The potential banning of Optional Practical Training (OPT) for international students is stirring up concern in the business education community. John Byrne, alongside Maria Wich-Vila and Caroline Diarte Edwards, delves into the implications of this possible policy change and its ripple effects on international MBA students in their latest discussion. OPT currently allows international graduates to work in the U.S. for up to three years, providing them multiple chances to secure long-term employment through an H-1B visa.

John reveals that eliminating OPT could severely impact the return on investment (ROI) for MBA students, with potential lost earnings ranging from $140K to $170K. The breakeven period on their degree could almost double, making the pursuit of an MBA in the U.S. far less appealing. Employers might shy away from hiring international talent, further deterring students from studying in the States.

Caroline points out that this uncertainty is already causing a shift in interest toward international MBA programs outside the U.S. With many programs offering one-year options at a lower cost, international students are exploring opportunities in Europe and Asia more vigorously. Institutions like INSEAD offer attractive alternatives with diverse recruitment platforms, making them resilient against regional shifts. As a result, the U.S. might see a diminishing international student population, losing a vital component of its academic and cultural diversity. For those considering an MBA, understanding these dynamics is crucial as they navigate their educational and career choices.

Episode Transcript

Note: This transcript was generated by AI and may contain minor inaccuracies.

[00:00:06] – John

Well, hello, everyone. This is John Byrne with Poets & Quants. Welcome to business Casual, our weekly podcast with my co-host, Maria Wichvilla and Caroline Diarte Edwards. We are going to talk about the threat to OPT. Opt, as many of you already know, is called optional practical training. I’m going to explain why it’s important, in particular to business education. What OPT does essentially is allow an international student to work in the US for one year, guaranteed, and up to three years if you graduate from a STEM-designated program and get a STEM job. In other words, you would be able to, under the law, get a job and work in the United States for three years, which gives you three chances at filing for an H-1B visa where you could work permanently. It’s a very important tool. And business schools in the last 10 years really embraced it because one school after another, has gained stem designation for their programs, often for MBAs, and very often for more technical or analytical degrees that they provide. Now, Now, OPT has been under threat. Stephen Miller, the key advisor to President Trump, has publicly said he’s against OPT.

[00:01:40] – John

And last month, there were more than a dozen congressmen in the house who wrote a letter asking for its abolishment. So one of the things I decided to do is, what if we did a back of the envelope analysis on what it would mean for an international student if the US, in fact, bans OPT? And what I found is that if OPT were eliminated, the estimated lost earnings for an MBA graduate, in particular, would be between 140 and 170K. The break-even timeline would nearly double on the degree from 4-5 years to 7-10 years. Essentially, the impact on ROI would be as much as 60 %, which is remarkable. And that doesn’t even account for how employers would likely pull back from hiring international students in the US, because if OPT were eliminated, it would make it much more difficult and frankly, almost impossible for an employer to bet on an international graduate, knowing that they would probably lose them or not be able to get them anyway because of the government. Caroline, what do you think of this?

[00:03:00] – Caroline

It’s potentially great news for the international schools who are already experiencing what they call a Trump bump because it is a, unfortunately, even if this doesn’t actually happen, we’re already seeing the impact of the uncertainty and a drop in interest from international students or international candidates in coming to study in the US. That is already happening. And if this change were to go ahead, then we would see a further drop, and the international contingent would drop drastically on all US MBA programs. So it would be a disaster for business schools who rely on this income as well as everything else that the international students bring to the MBA experience. And students have options, right? They don’t have to come and study in the US. There are fantastic MBA programs around the world. So US programs are typically more expensive, right? Especially the top programs are two years, whereas at most international schools, many of them are one year programs. So the reason it makes sense for many international students to come to the US is if they know that they’ll be able to stay when they graduate. And in most cases, they have the guarantee of staying for at least three years.

