Uncertainty, anxieties about doctoral programs

Summary

Marketplace Morning Report – "Uncertainty, anxieties about doctoral programs"

Date: July 27, 2026
Host: Kimberly Adams
Featured Guest: Toby Smith, Senior Vice President for Government Relations and Public Policy, Association of American Universities

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Episode Overview

This episode examines the state of U.S. doctoral program admissions amid rising uncertainties about federal funding and immigration policy. The team also discusses overall business sentiment as reflected in recent surveys, and covers economic news such as a rebound in durable goods orders. The main theme is the anxiety and uncertainty facing U.S. Ph.D. programs—a critical issue for American innovation, research, and competitiveness.

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Key Discussion Points & Insights

1. Business Confidence: Cautious Optimism Mixed with Inflation Worries

(00:31 – 02:16)

• The latest National Association for Business Economics survey shows nearly half of business respondents expect sales to increase in the next three months—a slight uptick from May.
  • “Almost half the survey respondents expect increased sales over the next three months and that is up slightly from the last survey in May.” — Nancy Marshall Ganzer (01:01)
• Fewer businesses are worried about a recession but inflation and rising costs remain top concerns:
  • Input costs are rising, including tariffs and energy. Labor costs are less of a driver.
  • “Tariffs, rising energy costs from the war, not really necessarily labor costs per se. That's not the main pressure, but sort of a broad menu of rising costs.” — Julia Coronado (Guest, cited by Nancy Marshall Ganzer, 01:30)
• Two-thirds of businesses have seen material costs rise; almost as many expect this trend to continue.
• Many businesses are passing these costs to consumers:
  • Nearly two-thirds raised prices; 40% did so in just the last three months, the highest since Oct 2024.

2. Economic News Update

(02:21 – 02:55)

• Durable Goods Orders:
  • Strong rebound in June (+3.1%, ≈$335 billion) after a drop in May (-4%).

3. Decline in Doctoral Program Admissions

(04:26 – 08:34)

• Ph.D. admissions in the U.S. down 15% year over year (according to Association of American Universities).
• Key drivers:
  • Federal funding uncertainty: Ongoing policy instability under the Trump administration is leading universities to scale down Ph.D. program capacity.
  • International student applications: Down by 21%. This is partially attributed to stricter immigration policies and a less welcoming national climate.
    • “The rhetoric and policies also are making it seem less welcoming for foreign students to come here.” — Toby Smith (05:15)
• Importance of international students:
  • “Over 50% of the top AI companies in the country were started by foreign-born founders who came here [for their PhDs]. Likely many of them studied at our university, stayed and they started companies that are now employing and driving critical areas for national defense.” — Toby Smith (05:29)
  • Other countries, including China, the UK, Canada, and Australia, are competing for this talent.
• Domestic Trends:
  • A small 3% increase in U.S. citizen applications, but reduced admissions capacity means more are turned away.
  • “With the reduction in the capability to support those students, they are not necessarily getting admitted to programs, which worries us greatly.” — Toby Smith (06:45)
  • A “stacking effect” occurs as existing grad students remain longer due to disruptions, reducing slots for new entrants.
• Recovery Outlook:
  • Recovery will take time even if funding becomes stable; some programs have already been eliminated.
  • “It's going to be a while, I think, for us to rebound... I think regaining that attraction and being the place where everyone wants to come and study, it's going to take several years for there to be trust regained...” — Toby Smith (07:46)

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Notable Quotes & Memorable Moments

• On Inbound Talent's Long-term Value:
  “Over 50% of the top AI companies in the country were started by foreign-born founders who came here.”
  — Toby Smith (05:29)

• On International Student Deterrence:
  “The rhetoric and policies also are making it seem less welcoming for foreign students to come here.”
  — Toby Smith (05:15)

• On Schools’ Difficult Path to Recovery:
  “It's going to be a while, I think, for us to rebound... for there to be trust regained that this is the place where everybody wants to come and work.”
  — Toby Smith (07:46)

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Timestamps for Important Segments

• 00:31 – U.S. business climate and economic survey (start of main content)
• 01:30 – Inflation and its drivers for businesses
• 02:01 – How businesses are responding: passing on costs
• 02:21 – Durable goods orders rebound
• 04:26 – Drop in PhD admissions, start of main segment on doctoral programs
• 05:15 – Why international student numbers are down
• 06:20 – Where international students are going instead
• 06:45 – Domestic student trends and admissions “stacking”
• 07:46 – How long recovery might take

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Summary Flow & Tone

The episode maintains Marketplace’s signature brisk, informative style—focusing on data-driven analysis and succinct expert interviews. The tone is concerned but not alarmist, highlighting both challenges and small positive spots (e.g., modest growth in domestic applications). The policy uncertainty and its impacts on both business and higher education form a throughline, underscoring the fragility of America’s competitive edge in research and innovation.

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For Further Reading

• Listeners are encouraged to check out Marketplace’s economic newsletter (Marketplace.org/newsletters) for daily insights.

Transcript

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[Kimberly Adams]

check in on how businesses are feeling and what that means for their customers. From Marketplace in Washington, I'm Kimberly Adams. The national association for Business Economics released its latest survey on business conditions today. It's a Pulse check, a quarterly questionnaire for business owners and members of trade groups. Marketplace's Nancy Marshall Ganzer had a look and joins me now with more. Good morning, Nancy.

