Donald Trump is expected to impose restrictions on programs that help non-citizen MBAs after graduation. edweek.org
Thirty-six million Americans have sought unemployment aid since the start of the coronavirus pandemic. That number continues to climb even as some states “reopen” — and even as the Covid-19 outbreak that has killed tens of thousands continues to ravage the country.
As he grasps for a way to mitigate the economic damage, U.S. President Donald Trump is reportedly considering suspension of a program that business schools increasingly have turned to as a lifeline amid declining international student enrollment and plummeting applications overall. When Trump formally suspended most legal immigration in a presidential proclamation April 22, he promised action within 30 days — by May 22. A week after his proclamation, on April 27, Trump’s acting Homeland Security Secretary Chad Wolf said in a radio interview that the Optional Practical Training program — by which hundreds of thousands of foreign workers, including thousands of MBAs, are allowed to stay in the U.S. longer without needing a hard-to-get H-1B visa — is now an administration target.
Half a million people are in the U.S. on H-1B visas, which are limited to 85,000 annually and can only be acquired though a lottery process; the OPT program, as of last year, had an enrollment of about 223,000. According to reports in Forbes, the Wall Street Journal, the New York Times, and elsewhere, in the next few weeks the Trump administration is expected to accede to a request by Republican senators to halt the issuance of new H-1B visas and suspend all non-immigrant work permits for at least a year, or until employment levels rebound. Unemployment in the U.S. is currently at about 15%, the worst since the Great Depression of the 1930s, and “these suspensions are critical to protecting American workers as our economy gets back on its feet,” Republican Senators Ted Cruz, Josh Hawley, Charles Grassley, and Tom Cotton wrote in a letter to Trump last week, urging a 60-day or longer suspension of H-1B and OPT.
The threat to OPT comes as two dozen top B-schools have established or expanded Science, Technology, Engineering, and Math programs to lure more international students with the promise of lengthier post-graduation work stays in the United States. Through the OPT program, STEM degree holders qualify for 36 months of post-graduate work in the U.S., three times longer than otherwise. Applicants get one chance at the H-1B lottery each year; three years of OPT means three shots at the prize. Many schools are also making their STEM designations retroactive to alumni from earlier classes; at a few others, alumni are pressing for retroactivity as they face the expiration of their OPT and visa eligibility.
FOREIGN STUDENT NUMBERS, OVERALL MBA APPS ALREADY DOWN BEFORE COVID
University of North Carolina’s Brad Staats. Courtesy photo
Even before the coronavirus pandemic threw everything into turmoil in March, the situation at U.S. B-schools was dire, with international student numbers dropping and applications plunging at large and small MBA programs alike.
Since 2017, 31 schools in the top 52 as ranked by Poets&Quants have seen declines in their foreign MBA student ranks, 21 by double digits. Seventeen schools have seen increases, with an average gain of 5 percentage points and 17.7%; among the 31 decliners, the average loss is 4.5 percentage points and 16.6%, including 3.5 points and 10.9% among 16 schools in the top 25. For the most part, the elite schools have not eluded others’ fate. Four of the top 10 saw increases in foreign student enrollment averaging 3.2 percentage points (8.35%), while six saw declines of 2.6 points (7.3%). The biggest change for a top-10 school came at the University of Chicago Booth School of Business, which lost 14.6% of its international MBA student volume in three years.
In terms of overall MBA applications — a data point directly impacted by slumps in international student interest in studying in the U.S. — 2019 was the fifth consecutive year of falling applications to the overall MBA market and the second year in a row that the slump has hit the most highly ranked and selective business schools. Few expect the current application season — extended by many schools in response to Covid-19 — to improve things.
The University of North Carolina-Chapel Hill Kenan-Flagler Business School has been among the hardest-hit in this years-long storm, losing more than a quarter of its foreign student volume in three years: from 27% in 2017 to 20.1% in 2019, a 25.6% decline. Kenan-Flagler lost 38.5% of overall application volume in that span, second-worst in the P&Q top 25. These and other realities explain why UNC’s B-school late last year launched a new STEM-designated concentration in business analytics and management science in its full-time MBA program. The program opened in January and drew 52 students.
