Sweden lost more than half of its non-EU foreign students in the year following the 2011 introduction of tuition fees, according to the report.
Several other EU countries give students a window of opportunity to find work after graduation. The report recommends that Sweden look into the same option in order not to deprive the Swedish labour market of well-educated employees.
“If this reform is possible politically speaking, I don't know,” Migration Board researcher Bernd Parusel told The Local.
"I can't issue a recommendation, just suggest they look into it."
The Migration Board also suggests that a student's spouse be able to work in Sweden.
Some parts of the visa process have already been simplified for students.
“We've made it possible to fill in the residence permit application online,” Parusel said.
Allowing foreign students to apply for Swedish residence permits at any European Union country's embassy or consulate could also be helpful, the report concluded, stressing the importance of closer cooperation within the EU to attract overseas students.
“In broad strokes, there are a lot of different rules across the EU countries,” Parusel told The Local.
The study will be officially presented at an EU conference on international students at the beginning of 2013.