Foreign students inject money into the Dutch economy

An increasing number of international students are choosing to live and work in the Netherlands after graduating, which means they also pay taxes. A new CPB report shows that, as a result, the costs of education and student finance are more than recouped.

This applies to both students from countries in the European Economic Area (EEA) and students from outside the EEA. The analysis also considers both students from research universities and universities of applied sciences. 

Around one in five European students are still living in the Netherlands five years after graduation. For students from outside Europe, the figure is around two in five.

Costs and benefits
In the short term, the arrival of international students has both advantages and disadvantages. They can help alleviate staff shortages, but they need somewhere to live and therefore exacerbate the housing shortage. In the long term, however, CPB researchers expect “no major effects on the labour and housing markets”, while international students can contribute to innovation and better international relations.

The Dutch government funds degree programmes and provides student financing for Dutch students and European students alike. These are substantial expenses: some international students study in the Netherlands for longer than others, but on average, the government pays 32,500 euros for a student at a university of applied sciences and 20,600 euros for a student at a research university.

However, these costs are recouped over the years. The CPB examines, amongst other things, the expenditure on healthcare and social security, weighing this against the returns and "retention rate". Ultimately, a European student at a university of applied sciences yields 13,000 euros for the treasury, while a European student at a research university yields 82,500 euros.

For students from countries outside Europe, higher education is not subsidised: they must pay the entire costs of their studies themselves. Therefore, these students are more profitable for the Dutch government when they stay, as anything they pay in tax is a profit for the government. Many of them start paying taxes during their studies, when they take side jobs. Those studying at universities of applied sciences yield an average of 117,000 euros for the Dutch state, while university graduates yield 243,000 euros.

Same conclusion reached previously
This is not the first time the CPB has reached this conclusion. The bureau had already reached a similar conclusion in 2012. At the time, politicians were grumbling that too many German students were coming to the Netherlands, while Dutch students were less inclined to study in Germany.

Halbe Zijlstra, then outgoing State Secretary, was pleasantly surprised by CPB’s calculation and revised his stance on international students. “We cannot ask other EU countries to pay for students who bring us economic benefits. That’s a difficult argument to make.”

A more positive view on migration
Since the world cannot be reduced to economic figures, the CPB also examines the "broader effects" of internationalisation. The researchers point out that English-taught degrees have their merits, but so do Dutch-taught ones.

According to the report, international students have no demonstrable effect on the academic success and employment prospects of Dutch students. “However, greater contact with international students appears to lead to more international social connections and a more positive attitude towards migration."

Brain drain
Another argument against internationalisation is that young people from countries in the Global South should use their talents for the benefit of their own countries. Staying in the Netherlands means a brain drain for their countries of origin. 

According to the CPB researchers, this can actually offer mutual benefits. Talented migrants can be more productive in more developed economies, and they can “partly compensate for the loss to their country of origin by sending money back to their families”. Moreover, those countries can also benefit from trade and from highly educated people returning home.