Brad Staats, associate dean of MBA programs at UNC Kenan-Flagler Business School, says recruitment in the Covid-19 era has been good so far, with the numbers higher than this time last year. UNC Kenan-Flagler extended its Round 4 application deadline to July 13 and moved back the start of the fall MBA term to August 31. “There are a lot of people who are re-evaluating their plans,” he says, “and applications have gone up as a result. So far, the class continues to come together nicely, I think. The big question that anybody who’s paying attention is certainly thinking about: What is the summer going to look like, as students either change their mind, or if international students can’t get visas? It’s that almost musical chairs-ish game that is always going on a little bit with waitlist clearing and students then changing their minds. I think everyone is trying to model what that is going to look like this year.”
Staats, who is also a professor of operations and faculty director of the Center for the Business of Health at UNC Kenan-Flagler, says impact of adding a STEM concentration has been substantial in both the first- and second-year cohorts. “We see it as a reflection of the attractiveness of analytics in the workplace, and certainly the international students’ response has been quite high, too,” he says.
‘DIFFICULT TO TELL WHAT IT MIGHT MEAN’
UNC Kenan-Flagler’s numbers may have dipped since 2017, but now they are bouncing back, Brad Staats says — and he partly credits STEM and OPT.
“The class composition right now sees a nice bounce-back, but how do we worry about what that’ll actually look like when they show up here? I think across the whole industry, part of the attractiveness of OPT is the ability to secure opportunities after graduating in the United States. And so removing that? There already have been a number of things that have strengthened our peer schools outside of the United States, and I think, not surprisingly, this would, for some, shift that decision further.”
At Georgetown University’s McDonough School of Business, the downturn in international student interest has not hit as hard, with MBA apps down just half percentage point from 2017 to 2019 (32.7% to 32.2%). But as an international hub — and as a school that lost 22% of app volume in three years before launching its own STEM Management Science major in the full-time MBA in 2019 — McDonough sees few positives from major visa or OPT restrictions, says Prashant Malaviya, senior associate dean for MBA programs.
“At Georgetown, we created our STEM-designated management science major in our MBA because it was valuable to all of our students,” Malaviya tells P&Q. “It is a reflection of the future of business, of who we are and the evolution of our curriculum over time — we actually did not add or change any classes to meet the requirements of the STEM designation. In the end, the knowledge taught in our core and elective STEM offerings are valuable to employers around the world, and having this designation on our students’ transcripts will certify to employers that Georgetown MBAs are prepared to lead their workplace into the future.
“We have little influence on the policies of the presidential administration, but we can continue to be innovative in our programming as we anticipate the knowledge and skills the business world will require in the long-term.”
Peter Johnson, assistant dean of the MBA program and admissions at the Haas School of Business at UC-Berkeley, says he and colleagues are keeping an eye on political developments — unsurprising for a school that lost 16.5% of application volume over the past three years.
“We’re definitely paying attention to it, as we do on any policy proposals or statements that would impact higher education in general and our program in particular,” Johnson tells P&Q. “Suffice to say, we’re keeping an eye on it. It’s hard to predict what will actually occur, if anything. I think there have been a lot of statements made by the (Trump) administration this year that are simply posturing for political purposes that don’t, in the end, become anything. So, it’s difficult to tell what this might mean.”
Learn more about the Optional Practical Training program on the next page.
THE HISTORY OF OPT
The Optional Practical Training program is available to eligible F-1 visa students with STEM degrees from accredited U.S. colleges or universities. The OPT program itself was launched in 1992; in 2008, Michael Chertoff, then secretary of the Department of Homeland Security, controversially extended the program by 17 months for graduates of STEM-certified programs. The extension was expanded to 24 months in 2016. Eligible business school graduates may apply for the additional two years of work on top of the initial one-year, post-completion OPT granted to all non-STEM-degree F-1 visa students; to be eligible, they must have a STEM degree from an accredited U.S. school and must secure employment with an employer that includes a minimum of 20 hours of work per week and formal training within the STEM field.
