DHS’s $100,000 OPT Fee Plan Tests The Limits Of Executive Power Over Foreign Graduate Work

The US Department of Homeland Security has proposed a dramatic restructuring of the financial conditions attached to Optional Practical Training, potentially making a longstanding work authorisation pathway for international students substantially more expensive for universities and employers.

 

Under the proposed rule, an educational institution certified by the Student and Exchange Visitor Program would pay $70,000 when it first recommends an F-1 student for Optional Practical Training, followed by $30,000 for a subsequent OPT recommendation. The second charge would apply to later participation in the programme, including the 24-month extension available to eligible graduates in science, technology, engineering and mathematics fields.

 

The proposal, issued by DHS through US Immigration and Customs Enforcement, is not yet law. It remains subject to public comment and further agency action. But its legal significance extends well beyond the immediate financial burden.

 

At its core, the proposal raises a question over how far the executive branch can go in using regulatory conditions and fees to control access to an immigration programme that Congress has not expressly abolished.

 

DHS Relies On Broad Immigration Authority

 

DHS bases the proposal principally on its general authority to administer and enforce immigration laws and, in particular, Section 214(a) of the Immigration and Nationality Act, which gives the Secretary authority to prescribe the time and conditions of admission of nonimmigrants.

 

The agency argues that practical training is part of the conditions attached to F-1 status and that it therefore has authority to establish requirements governing participation in OPT.

 

That argument has substantial precedent behind it. In Washington Alliance of Technology Workers v. Department of Homeland Security, the US Court of Appeals for the District of Columbia Circuit upheld DHS's authority to permit qualifying F-1 students to undertake practical training after completing their studies. The court concluded that DHS's power to regulate the “time” and “conditions” of nonimmigrant admission could encompass employment reasonably related to the F-1 visa category.

 

That ruling gives DHS a significant legal foundation for regulating OPT. But it does not necessarily answer the more difficult question presented by the new proposal.

 

The issue now is not simply whether DHS can regulate OPT. It is whether the agency can impose a six-figure financial barrier as a condition of participating in it. That distinction could become central to any litigation.

 

Is The Charge Really A Fee?

 

One of the most significant legal questions concerns the character and purpose of the proposed payment.

 

DHS describes the amounts as fees intended to strengthen programme integrity, deter fraud and encourage schools to scrutinise OPT recommendations more closely. The agency also argues that the charges are reasonably related to the statutory purposes of the F-1 classification.

 

But the proposal contains an unusual feature. DHS acknowledges that the money collected would be deposited into the US Treasury as miscellaneous receipts rather than retained by ICE for administering or enforcing the OPT programme.

 

The distinction between a regulatory fee and a charge that operates principally as a policy instrument could become important in litigation.

 

The proposed payments are not calculated simply by reference to the government's direct cost of processing an OPT recommendation. DHS instead places substantial emphasis on deterrence, programme integrity and the relationship between OPT and the H-1B system.

 

The agency's economic analysis also projects billions of dollars in annual transfers to the federal government if the proposal takes effect. That does not by itself establish that the charges are unlawful. But it could prompt questions about their statutory character and whether DHS has adequately explained why Congress authorised such a substantial financial condition for participation in OPT.

 

DHS is effectively arguing that the financial burden is justified because it changes behaviour. Schools would have a stronger incentive to scrutinise recommendations, questionable arrangements would become less attractive and employers could have less incentive to use OPT as an alternative to other employment-based immigration routes.

 

A court could therefore be asked to consider whether DHS has adequately connected the size and purpose of the charge to the authority Congress delegated to the agency.

 

The $70,000 Charge Could Face Close Legal Scrutiny

 

The proposed initial charge could face particularly close legal scrutiny because DHS does not calculate it simply by reference to the cost of processing an OPT recommendation.

 

Instead, the agency says it selected an amount comparable to certain H-1B charges partly to discourage employers and students from using OPT to avoid H-1B programme fees and restrictions. That rationale is significant.

 

DHS is not merely regulating how OPT operates. It is seeking to influence the relative attractiveness of two separate immigration programmes by making participation in one substantially more expensive.

 

That could invite an argument that the agency is using its authority over F-1 students to pursue a policy objective associated with the H-1B programme.

 

Congress has created separate statutory frameworks for F-1 students and H-1B specialty occupation workers. A legal challenge could therefore question whether DHS may use its regulatory authority over one classification to impose a financial deterrent designed, at least in part, to discourage reliance on that classification as a route towards longer-term employment.

 

The agency is likely to respond that OPT is not a statutory entitlement and that Congress has left substantial room for DHS to establish the conditions under which F-1 students may remain in the US and undertake practical training.

 

That argument is supported by the long history of executive regulation of practical training. But the unprecedented scale of the proposed fee creates a factual and legal distinction that earlier OPT litigation did not resolve.

 

The Proposal Could Be Challenged Under Administrative Law

 

If the rule is finalised, litigation would likely centre on the Administrative Procedure Act.

 

A challenger could argue that DHS has exceeded its statutory authority, acted arbitrarily or capriciously, or failed adequately to explain the connection between the proposed charges and the objectives it claims to pursue.

