Why Indians should not take on loans to study in the USA
By Ignatius Chithelen, author Passage from India to America*
Last night there was yet another clear signal that Indians should avoid taking on loans to pursue advanced degrees in the United States. President Donald Trump tweeted that he will soon order the suspension of immigration visas to the U.S.
The suspension will prevent hundreds of thousands of foreigners, mainly families of American citizens and foreign professionals, from getting green cards that enable them to work in the U.S.
Sharp reduction in work visas
Though said to be temporary, Trump’s order means Indians graduating from American universities next month have little or no chance of getting a practical training or work visa. The graduates, most of whom have taken bank loans to fund their education in America, will find it extremely tough to repay the debt and avoid losing their family homes, which are typically used as collateral.
Since January 2017, due to policy changes and other restrictions imposed by Trump’s Republican administration, fewer Indian – and other foreign - professionals are securing visas. In fiscal year ended September 2019, for instance, the U.S. issued about 462,000 immigration visas, including about 187,000 to family members. That was down 25% from the 618,000 visas issued in fiscal 2016, under President Barack Obama. :https://travel.state.gov/content/dam/visas/Statistics/AnnualReports/FY2019AnnualReport/FY19AnnualReport-%20TableI.pdf
Indian professionals under attack from right wing groups
Currently companies in the U.S. are laying off staff and have stopped hiring, since tackling the spread of Covid-19 has frozen the economy. The unemployment rate is estimated to be over 20%
Referring to virus, Trump tweeted: “In light of the attack from the Invisible Enemy, as well as the need to protect the jobs of our GREAT American Citizens, I will be signing an Executive Order to temporarily suspend immigration into the United States!” https://www.bbc.com/news/world-us-canada-52377122.
But even before the virus hit, Trump was under pressure from his conservative base to cut immigrant visas. In February for instance, the right wing Breitbart.com, was critical that “…at least one million non-immigrant Indians now hold jobs as temporary contract workers in Americans’ white-collar workplaces.” They replace “…many U.S. graduates who are fired, displaced, or ‘re-badged’ from a huge variety of middle-class jobs in software, accounting, management, recruitment, design, engineering, and even regulatory enforcement.” The Indians also suppress salaries for Americans, Breitbart continued, even as President Donald Trump boasts of a “blue-collar boom” https://www.breitbart.com/politics/2020/02/17/ceos-keep-1-million-indian-graduates-in-u-s-jobs-legally/
Hiring freeze at Google
The big American technology companies are faring relatively better in the current economy and they also have strong balance sheets, with plenty of cash. Yet this week it was reported that Google, with Sundar Pichai as chief executive and a major employer of Indian graduates, has frozen hiring in certain areas. https://www.cnbc.com/2020/04/23/google-to-cut-marketing-budgets-hiring-freeze-expected.html
Other big tech companies will likely follow Google and the hiring freeze could last at least 18 months, the amount of time experts say is required to come up with a vaccine for the coronavirus. As a result, over the long term too, the job prospects for Indian graduates in America has gotten worse.
Top Indian grads avoid loans to study in the U.S.
In recent years, very few of the top engineering graduates in India, especially from the Indian Institutes of Technology, are taking on $80,000 to $200,000 in bank loans to pursue one, or two, year advanced degrees at American universities. They realize that, with the slim odds of finding practical training and work visas after graduation, there is a very high risk of ending up with large debts.
They fear being unable to repay the loans and their family homes being taken over by the banks in India, since it was used as collateral for the loans. Instead they work for American and other multi-national companies in India, expecting to get transferred to lucrative foreign postings, for at least a few years.
Students from second tier universities take on big loans
American universities, in order to bring in revenues to cover salaries and overhead costs, are diluting their admission standards to fill up their classes. Since 2017, anecdotal evidence indicates that Indians enrolling in American universities for advanced degrees are mainly from second or third tier Indian universities. They- and their parents - are proud about gaining admission to American universities, including to Ivy League colleges, ignoring the fact that they faced little or no competition from IIT and other top graduates.
The students take on loans from Indian banks at interest rates of up to 13%, by putting up their parental homes as collateral, to fund their American education. Those pursuing advanced degrees in engineering, science, technology and math expect to at least find employers sponsoring them for practical training visas, if not work visas.
