.
Germany already has part of the skilled workforce for which countries around the world are increasingly competing.
The question is how many of those people will still want to be there after graduation.
SK
