Trump's H-1B Visa Reforms Will Have Mixed Effects On MBAs

The first academic quarter at Northwestern University's Kellogg School of Management had only just begun, but Luca, a first-year MBA student, was already deep into his studies on business strategy, corporate finance and more. Then, at the end of the term's first week, he had to dive into a very different subject. "I've become an expert in immigration law," he says.

Luca is a Mexican citizen, and, like most international students in US MBA programs, he'd like to stay on after graduation and work here, most likely for a real estate investment company in Chicago. All that may now be in jeopardy. ("Luca" is a pseudonym; he requested that Bloomberg Businessweek use it to avoid drawing the government's attention-especially given the immigrant enforcement campaign now underway in Chicago.) On Sept. 19, President Donald Trump signed a proclamation to rein in the H-1B program, which allows nonimmigrant foreigners to work in the US. H-1B status ostensibly lasts for three years, although it can be, and often is, extended.

Anti-immigration organizations and liberal economic groups alike have long attacked H-1B visas as a tool for replacing US employees with lower-paid foreign ones. New private-sector H-1B jobs are capped at 85,000 annually, but the program is so popular the government holds a lottery to dole out approvals. And the Department of Homeland Security estimates that, on average in each of the last five years, 83% of the petitions for new employment filed by companies were for jobs that the employer initially identified as paying below the median wage; 28% were deemed entry-level. (Under the H-1B system, US-based employers file a petition to the government to allow a nonimmigrant foreigner to fill a specific job; the foreign worker is the beneficiary of that petition.)

The proclamation's new $100,000 fee on foreign nationals seeking an H-1B visa or entry for at least the next year has captured the most attention. (Although H-1B is commonly called a visa program, a beneficiary who's already in the country doesn't need an actual visa, which can only be obtained overseas, for the right to work here under H-1B status.) But as the government currently intends to implement the fee, it won't snare MBA graduates. On the other hand, two largely overlooked sentences in the proclamation that call for raising the program's wages could prove to have a bigger effect. This will depend on how the Trump administration implements and enforces these directives-and how companies respond. "Will they look for someone who is more skilled and more educated, and offer them a higher wage level?" asks Daniel Costa, director of immigration law and policy research at the Economic Policy Institute. "Or will they hire the same person they were planning to and just offer them a higher wage level than they think they deserve?"

One of the proclamation's directives calls for giving priority to higher-paying jobs in the lottery for new petitions. H-1B salaries are required to meet one of four so-called prevailing wage levels, which are calculated for any given job in any region, based on experience and qualifications. Currently the lowest two are set below the median wage. (The Level 3 wage is the median.) In late September the Homeland Security Department proposed new regulations that would give potential H-1B jobs in higher wage levels a better chance of winning the lottery by weighting them, but it wouldn't reserve all the spots for those petitions.

Prioritizing higher-paid jobs could assure H-1B status for many MBA grads. After all, business schools trade on the outsize salaries a degree can land. But as one moves further from the most prestigious schools and jobs, particularly in the consulting industry, those salaries deflate. Pay for graduates at many schools appears to come in below the Department of Labor's Level 3 wages, based on a review of the latest starting salary reports from a dozen MBA programs, comparing them with the prevailing wage levels for some of those schools' key geographical destinations.

Sales and marketing jobs, in particular, tend to pay less, even for graduates of elite schools. For example, the $148,000 median starting salary for sales and marketing hires from Kellogg, who made up a quarter of the school's 2024 graduates, fell well below the median salaries reported by the government for sales managers and marketing managers in Chicago, New York and San Francisco, the three leading destinations for the school's grads. (Adding the median signing bonus, first-year compensation exceeds the median in Chicago, but not New York or San Francisco.) At the University at Buffalo's management school, which sends more than half of its grads to jobs in western New York, the median starting sales and marketing salary of $81,000 comes in at the very low end of such salaries in Buffalo and Rochester, according to government figures.

Among the school employment reports reviewed by Businessweek that break out salaries by domestic and international students, more often than not international students reported lower starting salaries. In at least two instances, this couldn't have been because international students found work abroad. At both Southern Methodist University and Rice University, all the MBA graduates who reported salaries found work in the US, and international students accepted lower-sharply lower at SMU-median salaries. (Although the Career Services & Employer Alliance, an organization of B-school career teams and corporate recruiters, collects this data, it's unable to provide domestic and international salary averages across US schools, says Executive Director Megan Hendricks. She says CSEA hasn't compared MBA salaries with H-1B prevailing wage rates or analyzed the impact of the proposed changes on MBA students.) 

