An economic and social crisis may engulf the families of around 40,000 students from Telangana and Andhra Pradesh who are currently studying in the United States or waiting for H-1B visas after completing their mandatory Optional Practical Training (OPT) period. A huge debt burden of an estimated Rs 7,500 crore hangs on their heads as most of their parents belong to the middle-class and have taken out huge loans to educate their wards in the US. During OPT, undergraduate and graduate students are allowed to work in the US. The OPT period was extended from the earlier 24 months to 36 months by the Barack Obama administration. A cut in the OPT from the present 36 months to either zero or less than a year will directly hit the students who had taken educational loans from banks.
In 2015 and 2016, the US issued 65,000 H-1B visas to skilled workforce across the world and another 20,000 to qualified foreign students in the US. It is this second group of qualified students, who have just stepped out of their campuses and also those who are part of the OPT system, who are getting hit the maximum because of the visa curbs. If around 70% techies working in the US are from India, around 40% of them are from the two Telugu states. As per sources in the NASSCOM, around 72% of those who bagged H-1B visas in the last two years are from India. How many of them would be retained in the US after the new reforms is a big question.
Most of the techies who are part of the OPT programme and are waiting for their H-1B visas to materialise are working as “code-coolies” in IT companies, earning far less than the US$60,000 per annum offered to H1-B visa holders. While students on campuses and even on OPT are doing sundry manual jobs to support their stay in the US.
A quick estimate made by experts and consultants contacted by The Sunday Guardian revealed that close to 25,000 students had left for the US from Hyderabad from April-May 2015 to April-May 2016. Around 80% of them have taken educational loans in the range of Rs 15 lakh each from banks and financial institutions. Thus, the total loan burden is estimated to be Rs 7,500 crore for students from just these two states. This figure would more than double if an all-India count is made.
Surprisingly, around 75% of these Telugu students have already completed graduation and post-graduation in engineering or pharmacy courses in India, but have taken admissions in different US universities in MS courses purely with an eye on the 36-month OPT.
The craze among Hyderabad’s students for MS courses in the US can be understood from the fact that the city has around 25 to 40 major consultant firms working round the clock in securing US visas, besides another 200 individuals who help students take US flights, chasing their American dream. All the major public and private banks and financial institutions here have a thriving business of education loans.
Ever since Donald Trump was inaugurated as US President on 20 January, there have been back and forth communications between the parents and the students in the US on the possible policy changes in US visa norms.
Once the details of the drafts of the executive order of President Trump made it to the media this mid-week, not only did the stocks of the technology giants tumble by 30%, but uncertainty reached panic levels among the families that sent their children to the US.
Credila, the educational loans division of many major private commercial banks including HDFC and Axis, has issued loans to the tune of around Rs 1,500 crore to 1,200 students in Hyderabad and other major cities in AP, such as Vijayawada and Visakhapatnam in 2015 and 2016. All these students are banking on OPT work permits so that they can start earning to repay their loans.
Sources in Credila who spoke to this newspaper on the condition of anonymity shared the concern expressed by the parents of their clients on the possible changes in the US visa regime. “Any cut in the OPT, which appears certain, will have a devastating impact on the parents,” said a senior manager of Credila, who looks after the Hyderabad business.
Most of the parents who are paying EMIs, primarily to repay the interest component, are eagerly waiting for their children to start earning either as part of OPT or after that, so that not only their loan burden goes down, but their meagre family incomes also increase. A parent who works with a private firm and earns Rs 25,000 per month has even defaulted on two EMIs of Rs 9,500 on his son’s education loan.
Sources in the State Bank of India, a major disburser of education loans in the two Telugu states, said that either a denial of H-1B or a cut in OPT (for students who have just completed their MS) would spell disaster for their clients’ families back home. “We are watching the situation closely. We are worried that there may be massive EMI defaults because of policy changes in the US,” said an SBI officer in the education loans section.
The condition of the students who are currently in the US is anyway far from satisfactory. These students who had completed BTech, MTech, BPharmacy and MPharmacy in India are being forced to do shorter postgraduate MS courses for 14 to 18 months in the US, so that they can start earning quickly during the OPT period. Many of them have taken to working even during their MS courses.
A majority of these techies have taken up menial jobs in coffee shops, grocery stores, fuel stations, restaurants and shopping malls where formal educational qualifications are not required, for sums of $5 to $10 an hour. Some of the others are working on campuses either at libraries or at photo copying machines.
“We are compelled to take up these jobs as our families are unable to send us any living expenditure and are expecting us to repay the debts they have incurred for our education and US travel,” a student who has just finished his MS from a university near New York told this newspaper over phone. His family lives in Warangal district in Telangana and he declined to be quoted.
Some of these students are facing another peculiar problem. They have just finished their MS and are taking orientation classes for their OPT programme, without paying any fees. The institutions that train these students for OPT work usually collect their fees from the salaries these students earn later. But now this system of free orientation classes has descended into chaos.