New Report Shows Increase in Foreign Students, but Downplays Subsidy

A near-$1 Billion Tax Break for Employers Who Hire Alien Alums

By David North on November 13, 2023

A State Department-funded study released today shows (an expected) increase in the number of foreign students by 12.4 percent, but masks the fact that American employers are given a nearly $1 billion tax break for hiring recent alien alumni of U.S. colleges and universities rather than American grads from the same institutions.

Open Doors, the annual report of the New York-based Institute for International Education, also overstates the number of foreign students, just as the administration understates the illegal immigrant population and the illegal flow across the southern border.

The report would have you believe that there are over a million foreign students in this country, when that is an exaggeration by about a quarter. The million-plus figure includes both some 858,000 actual foreign students, and also 199,000 recent alumni whose employers will get the tax break; these alumni are enrolled in the Optional Practical Training program, which is, in fact, a disguised — and subsidized — foreign worker program.

The OPT program has two parts: All alien recent college graduates get a year’s legal employment following graduation; the Open Doors survey of American institutions of higher learning shows that there were 128,000 of them. Those alien grads who majored in the STEM fields of science, technology, engineering, and math get two additional years of benefits; the survey counted 71,000 of them this year.

The tax break for employers (enjoyed by some of the alumni as well) consists of the non-payment of payroll taxes, which the rest of us pay to support the Social Security, Medicare, and federal unemployment insurance programs; this comes to about 9.5 percent of payroll for the employer and for many of the workers, and means that those not paying the payroll taxes receive a subsidy at the expense of our elderly, sick, and unemployed.

The Bush II administration decided, without seeking the approval of Congress, that these recent grads should be defined as “students”, thereby eliminating the payroll tax. While I have not read every word of this year’s Open Doors — it became available at 9 a.m. — every version of the report in prior years was totally silent on this subsidy; the speakers announcing the report today were equally quiet on this subject.

Some alien workers do not get the tax break on the grounds that they have been in the States for five years or more and thus are no longer nonresidents for tax purposes.

Open Doors, again this year, showed that China (27.4 percent of the foreign student population) and India (with 25.4 percent of it) were the leading providers of foreign students.

The Calculation. Our nearly $1 billion tax break is estimated as follows: There are about 128,000 OPT workers in the first year; let us assume a conservative $50,000 a year as their salaries; that creates a payroll of $6.4 billion and 9.5 percent of that is $608 million. Assuming 37,000 workers in the first year of the STEM extension at $52,000, we get a payroll of $1,924,000 and a payroll tax of $182,780,000. Then, assuming 34,000 workers in the second year of STEM, each paid $54,000 a year, the payroll is $1,836,000 and the payroll taxes would be $174,420,000. Adding the three annual payroll tax elements, we get $965,200,000.