The training visas allow graduates in these disciplines to work in the U.S. for three years. The Indians hope, that after working for three years in the U.S., they will be able to pay down much of the education debt owed to the banks. Those Indians pursuing MBAs and social science degrees, bear a far greater financial risk, since their practical training visa is valid for only one year. https://www.globalindiantimes.com/globalindiantimes/2019/10/7/american-mba-schools-create-courses-to-counter-sharp-drop-in-indian-applicants
Fewer work visas in the U.S.
Fewer Indian graduates are getting practical training visas, let alone work visas. In 2018, for instance, only one out of six Indians, among a class of 40 graduating with a Masters’ degree in an applied engineering field at an Ivy league university, got a practical training visa. The rest, to continue staying in the U.S. in the hope of finding jobs, pursued additional educational programs, thereby adding to their debt burden.
Either not knowing of the plight of the 2018 graduates or ignoring it, as many as sixteen students from India took on at least $70,000 in loans to pursue the same one-year program, during the next academic year. The fact that 40% of students admitted to the program were from India should have been a warning sign that there is little demand for the program because past graduates are not finding jobs. The university though is diluting its admission standards to fill up the class. The website for the program now says that the goal is to provide the best education. In past years, this and other universities would display the percentage of graduates who got jobs upon finishing their degrees.
American colleges will cut scholarships due to budget deficits
It is almost certain that Indians enrolling at American colleges, for the new academic year starting in September, will have to take on bigger loans than those taken on by Indian students in past years. Fees will rise and scholarships and fellowships will be cut or even abolished, since funding for higher education is dropping sharply.
The trillions of dollars in expenses, incurred by the Federal and state governments to deal with the coronavirus epidemic, is leading to sharp cuts in education budgets for state universities as well as in Federal education grants, which subsidize advanced education at both state and private universities. https://www.insidehighered.com/news/2020/04/13/public-colleges-face-looming-financial-blow-state-budget-cuts
Private universities, with big endowments, are also cutting spending. On April 21, for instance, Ronald Daniels, the president of the prestigious John Hopkins University in Baltimore stated in a letter “Based upon just the final four months of this fiscal year…we are projecting a loss of more than $100 million for FY 20 (on a budget of about $6.2 billion.) Even more distressing, depending on when the university is able to resume normal operations…we are projecting losses of $375 million for the next fiscal year (July 2020 through June 2021).” https://hub.jhu.edu/2020/04/21/jhu-prepares-for-financial-challenges-from-covid-19/
Hopkins has an endowment of $6.3 billion, one of the 25 largest among American universities. https://www.insidehighered.com/news/2020/01/30/endowment-returns-10-year-average-rises-leaders-see-clouds-horizon. But that funding is tied to long term projects and not for annual operations.
To try to cover its operating budget deficits, Hopkins announced cuts in staff and retirement benefits and freezing of both salaries and hiring. Given the spending cuts, Hopkins will almost certainly reduce the number and amount of scholarships and fellowships it offers to advanced degree students, for the 2020-2021 and future academic years.
Apparently Daniels issued the statement as students at Hopkins, led by senior class president Pavan Patel, launched a public campaign for a 25% refund of fees, since classes were shifted online due to Covid-19. https://www.washingtonpost.com/education/2020/04/16/college-students-are-rebelling-against-full-tuition-after-classes-move-online/
Like Hopkins, several other universities will soon announce budget cuts, implying cuts in funding for students pursuing advanced degrees, except perhaps in the science of virology, given the explosion in funding for virus related research.
Migrate to Canada
Indian students, instead of taking on big loans and risk losing their parental homes to banks to pursue advanced degrees in the U.S., should follow the example of the IIT graduates and find jobs with the big foreign companies in India. And those eager to migrate should consider pursuing advanced degrees in Canada instead of at American universities.
Canada faces a shortage of skilled labor and also has a population which is rapidly aging. In 2019, the number of Indians who became permanent residents in Canada doubled to over 81,000, compared to the previous year. https://www.forbes.com/sites/stuartanderson/2020/02/03/indians-immigrating-to-canada-at-an-astonishing-rate/#52e2d562b5f2
Canada, which also faces major expenses to deal with the coronavirus and now has rising unemployment, may reduce the intake of immigrants. But the odds for an Indian professional to get a work visa, with an advanced degree in Canada, is higher than in the U.S. In Canada, Also, Indians with advanced skills can get a permanent resident visa in four weeks. In America, assuming they find a job, they have to wait for fifteen years.
