Foreign MBA students in American business schools comprise approximately one third of their class. In the past, foreign MBA students were attracted to American schools because they hoped to land jobs on Wall Street upon graduation.
Those hopes changed when Bank of America announced on March 10, 2009, that it is rescinding its job offers to 50 foreign students. The move was in compliance with the Troubled Assets Relief Program (TARP) conditions restricting banks that receive stimulus money from employing individuals who require H-1B visas when U.S. citizens have been laid off by the same institution.
TARP and the Foreign Student
TARP was established under The American Recovery and Reinvestment Act of 2009. The Act is popularly known as the Stimulus Bill. The TARP restrictions, authored by Senators Dick Durbin (D-IL) and Chuck Grassley (R-IA), were signed into law as the Employ American Workers Act (EAWA). This act forces U.S. employers to give American citizens hiring preferences before extending job offers to H-1B visa holders. The restrictions also prevent “employers from hiring additional H-1B and L-1 visa holders if more than half of their employees rely on those visas.”
H-1B Visas
An H-1B visa is a classification for foreign employees with superior professional qualifications and skills. It is a non-immigrant status awarded for a temporary period. The H-1B visa is usually valid for three years and can be renewed for an additional three years.
Revenue Generators
Foreign students are not the only stakeholders affected by this legislation.The TARP restrictions are a major setback for U.S. business schools who, in the last decade, have been trying to globalize their curriculums and student body as a means to generate greater revenue and broaden student networks.
Universities now must rethink their international student recruiting and retention strategies in order to avoid a revenue gap, because most international students are ineligible for federal student loans and traditionally pay full tuition rates. The 2008-2009 median MBA tuition in the top ten U.S. business schools is approximately $65K. In the past, graduates expected to earn salaries starting at $80K, thus receiving a return of investment in two to three years on average.
Protectionism and Meritocracy
Many foreign MBA students were unsurprisingly forced to return home to work summer internships – a key graduation requirement – because they could not secure offers in the U.S. As such, an increase in applications for business PhD programs can be expected, as some foreign students may be re-strategizing in order to buy more time for the economy to stabilize. American students are not immune to the current weak job market and they may well start rethinking their educational goals and choices too.
Meanwhile the debate on whether the stimulus bill’s EAWA is protectionism versus meritocracy or a political overreaction continues.
Ethel Matshiya - Ethel Matshiya was born and raised in Zimbabwe. She holds a Bachelor of Arts degree in journalism and sociology and a master’s ...
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