[00:04:31] – Caroline

And that gives them the ability, as your article lays out, to recoup their investment or almost recoup their investment. And we know that many graduates from top programs, whether it’s in the US or internationally, they see a return on their investment within four or five years, or sometimes even less time. So the calculation just doesn’t work anymore if they don’t have that opportunity to stay. And therefore, for those internationally mobile students, it would make a lot more sense to go to a school like INSEED or many of the other one-year programs across Europe, as well as, and we’ve also discussed how the Asian programs are increasing certainly attracting internationally mobile students as well. So people have choices, right? And they will vote with their feet if the return on investment is not clear in the US. They can go and study at one-year a big top one year program that gives them a platform to international recruitment opportunities. They can potentially go and work in London or the Middle East or many other different markets. They are not dependent on one individual market. So So I think one of the issues that the US schools have is that they are very dependent on domestic recruiting.

[00:05:53] – Caroline

A school like INSEAD, of course, has a portfolio of recruiter relationships across many different markets. So So if recruitment is down in London, then people can get recruited in other regions or vice versa. So schools like that can somewhat soften the blow of regional variations in demand from recruiters, but the US schools don’t have that. They’re extremely dependent on the domestic market. And so I don’t see how They will turn this around for students, what their options will be. And it’s very concerning, as your article lays out as well, that schools aren’t really speaking up about this because they’re afraid that the Trump administration, US higher education is already under attack, and so they don’t want to rock the boat even more. And individual employers don’t have an incentive necessarily either to stick their neck out on this issue. So who’s going to speak up? So John Byrne is the one who speaks up.

[00:07:07] – John

It’s all up to you, John. For international students, the MBA is already a high risk, high cost bet because you put together the two years of tuition, the foregone earnings, the relocation expenses, the currency risk, the fact that many students abroad aren’t earning the kinds of money that domestic students here earn, so that the ability to pay or pay back is very much dependent on landing a job in the US. Really makes this really a difficult and scary possibility. Maria, what’s your take on all this?

[00:07:47] – Speaker

I think if it passes, what we’re going to see is, sure, there may still be some international students coming to study in the States, but they will, almost by definition, have to be students from incredibly wealthy families overseas. Excuse me, perhaps people who have existing large family businesses or what have you. That means that we might be missing out on some of the top talent from the world. One of the things that has made America great in the first place, certainly the latter half of the 20th century was the embracing of the world’s top talent and bringing those folks to our shores and having them contribute to our organizations and our companies and our research and all of these different facets of society. I think that we’re going to have fewer international students. I think the international students will almost, by definition, have to be from very wealthy families. As a result, some of them are, of course, very talented, but we will, in fact, be missing out on the lower income talent. I just think that in the long run, it’s a short-term benefit, but the long-term impact on American society will be pretty negative.

[00:08:53] – Speaker

American companies rely on innovative, energetic, intelligent talent to continue to stay ahead and to continue to win things like market share. If we are telling these folks that they are not welcome in our country and they cannot come and contribute to American companies, there may be, I think the argument would be, Well, we’re just making more opportunities for Americans. That may be some more opportunities for American workers, but what will the overall impact of the American economy be? I can’t imagine that it would be a positive one. I mean, look at all the CEOs right now of the top tech companies who are either immigrants or the children of immigrants. I don’t know. I’m not only concerned about what it means for business school enrollment, but I’m also concerned about what it means for the American economy as a whole.

[00:09:43] – John

We’ve talked in the past about how international applicants are declining for US business schools. But before, the large concern was over stricter visa screening. You recall that last summer, Trump put into effect a screening of social media accounts before a student visa was issued. There was also a pause in the processing of visa applications that led a fair number of students not to be able to come to the US to start their programs this past fall because of delays in getting visas after they were admitted to a US business school. But now, with the threat of the elimination of OPT, and frankly, even more alarming are the videos that are circulating around the world of ICE agents in the streets of the US rounding up and ruffing up people. Look, prospective students in Mumbai and Shanghai and elsewhere are not, frankly, parsing the visa categories or the regulatory nuance. What they are doing is watching people who look like them being forcefully detained and beaten up, and they’re hearing Trump talk about foreigners as criminals. And they’re drawing, frankly, the obvious conclusion. If this is how America treats immigrants, why would I go to school there?

