US plans to scrap H-1B exemption for universities: Will foreign students be the first to go?

Time of India

25-07-2025

US plans to scrap H-1B exemption for universities: How will it impact international students?
For years, a quiet clause in the US immigration system has acted as a lifeline for international students hoping to stay in the country after graduation. It allowed American universities and nonprofit research institutions to hire foreign graduates under the H-1B visa program, without competing in the tech-heavy, oversubscribed lottery.
Now, that lifeline may be slipping away.
A proposed rule under federal review aims to scrap the H-1B visa exemption for universities, forcing them to play by the same rules as corporate employers. The change, though technical on the surface, threatens to send shockwaves through US academia, and push thousands of foreign students, especially from India, out of the country they've called home for years.
A backdoor that powered academic dreams
For students pursuing advanced degrees in the United States, think PhDs, postdocs, and even teaching assistants, the path has long followed a predictable arc: arrive on an F-1 student visa, work under Optional Practical Training (OPT) after graduation, and then transition into the H-1B visa through a university or research institution.
Unlike tech companies, universities were exempt from the H-1B cap, allowing them to sponsor skilled foreign workers year-round, without the uncertainty of a lottery.
This exemption didn't just help universities, but it helped students plan futures. It gave them hope that their years of study and research could translate into careers in U.S. classrooms and labs.
But if the rule change goes through, that certainty evaporates.
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Welcome to the lottery
Under the new proposal, all H-1B applications, including those from universities, would be thrown into the same annual cap: 85,000 visas for hundreds of thousands of hopefuls. In 2025 alone, more than 780,000 applications were filed, making the odds of selection slim and luck-dependent.
This means even if a university offers you a job, it won't matter unless your visa application wins the lottery.
And that hits international students where it hurts.
Imagine graduating with a PhD from MIT or Stanford, securing a research position, only to be told you can't stay—not because you're unqualified, but because your name wasn't pulled from a digital draw.
Indian students stand to lose the most
No group is more vulnerable to this change than Indian students. They account for over 70% of all H-1B petitions, and form the largest international student demographic in American graduate programs, especially in STEM fields.
Many of them take out substantial loans, banking on a US job to repay the investment. But now, even jobs in academia may not guarantee legal stay.
Without the exemption:
Job security drops sharply after graduation.
Loan repayment becomes risky without a US-based income.
Students may be forced to leave despite having job offers.
In effect, the pipeline that once led from classroom to career is now riddled with cracks.
Universities may suffer too
The fallout won't stop at student visa holders. US universities could also face the heat. Without reliable access to international researchers and faculty, departments could struggle to fill teaching and research positions, especially in science and engineering.
Postdoc researchers, who often hold short-term roles that bridge PhDs and permanent academic jobs, may become the hardest to hire. And with administrative delays and uncertain timelines, universities may begin looking elsewhere, or simply stop hiring foreign talent altogether.
The fear is that US academia may begin to lose its global edge, not from lack of interest, but from lack of access.
Meanwhile, other countries are rolling out the welcome mat
As the US tightens visa options, countries like Canada, Germany, the UK, and Australia are doing the opposite, streamlining immigration paths, lowering post-study barriers, and marketing themselves to the very talent the US might turn away.
Already, Indian students are shifting their gaze. Consultants and education agents report a steady uptick in applicants choosing Germany and the Netherlands, citing more stable visa policies and long-term work options.
If the US follows through with this rule change, it could accelerate a global talent diversion, not because American universities are less attractive, but because staying after graduation becomes harder than ever.
What lies ahead
The rule is still under review and has not yet taken effect. Legal challenges and pushback from universities are expected. But for current students planning their careers, and for future applicants deciding where to study, the uncertainty is already real.
For now, the question remains: Will foreign students be collateral damage in America's immigration reset?
If the H-1B exemption goes, so might a generation of scholars, researchers, and educators who once saw the US as a long-term academic home.
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