Will Indian Students Lose Faith in US Universities Because of H1B and OPT Tax?
The US government introduced an increased H1B visa fee on September 19, 2025. This new H-1 B visa rule has created confusion among Indian skilled workers and US companies. As per the new rule introduced by the Donald Trump administration, US companies that plan to employ international workers in USA have to pay $100,000 per new application. After a few days, there was a proposal that international students on OPT training should be taxed the FICA (Federal Insurance Contributions Act) tax, which was previously not applicable to international students. All of these new regulations in USA will impact the Indian community. In 2024, 71% of H1B approvals were given to Indian skilled workers, making them the largest community. As for international students, Indian students are 27% of the total international student population in USA in 2024. This was an increase as compared to the data of 2023, wherein 11.8% international students in USA were Indians. Based on the changes in the H1B and OPT tax policies, Indian students might start losing faith in US universities and will start looking for emerging destinations to study abroad that offer flexible visa policies. Read this article to understand how both the H1B 100K fee and OPT tax proposal will affect Indian students.
This Story also Contains
- What is the New H1B Visa Fee?
- What is OPT Tax Proposal?
- Why are Indian Students Losing Faith in USA Universities?
What is the New H1B Visa Fee?
On September 19, 2025, the Trump administration announced $100,000 fees for new applicants of H1B visa in USA. This new H1B fee will be paid by the US companies that sponsor international workers. The increase in the fee is huge as compared to the previous H1B fees of $2,000 - $5,000. Although this new fee is valid for a period of 12 months initially, it will impact the Indian students and skilled workers. The goal is to manage the misuse of the visa system and to focus on attracting only the ‘very high skilled’ international workers.
This new rule in USA will impact Indian students as well and US companies, irrespective of the size of the organization. Startups and mid-sized companies will be affected the most, as they have tighter budgets. The H1B 100k fee will affect India's IT services sector like TCS, Infosys, Wipro, and HCL, which have depended on the H1B visa to send their skilled workers to USA.
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What is OPT Tax Proposal?
After the increase H1B visa fees, the Donald Trump administration aimed at the OPT program in USA. Operational Practical Training (OPT) is a training program that permits international graduates to work in the USA for up to 12 months. For those with a STEM degree, the OPT extension can be provided for an additional 24 months. However, a recent proposal submitted stated that the tax exemption for OPT students and employers should be removed. This means that earlier OPT students and employers were not supposed to pay any FICA (Federal Insurance Contributions Act) tax, which was a contribution towards Social Security and Medicare. Under the new proposal, the following must be paid by international students and OPT employers.
HIRE (Halting International Relocation of Employment) Act: All USA companies hiring OPT workers will be required to pay a 25% tax.
Dignity Act: Under this Act, OPT students will be required to pay the FICA tax. The tax rates include Social Security tax of 6.2% from the employer and employee, respectively, making it a total of 12.4%. For Medicare, the tax is 1.45% for both employee and employer.
If this proposal gets approved, then the OPT workers will see a decrease in their wages and the employees will have to incur high costs.
This means that an OPT worker would see a reduction in their wages due to the employee tax, while employers would face higher costs for hiring OPT employees. As Indian students make up one of the largest groups of H1B visa holders, these changes will impact their pay and might also cause limited OPT work opportunities.
Read More: Indian Techie shares his journey from F1 visa to green card in the US
Why are Indian Students Losing Faith in USA Universities?
According to the International Trade Administration, USA has seen a 50% decrease in the number of Indian students. Moreover, currently, there are about 3,13,000 international students in USA, which is a 19% drop compared to the number in 2024. This number is also the lowest as per the data of the consecutive 5 years. These numbers suggest that Indian students are starting to lose faith in US universities and are starting to look for other study abroad destinations. This year, the Donald Trump administration made major reforms in the visa policies that impacted international students. Some of the events that affected Indian students include:
Pausing F1 visa for international students
Deporting Indian students
Revoking student visas
Social media vetting
Threatening elite universities with freezing funds
And now, with the introduction of the H1B visa and the OPT tax proposal, Indian students have started to look for alternatives. Some of the reasons why Indian students reconsider studying in USA for higher education include:
Increased Costs and Lower ROI: Studying and living in USA is expensive. It is an investment made by students towards a better future. With the recent uncertainty in USA for international students, the cost of studying in USA will not provide the expected return on investment.
Uncertainty in Job: These policy changes will decrease the chances of attaining post-study work options available through OPT and H1B. With the new H1B 100K fee, the US companies will hire highly skilled international workers. They will be selective in hiring international workers; hence, there will be a reduction in job opportunities for Indian students.
Increased Competition: Companies that can manage the fee will prioritize sponsorships for senior positions rather than entry-level jobs. This means that fresh Indian graduates from USA universities may find it competitive to earn a sponsored position and gain work experience in the US.
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Frequently Asked Questions (FAQs)
Q: Can an H1B visa lead to citizenship?
A:
Yes, H1B is often seen as a pathway to obtain a Green Card in USA which is permanent residency. Eventually, from permanent residency, candidates can opt for citizenship in USA.
Q: Is a H1B visa risky?
A:
With the recent hike in the H1B visa fee, it will be quite a challenge for international workers to enter the US job market. Senior level positions might not be affected, but entry to mid-level jobs will be affected by this rule. Moreover, US companies that sponsor H1B holders will be selective in hiring which will result in reduced job opportunities.
Q: How does an H1B visa affect Indians?
A:
Any changes in the H1B visa, such as the recent H1B visa fee hike, will affect Indian students as they are one of the largest communities to have obtained the maximum number of approvals. In 2024, 71% of approvals were provided to the Indian students.
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