H-1B Setback Threatens The American Dream For Indian Students

(MENAFN- Live Mint)

Donald Trump's $100,000 fee on the H-1B employment visas that are most sought after by highly skilled immigrants has shocked the global education and talent industry. And for thousands of Indian students, like millions worldwide, the American dream may be fading.

Apart from the tech industry , Indian students-particularly those from top colleges-are likely to face an immediate setback. Many of them had secured pre-placement offers with US-based firms and were set to begin their full-time roles in 2026. Along with proposals to restrict work options for students and mandate minimum salary thresholds, these changes may also deter other students from considering US universities and colleges.

“I was so excited that I didn't have to go through the pressure of sitting for placements, and I would just easily head to the US with a PPO (pre-placement offer) in my hand after college ends," said a student from one of the older IITs.“Now I am uncertain whether the company will approve my visa sponsorship, and I am waiting for further clarity, which is making my family and me anxious."

H-1B is a non-immigrant visa used by US employers to hire foreign workers in speciality occupations that require highly specialized knowledge and at least a bachelor's degree or its equivalent. It is most commonly used by technology companies and research institutions.

On Friday, Trump signed the 'Restriction on Entry of Certain Immigration Workers' rules, which require US companies seeking H-1B skilled worker visas to pay $100,000 per application. The rules make exceptions only for roles deemed vital to national interest. That triggered panic and US companies like Microsoft asked H-1B visa holders to return by the 21 September midnight deadline. The White House later clarified that the fee won't apply to existing visa holders and will have to be paid only once.

Also Read | How Trump's $100k H-1B visa fee will redefine tech hiring for Indians and the U

Double whammy

The new fee structure places a significant financial burden on potential employers, making the situation complex for students with existing pre-placement offers at hand, said Namita Mehta, president and partner at foreign education consultant Red Pen.

"Smaller companies and startups may be forced to withdraw offers, as the additional $100,000 per employee is unsustainable. Larger firms and IT majors are more likely to retain these hires, but they may shift roles to overseas offices in countries with more favourable visa policies, such as Canada, Ireland, Singapore or even India for Indian nationals," Mehta said.“Big Tech companies like Amazon, Microsoft and Google may still absorb the fee for top talent, but they will be far more selective, given the cost of a mis-hire."

Pre-placement offers (PPOs) are becoming an increasingly crucial hiring tool for companies, allowing them to secure their top interns as full-time employees before the official campus placement season begins. About 70% of companies this year have already selected their best candidates through PPOs rather than waiting for campus placements, according to Aon's campus hiring report. This hiring firms includes US-based companies and multinational corporations.

According to Mehta, even the students awaiting final placement may see a decline in US-based offers.

"For students currently in the placement process, opportunities in the United States are expected to narrow. Companies are likely to scale back H-1B dependent hiring for entry-level roles, making it uneconomical to recruit fresh graduates unless they are filling highly specialized positions," she said.

The setback will only amplify the challenges for top colleges grappling with slower hiring cycles, reduced offers from the US and global companies, and shifting recruitment priorities amid economic uncertainties.

Also Read | Trump's revised H-1B visa fees amount to 10% of 5 Indian IT firms' profit

Tighter work rules for students?

A higher visa fee isn't the only challenge that Indian students hoping to study or work in the US face.

Republican senator Jim Banks has introduced the American Tech Workforce Act, a legislation which seeks to eliminate or drastically restrict the Optional Practical Training (OPT) program, raise salary minimums for work visas, and sharply limit the ability of US employers and universities to recruit and retain foreign STEM talent. The combined moves signal the most severe tightening of America's skilled immigration and student-to-worker conversion pathways in decades.

Students studying in the US typically hold an F-1 visa, which allows them to pursue academic studies but does not permit employment except under specific programs like OPT. After completing their studies, some F-1 students apply for H-1B visas to transition into skilled work roles in the US. The H-1B requires employer sponsorship and is subject to an annual cap and a lottery system as demand exceeds supply.

"The additional fee on H1 Visa and potential closure of OPT program that allowed students to do internships and trainings post completion of their course in the US has restricted the opportunities for students immigrating for education," said Suchindra Kumar, education analyst at consulting firm PwC.“Without these, the students will have to leave immediately after their study program because potential recruiter organisations will be wary to pay $100,000 for a fresh graduate over and above their regular compensation."

Kumar points out that of the 4 lakh students who immigrate for their studies every year, not more than 10-15% travel for strictly educational purposes.

“Most of the students see it as a gateway to employment and settling down in the country post-study. This segment of students will be impacted massively," Kumar said“A lot of these existing students have large education loans that they planned to repay through salaries from a job in the US. Thus, it is expected to have a cyclical effect as we go along."

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Moving away from the US

Red Inc's Mehta suggests that the placement cells at leading institutes may need to pivot towards global locations where immigration pathways are clearer and less expensive, ensuring students continue to access strong international career opportunities.

As it is, students have started moving away from the US as a destination to study abroad after tighter visa regulations.

"...now it will almost dry up till there is clarity on H-1B fee applicability. The immediate impact on the current students studying in the US will discourage the next wave of students planning for foreign education to fly to the US," said Kumar.

"Even from a US university perspective, full fee-paying international students were a major way to cross-subsidise local students and grant scholarships," according to Kumar.“So in the long run, even that will take a hit. Students from India looking for scholarship opportunities will struggle."

Narayanan Ramaswamy, partner and leader for education and skill development practice at consulting firm KPMG, said, "If I were a student, I'd be worried right now because the recent changes not only have an immediate impact on students who are currently studying abroad, but also affect in the students who are planning to do so."

He said“European countries including the UK, Japan and Australia might benefit in terms of educational immigration, followed up by employment".

PWC's Kumar sees the UK as a major beneficiary, citing its best research-based institutions after the US and India's recent free-trade agreement also covers services.

Ramaswamy, however, said that academic prowess cushions India's top students from the new H-1B fees. "The creme de la creme of students from India from Institutes that are academically highly ranked will continue to get opportunities and wouldn't take a big hit as the US cannot stop all entries immediately and will need a skilled workforce from India."

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