Melissa Ruggiero, assistant dean and director of Buffalo's career resource center, says only a handful of graduates reported sales or marketing salaries, including some who simultaneously earned a bachelor's degree and had no prior work experience. "One person can be a huge outlier, in either direction," she says.

SMU Cox Senior Assistant Dean Shelly Heinrich said in an email that international students in the previous two graduating classes landed higher median salaries than domestic students. She attributed the shift in 2024 to less hiring by consulting and tech firms, which pushed international grads "to more marketing/sales or ops/logistics functions which often have lower base salary ceilings (or more variable compensation)." Spokespeople for Northwestern and Rice did not respond to requests for comment.

Moreover, even though MBAs are more likely than other master's graduates to fill jobs in the top two wage levels, most of them take jobs classified in lower wage levels, according to data on new private-sector petitions Bloomberg obtained from the Department of Homeland Security through a Freedom of Information Act lawsuit, matched to initial applications to the Department of Labor, which are publicly available. From 2021 to 2024 almost half of all petitions for beneficiaries with master's degrees who studied business administration were for jobs initially identified in the second wage level; 21% were classified as entry-level. (In some cases, and across degrees, the actual salaries paid to beneficiaries were considerably higher than the prevailing wage indicated in the initial application, according to the data.) Just 9% took jobs in the highest wage level.

All of which suggests a very mixed effect for MBA grads and programs. Across all petitions the agency projects that its new rules will deliver far fewer visas for jobs in the lowest wage level. Top-level visas would almost double but still account for fewer than 10% of the total. Visas for the top two cohorts together would increase to a little more than a quarter of the total. But the second tier, below the median wage, would also grow slightly, and still make up more than half of all new beneficiaries.

A more straightforward procedure of granting applications for the highest levels first "would effectively kick out all the Level 1 and Level 2 wages," says Costa, of the Economic Policy Institute. The first Trump administration made exactly this change in 2020, but a court overturned the regulation on procedural grounds, and the incoming Biden administration declined to pursue it.

Prioritizing higher-paid jobs could assure H-1B status for many MBA grads.

Today, DHS argues that excluding lower-wage jobs from H-1B status wasn't "optimal." Costa says he suspects the department opted to keep them in the mix because it concluded "that will be more likely to pass legal muster, since there is no question that the rule will be challenged."

The proclamation separately calls on the Department of Labor to raise all the prevailing wage levels that H-1B jobs are required to meet.

And that $100,000 fee? News of it broke late on a Friday afternoon and sent immigration lawyers and their clients, especially those overseas at the time, scurrying. "A plain reading of that language says to me that if someone in H-1B status was outside of the United States when this proclamation was published, they're not getting back into the US after the Sept. 21 effective date," says immigration lawyer Dani Rizzo, a partner at the Buffalo law firm Phillips Lytle-"unless their employer pays $100,000."

Almost immediately, though, the border bureaucracy dialed back the pressure. The next day, DHS declared in a memo that the fee wouldn't apply to people who already had H-1B status. Instead it will be required only for first-time petitions for people who've never had H-1B status before and who are outside the US. In 2024 that represented less than half of the initial petition beneficiaries.

This would likely exclude students and graduates already in the country. But for a month that wasn't completely clear, says Rizzo, especially in situations when those people had to leave the country-would they have to pay the fee upon return? On October 20, though, the US Citizenship and Immigration Service made it official: The entry fee won't apply to people in the country seeking to change their status, including students.

"It's very good news for international students," says Rizzo. "It's clear that they can have cap H-1B petitions filed on their behalf as a change of status in the US, and thereafter apply for a visa outside the US, all without triggering the $100,000 fee."

Back at Northwestern, Luca had coffee with reps from the companies he hopes to work for in Chicago. "Right now their advice was for your internship, just go on as if nothing happened," he recounts. But a job after graduation, they told him, would depend on the regulations. He has other options, he says, including a special visa for Mexicans (and Canadians) to work in the US. Luca's platinum business education won't put him in debt, "but the ROI on the MBA does look really bad if I'm not in the US." 

Says Luca: "I'm just trying to stay positive. I've seen people who are catastrophically worried, and I don't think that's the best course of action."

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)