[00:11:17] – John

And so you have this in combination with these awful videos that are circulating in the world. And you have to think, my God, international applicants are going to just run for the rope, run away, and go to schools in Europe, where they don’t have this problem, or schools in Asia, and get a great business education there, instead of coming to the US, where they might fear being, frankly, brutalized in some way by amassed agents in unmarked cars who just seem to stop people on the street, and where even US citizens have been stopped and detained, and in some cases, actually deported. I’m thinking, My goodness, the whammy that business calls are going to see on international enrollment is going to be huge in this coming fall. We already saw in the latest fall numbers, international enrollment was softening. But given the threat to OPT and given What’s going on here in terms of enforcement, or let me just put it beyond enforcement, it’s not really enforcement. What it is, is harassment. I can’t imagine that there are going to be many international candidates in the pool who will really come if admitted. Caroline, wouldn’t you agree?

[00:12:50] – John

I mean, look, unless you get into a Harvard or Stanford or Wharton or an M7, let’s say, would you dare come to the US right now?

[00:13:01] – Caroline

Well, I mean, on one hand, yeah, I mean, the videos are extremely scary, and I think it’s worse in some areas than others. On the other hand, students would be coming legally, right? Because they do get student visas. So in theory, they are not vulnerable to harassment or deportation. But of course, ICE has been making mistakes, so there is always that chance. I don’t think we’ve had many stories of MBA students having issues yet. There have been one or two cases, but they’re relatively few and far between, thank goodness. So I think the risk at an individual level is pretty low. But I agree it is very concerning, and it will certainly put some people off.

[00:13:56] – John

Maria, if you were abroad and your child said they wanted to come to the US for an undergraduate education, would you feel safe and saying, Yeah, and support that decision, or would you say, Why don’t you stay closer to home?

[00:14:14] – Speaker

Well, It’s interesting. My child is actually starting to look overseas, perhaps for some college options. It’s an interesting coincidence that you mentioned that. I think there have been some other concerns as well. Gun violence has been, I think, a main one when I talk to even family members overseas. The campus shooting culture, I think, is one that I think would concern, even if it’s a very small possibility, it’s still a possibility. I think that that’s one thing that really does give some international students pause. But yeah, absolutely. I mean, it’s not even… Even if I know that I have a visa and even if I know that my English is great, and so therefore, if I do get stopped, I will be able to explain myself. I I worry even about the attitudes. I mean, I don’t think that you would encounter these attitudes at any institution of higher learning, and certainly not an elite business school. But this idea that sometimes you see people saying things like, Well, all these Chinese students, they’re just spies. They’re just spies for China, and we have to kick them all out. It’s like, Oh, my gosh. Come on, give me a break.

[00:15:21] – Speaker

Even if I know that I’m doing everything by the book, is there going to be a shift in attitude, in suspicion, in the way that I’m treated, perhaps not by my classmates, but maybe in the broader society. As Caroline pointed out, it’s not like you have to get an MBA, and you certainly don’t have to get it in the United States. With the digital age in which we live and work being able to be completed pretty much anywhere in the world that’s got an Internet connection. I don’t have to put myself through this. I would absolutely be looking more to programs in other countries, for sure.

[00:15:58] – John

And if you’re an admissions director and you’re trying to manage yield for the incoming class in the fall, this is going to be very tricky when you accept an international student. You got to know that I would think the admit rates are going to go way up because there’s got to be a discount that an admissions official assigns to every international admit, thinking that, well, maybe we’ll get a third of them, maybe we’ll get 10% of them instead of our usual 50 %, 40 %, whatever it is. Because of this. Now, Caroline, you’ve been on that side of the fence, although at INSEAD, wouldn’t you think there’s got to be a real adjustment here in terms of who you admit and how many you admit?

[00:16:47] – Caroline

Yeah, I would imagine the admit rate is going up quite a lot for international candidates. And then there’s a double whammy for admissions because not only a few are people applying from international markets, but then those individual candidates are getting more offers. So your yield would go down in any case because they will be getting other options, other choices, other great options, no doubt. And they might just decide to opt out entirely and go to an international school instead. So I think it’s probably a massive headache for admissions to try to predict what percentage of their international core will actually finally end up on the program.

[00:17:33] – John

I mean, if there’s a silver lining to any of this, it’s this. Domestic students are probably going to get in at a higher level than they had in the past at very good schools. An international Americans who can basically get the courage to come and apply and come after being admitted will have a greater chance of being admitted because you’re going to face less competition. I mean, that’s the ultimate result. If you’re thinking about just getting into a really good MBA program or a really good school period on any degree program in the US, Maria, wouldn’t you think that?