The OPT program is seen as a way for B-school grads to acquire an H-1B visa, which are limited by law. In 2017, 180,440 new H-1B visas were issued. But according to just-released data by the Institute of International Education, the policy changes allowing STEM students to remain in the U.S. on OPT opportunities for three years after the completion of their studies is the likely biggest factor driving a massive increase in students on OPT programs, which increased by 9.6% to 223,085 between 2016-2017 and 2018-2019.
In 2014, the Washington Alliance of Technology Workers sued Homeland Security, saying it exceeded its authority in both the establishment of the STEM OPT program and later extensions. WashTech’s lawsuit challenging the legality of OPT — filed because the union, which represents computer programmers, says the program hurts American tech workers — was allowed to proceed in July 2019 by the U.S. District Court for the District of Columbia. A decision on the case had been expected May 1 but was delayed until September 4.
Big Tech, including Apple, Google, Microsoft, and Facebook, granted the right to participate in the case, have argued that the OPT is a vital pathway for highly skilled international workers to put their talents to work helping the U.S. economy. The companies also stand to gain: employers who hire foreign workers are exempt from paying payroll taxes for those workers, saving them thousands on each worker annually. Ron Hira, associate professor in the Department of Political Science at Howard University, says this is one factor making the program ripe for exploitation by schools and employers.
“There are some questions about whether the OPT really should exist at all, because it was supposed to be a pilot project back in the early 90s,” Hira, who studies the program, tells Poets&Quants. “From my point of view, aside from the legal stuff, I think you can justify — from an educational standpoint — 12 months, that there’s some training and all that makes some sense. I think it’s really a huge stretch to argue that someone needs 36 months for training internships.”
CRITICISM, AND DEFENSE, OF OPT
Ron Hira of Howard University. Courtesy photo
Unhappiness with OPT — and with the federal immigration system overall — is not confined to academia and government. Reflecting the views of many that the U.S. government’s focus should be on helping U.S. workers first and foremost, one P&Q reader commented on our recent coverage that OPT is part of the acceleration of the demise of the U.S. middle class.
“With six-figure loans, an uncertain professional future, and facing a future with a diminishing middle class, most U.S. citizen and permanent-resident college grads have to compete with foreign college grads who work using the corrupt OPT program,” writes frequent commenter “CitizenOfACorruptNation.” “OPT amounts to the government offering a $10,000-per-year incentive to employers for hiring a foreign student instead of a U.S. citizen or permanent resident. This bonus takes the form of the employer being exempt from paying payroll tax for their foreign student workers (due to their student status, which they technically still have under OPT in spite of having graduated). Why hire Americans, eh?
“In 2017 alone, Amazon employed 3,655 foreign workers on OPT,” “Citizen” continues, citing U.S. Immigration and Customs Enforcement 2017 data. “Amazon’s average starting salary for ‘entry-level engineers’ is approximately $108,000. Social Security and Medicare tax rates for employers is 6.2% and 1.45%, respectively (7.65% combined).
“On one worker alone, Amazon saved $8,262/yr by preferring an OPT worker instead of an American worker ($108,000 X .0765). On all 3,655 OPT workers they hired in 2017, Amazon saved a total of $30,197,610 in one year by preferring OPT workers instead of American workers ($8,262 X 3,655). You read that right. $30 million.”
On another recent story, “Citizen” writes that if the U.S. really needs an influx of foreign students to address a labor shortage, “why do these students need training? The DHS/industry narrative is that the U.S. lacks sufficient workers with training, while the foreign workers are supposedly already trained.
