But because of a significant exemption for foreign students in the tax code, even if employers of foreign students are paying a fair wage, OPT can still create an incentive for employers to hire foreign students instead of U.S. workers.
The program, known as the Optional Practical Training Program (OPT), allows foreign students to remain in the country and obtain employment for up to six years in any profession.
Foreign students employed through these programs (and their employers) are exempt from Social Security, Medicare, and unemployment taxes.
Put differently, ensuring that this optional practical training program was actually for training purposes, as the name implies, rather than a massive foreign worker program, was the goal.
As noted above, the practical training programs have grown in size so quickly that there was a comparable number (539,000) of foreign students employed through a practical training program in 2023 alone.
The most popular version is simply called Optional Practical Training (OPT), which allows foreign students to work for up to a year after graduation.
A controversial foreign-labor program developed by the Department of Homeland Security (DHS) and managed by U.S. Immigration and Customs Enforcement (ICE) is creating an incentive for employers to hire foreign students rather than U.S. citizens or permanent residents while potentially costing the Social Security and Medicare programs over $4 billion in lost revenue every year.
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