[00:18:09] – Speaker

Absolutely. And certainly it bodes well for any domestic candidate on the waitlist. As the summer approaches, these policies seem to change every couple of days. I feel like every time I open my computer, it’s like, Oh, a whole new, totally different headline. But hopefully something resembling more certainty will It’s going to start to be made clear as we approach the summer. But should there continue to be this same level of uncertainty and talk of eliminating OPT, et cetera, if I were an admissions person and I’ve got a bunch of domestic folks on the waitlist, I think It’s going to be a good time to be those folks because I know that I won’t need to worry about… I might have other concerns about them, but I’m not going to have this concern. I think, yeah, I think domestic candidates probably benefit.

[00:18:58] – John

Now, Maria, you came across legislation that had been introduced last year by a senator to address some of these conservative concerns about OPT because the letter that was sent into the Trump administration just last month by the more than dozen conservative members of Congress, specifically said that OPT actually contributes to the insolvency of Social Security and Medicare. Tell us something about That’s what you found.

[00:19:31] – Speaker

Yeah. So apparently, Senator Tom Cotton last year introduced something called the OPT Fair Tax Act, which would require that anyone working in the United States under OPT after they graduate would have to pay into something called FICA, the Federal Insurance Contribution Act, which is basically money that goes into Social Security and Medicare. Basically, for folks who might not be from the US, Social Security is something that is taken out of your paycheck. Every paycheck that you get, some percentage, about seven and a half % or something, is taken out to fund the Social Security pot that then helps support senior citizens after retirement age. The logic for why OPT folks have not had to pay this in the past is very sound. If I’m only going to be in the country for between one to three years, why should I pay into this system that I will most likely never get to use? However, I think if part of the argument is that there’s this narrative that these immigrants are coming and they are leaching off of our systems and they are not contributing. If that’s part of the narrative, I do think that passing this bill would at least help combat some of that image, and it might actually help.

[00:20:42] – Speaker

I mean, if it helps save OPT in general, then I’m all for it.

[00:20:47] – John

Yeah. It also tells me something else that this threat on OPT is real, because if you have a prominent senator introducing legislation to try to diminish the pressure to restrict or eliminate OPT, it tells me that something may very well happen on the OPT front. We’ve been concerned about this ever since Trump got in. But I sense the threat is growing because, frankly, we’re seeing increasingly extreme views and decisions made by the Trump administration across the board, which just tells me it’s not going to end. That’s what’s so concerning, frankly. Well, there you have it. Okay, so what’s the takeaway? Well, if you’re an international applicant and you have the courage to come, you will have increased odds of getting into a great school because there are going to be fewer people you’re going to compete against. If you’re a domestic student wanting to get into a great program, the same is true because you’re going to have less competition from internationals, and a school will have to rely more heavily on domestic applicants as international international students actually shrink and international enrollments continue to soften. That’s the positive news. The negative news is that, hey, this is not a good thing for anybody.

[00:22:11] – John

It’s not a good thing for domestic students who will be in classes with fewer international students. The diverse views that international students bring will be diminished. That’s bad. It’s bad for the US economy because international students, graduates who have stayed here, have contributed lead to the economy and have helped it greatly. Go to Silicon Valley and just look at the list of founders of any of the startups or even look at the CEOs who are the heads of some of our biggest and most important tech companies. And you’ll find that they’re not domestic people. They’re international candidates who came here seeking a better life and have made a terrific contribution to the US economy. So it’s not good on that right either. It’s not good for basically higher education overall, who will likely see less talent come through the door. It’s just not a good thing. We are hopeful that this will not happen in terms of OPT, and we’re hopeful that maybe it won’t deter as many international applicants as we think it would. If you want to read more about this, read the story on Poets and Quants. It’s called OPT Under Threat?

[00:23:31] – John

What it means for MBA, ROI, jobs, and international students. This is a companion piece as well. Both of these are commentaries. It’s called Trump’s ICE Campaign Isn’t Just on welcoming, it’s deadly, and it’s undermining American Higher Education. This is John Byrne with Poets and Quants. Thanks for listening.