[Nancy Marshall Ganzer]

Good morning.

[Kimberly Adams]

So the survey out this morning paints a picture of cautious optimism. Can you explain?

[Nancy Marshall Ganzer]

Yeah. Almost half the survey respondents expect increased sales over the next three months and that is up slightly from the last survey in May. Fewer businesses expect their sales to drop sharply and one reason for that, they're less concerned about a recession, but they are very worried about inflation. Kimberly, I talked to Julia Coronado about what's behind behind that. She is founder and president of Macro Policy Perspectives and a professor at the University of Texas, Austin.

[Rima Reyes]

Tariffs, rising energy costs from the war, not really necessarily labor costs per se. That's not the main pressure, but sort of a broad menu of rising costs.

[Nancy Marshall Ganzer]

About 2/3 of the survey respondents said the cost of the materials they buy rose over the past three months and they expect materials cost to continue going up over the next three months.

[Kimberly Adams]

And are they passing those higher costs on to their customers?

[Nancy Marshall Ganzer]

Yes, they are. Nearly 2/3 of the survey respondents say they have raised prices at some point to offset at least some of their higher costs. 40% of them hiked prices just over the past three months and that is the biggest share since October of 2024.

[Kimberly Adams]

Marketplace's Nancy Marshall Genser. Thank you, Nancy.

[Nancy Marshall Ganzer]

You're welcome.

[Kimberly Adams]

Orders for durable goods, things like cars, furniture and home appliances rebounded in June, according to from the Census Bureau. It shows orders were up 3. 10%, about $335 billion. That's after there was a 4% decrease in May.

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podcast is supported by Raymond James, a financial firm offering wealth management, banking and capital market services that are inspired by people before Raymond James Financial Advisors build plans. They build relationships so they can craft individual strategies designed to achieve priorities and pursue what's possible. That's the power of personal [e-mail] Raymond James and Associates, Inc. Member NYSE SIPIC There are fewer students

[Kimberly Adams]

trying to get advanced degrees in the United States. The number admitted to PhD programs this coming fall dropped by 15% from last year, according to the association of American Universities Data Exchange. That's partly due to the uncertainty of federal funding under the Trump administration causing universities to reduce the size of their programs. But it's also due to a sharp drop in the number of international students applying to Ph.D. programs in the U.S. those applications were down 21% this year. For more on this trend, I'm joined by Toby Smith, senior Vice President for Government relations and Public Policy at the association of American Universities. Good morning.

[Toby Smith]

Good morning. It's great to be here.

[Kimberly Adams]

There's been that drop in applications from international students. What explains that shift?

[Toby Smith]

What has happened historically is we've attracted the best and brightest students from around the world not only come here, but they often come here. They want to stay and they manage to stay, but the immigration policies that are being put in place is going to make that harder. The rhetoric and policies also are making it seem less welcoming for foreign students to come here. The concern we have with that is if you look and I'm just going to use artificial intelligence, one of the areas that's very important. There are some studies that show that over 50% of the top AI companies in the country were started by foreign born founders who came here. Likely many of them studied at our university, stayed and they started companies that are now employing and driving critical areas for national defense. And we also know that other countries are instituting new programs to take advantage and attract talent their way. In light of the fact that less is coming to the US where are

[Kimberly Adams]

most of these doctoral students that maybe previously would have come to the US going instead?

[Toby Smith]

Well, certainly China is a big rival. So there's a. They've had programs in place to try and attract that talent. But certainly other countries, we know that the uk, Canada, Australia, they're all trying to attract that talent their direction.

[Kimberly Adams]

So we know we are getting fewer international students for doctoral programs. But what's happening domestically?

[Toby Smith]

So there, there was good news in terms of what the Audi data showed. There's actually a 3% increase in applications from domestic students, US citizens. A concern though is that with the reduction in the capability to support those students, they are not necessarily getting admitted to programs, which worries us greatly. And one of the other things is stacking effect. Graduate students in the system had to be switched. They'll be in the system longer because they were working on research that was on a grant for an advisor who had that grant terminated. They had to be moved. So they're working on their research for another year or two. That takes the slot of somebody coming in, makes it harder and has been one of those things that has driven declines in admittance rates.

[Kimberly Adams]

Let's say federal funding gets more stable or is even restored in either this administration or the next. How quickly would you say universities could bounce back from these cuts?

[Toby Smith]

The problem is there are real programs that are being reduced, degree programs that are being eliminated. So it's going to be a while, I think, for, for us to rebound on the topic of international students. I think regaining that attraction and being the place where everyone wants to come and study, it's going to take several years for there to be trust regained that that this is the place where everybody wants to come and work because of the change policies and how quickly the policy change is also unclear. And much of that will depend on just future elections and where the country goes.

[Kimberly Adams]

Toby Smith is Senior Vice President for Government Relations and Public Policy at the association of American Universities. Thank you.

[Toby Smith]

Thank you. Thanks for having me.

[Kimberly Adams]

Read our take on the economic news of the day in our daily newsletter. You can sign [e-mail] newsletters in Washington, I'm Kimberly Adams with the Marketplace Morning

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