"Don't hire our own students, because those foreigners are cheaper.
It's true, at many foreign universities you can get students who are just as qualified but usually aren't weighed down by the massive tuition burdens american students are. Take for example the University of Tokyo, one of the top 20 univerities in the world, and the annual tuition is only ~$6,000. Under circumstances like that, why would anyone hire an american student, who often has several times that amount which leads to crushing amounts of debt from student loans?
You do realize that international students are paying tuition like everyone else, right? (Possibly even higher tuition.)
I'm not so sure they were referring to foreign students in the US, I think maybe they were referring to foreign students studying in their own countries.
EDIT: I'll also add that the international students who study in america generally don't pay their own way, either their families pay for it upfront or, in the case of many students from developing countries, they got scholarships (either from their country's government or the university). Either way they don't normally go into debt to pay it off, leaving them with a huge advantage over their american counterparts.