“If workers with such training are indeed needed to remedy a labor shortage, why won’t these special ’employer-tax-saving’ training programs be open to Americans (you know, the ones who are denied employment because they lack the proper training that the foreign nationals supposedly have)?” Addressing the issue of retroactive STEM designation, which some schools have been doing to help their alumni stay on the U.S. longer, the commenter adds, “If the foreign nationals mentioned in this article were granted retroactive participation in the three-year STEM OPT training program (as opposed to the one-year, non-STEM OPT training program), but are then immediately approved for an H-1B, does that mean that these same foreign students wouldn’t need training after all?”
Howard’s Ron Hira says such concerns about abuse of the OPT program are not unfounded.
“It’s true that OPT workers are not required to pay payroll taxes,” he tells P&Q. “It’s also true that government has created an un-level playing field. Employers and workers each pay the 7.65% tax, so the potential savings is 15.3%. Government policy makes the OPT workers cheaper than U.S. workers. It would be incredibly naïve for anyone to believe that highly sophisticated companies like Amazon don’t know this. A firm like Amazon would be foolish not to take advantage of it. Major firms have armies of accountants to minimize their tax liability.”
GROWING THE PIE
Responding to critics, Brad Staats at UNC says OPT and the labor market is not a zero-sum game.
“From where I sit, both as an associate dean and as a U.S. citizen, eliminating OPT would be most unfortunate,” he says. “It’s about how you look at the underlying problem. When one thinks about OPT and immigration, do you focus on growing the pie or carving up a fixed pie?
“People immediately go to that fixed-pie angle, and say, ‘Oh, clearly if you give someone a visa to work, then that means they’re taking the job away from a deserving American who now can’t be employed.’ And if you look at the data, that doesn’t seem to be the case — it’s unfair to say that that’s limiting job opportunities for U.S. workers. Instead, if we look at the skilled labor that we’re talking about here, it’s much more around job creation, around growth, in recognizing that companies have a choice already as to where they locate their workforce and whether they are in the U.S. or move those jobs somewhere else kind of scattered around the world.
“And so, as a result, OPT, that sort of skilled kind of immigration, is something that tends to be overall a net creator of jobs, a net creator of economic growth. I think at a high level it’s something that is positive. And obviously, from a business school standpoint, it would make life much more challenging to recruit the diverse international students that are so important in creating our classes.”
B-school deans, concurring, have made their views well known.
DATE FOR PROMISED ACTION BY THE TRUMP ADMINISTRATION: MAY 22
Diane Hernandez, an employment and immigration law attorney at national firm Hall Estill, helps clients navigate visa concerns. She says that while a knee-jerk response against immigrant labor is understandable during a crisis that includes the highest level of unemployment on record, “targeting this relatively small portion of the overall workforce is not going to have the impact (the Trump administration is) hoping for. H-1B workers make up such a small percentage of workers in the U.S., and they fill specialty occupations, which require at least a bachelor’s degree to even qualify.
“Closing off this path for would-be workers in some of America’s most vital industries is akin to putting a piece of tape on the wall of a crumbling dam.”
Action has been promised by the Trump administration by May 22. Hernandez says Trump, his administration, and the four Republican senators who want to suspend the H-1B and OPT programs all are being short-sighted.
“The OPT program offers a bridge for these graduates to contribute valuable experience and abilities to the U.S. workforce and economy — graduates who have invested in a future in the U.S., and are ready to stay and contribute to its overall success,” she says. “They take hard-to-fill positions, and in many cases, help to maintain America’s reputation as a world leader in research and development achievements in science, technology, engineering, and math. Eliminating the path for these graduates to contribute their expertise in America will automatically create a path for them to contribute their expertise abroad, directly benefiting other countries, many of which are in direct competition with the U.S.
“American business owners that have benefited directly or indirectly from the H-1B and OPT programs must collectively voice their opposition to any measures that seek to hamstring these programs. The path back to a strong economy is not one that includes eliminating programs that contribute to that strength,” Hernandez says.
DON’T MISS KELLOGG ALUMNI CALL ON SCHOOL TO MAKE STEM RETROACTIVE and TEPPER CLASS OF 2019 MBAs URGENTLY CALL FOR RETROACTIVE STEM
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