 

The agency has attempted to anticipate some of these arguments. Its proposal contains an extensive explanation of why it believes the fee is reasonably related to F-1 status. DHS points to alleged fraud, problematic worksites, “pay-to-stay” arrangements and concerns that OPT can be used to bypass H-1B restrictions.

 

The agency also says the financial burden would encourage schools to conduct more rigorous reviews before making OPT recommendations.

 

But the scale of the charge could make the adequacy of that reasoning a critical issue. DHS's own analysis acknowledges that the proposal could produce major reductions in OPT participation. It estimates annualised costs of the rule at between $32 million and $8.2 billion, with a primary estimate of about $4.1 billion. The agency also projects annual transfers from educational institutions to the federal government of between about $8.7 billion and $16.9 billion.

 

Those figures demonstrate that the economic consequences are not incidental. The financial burden is central to how the proposal would operate.

 

That could strengthen a challenge arguing that DHS has not adequately explained why such a substantial charge is necessary or authorised under the statutory framework governing F-1 students.

 

The Major-Questions Doctrine Could Enter The Dispute

 

The proposed rule could also bring the major-questions doctrine into the litigation. The doctrine places limits on an agency's ability to claim broad regulatory powers over matters of major economic or political significance without clear congressional authorisation. Its relevance here would depend heavily on how a court characterises the proposed charges and their effect on the OPT programme.

 

DHS would be likely to argue that immigration is an area in which Congress has delegated substantial authority to the executive branch and that regulating the conditions of F-1 status falls squarely within that delegation.

 

A challenger, however, could contend that using that authority to impose a charge of this magnitude would go beyond ordinary administration of the programme, particularly if the practical effect is to substantially reduce access to OPT.

 

The proposed rule would not formally eliminate OPT. But the scale of the charges could make participation considerably more difficult for universities, students and employers.

 

That distinction could prove important. A court would have to determine whether DHS is regulating an existing immigration programme within authority already delegated by Congress or effectively redesigning access to that programme through a financial condition for which Congress has not provided sufficiently clear authorisation.

 

Schools Become Immigration Gatekeepers And Financial Risk-Bearers

 

The proposal would also change the relationship between universities and their international students.

 

At present, the designated school official plays an important compliance role in the OPT process. Under the proposal, that role would acquire a direct financial dimension.

 

A school would have to pay the applicable fee before its designated official could enter the OPT recommendation into the Student and Exchange Visitor Information System. USCIS would not be permitted to grant employment authorisation if the required payment had not been made.

 

This would make the university a financial gatekeeper to federal employment authorisation. The financial exposure could be particularly significant for smaller institutions. DHS itself estimates that the rule would have a significant economic impact on a substantial number of small entities and identifies more than 1,300 private non-profit institutions as small entities for purposes of its regulatory analysis.

 

The agency also acknowledges that schools could pass the cost to students, other students or employers. That creates another potential source of controversy because the party legally required to make the payment may not ultimately bear its economic cost.

 

The arrangement could also create difficult institutional decisions. Universities may have to determine whether an individual student's proposed OPT participation justifies a charge that could be many times higher than the cost of the student's education or administrative processing.

 

Reliance Interests May Also Matter

 

DHS has attempted to address reliance concerns by making the proposal prospective. The proposed fee would apply to OPT recommendations made after the final rule becomes effective, rather than retroactively imposing charges on students who have already received OPT authorisation.

 

That prospective approach could strengthen DHS's position, but it would not necessarily end the reliance issue.

 

International students and educational institutions have for years made educational, employment and recruitment decisions around the availability of OPT. STEM graduates, in particular, have been able to rely on the additional 24-month extension when planning their transition from higher education to employment.

 

The agency nevertheless concludes that the interests of students, employers and educational institutions in the existing system are outweighed by programme-integrity and worker-protection concerns.

 

A court reviewing the final rule could examine whether DHS adequately considered the consequences of disrupting established reliance interests and whether its explanation reasonably addressed those consequences.

 

The question would not simply be whether the government is permitted to change policy. Agencies generally can change regulatory policy. The more important issue would be whether DHS followed the required administrative process and adequately explained why the new policy is justified.

 

The Rule Could Reshape The H-1B Pipeline

 

The proposal is also significant because OPT has become closely connected to the H-1B system. For many international graduates, OPT provides the period during which they obtain practical experience while seeking longer-term sponsorship. STEM graduates can obtain an additional 24 months of work authorisation, giving them a substantially longer period to compete for H-1B sponsorship.

 

DHS expressly identifies this relationship in its proposal. The agency says the fee is partly intended to prevent OPT from being used to circumvent H-1B fees, caps and prevailing-wage requirements.

 

That could have consequences beyond student immigration. If the proposed charges substantially reduce OPT participation, employers could face a smaller pool of international graduates available for professional positions. Students may instead seek opportunities in other countries, while universities could face pressure to reconsider the value and cost of international enrolment.

 

The proposal could therefore alter the economic relationship between the US higher education system and its international talent pipeline even though its immediate legal target is a temporary work authorisation programme.

 

A Fee That Could Become A Test Of Agency Power

 

The proposed OPT charges represent more than another increase in immigration costs. They test an important boundary in administrative law: how much policy-making power Congress has delegated to an executive agency when the agency regulates an existing immigration programme.

 

DHS has a significant legal foundation because courts have recognised its authority to regulate the conditions of F-1 status and to establish OPT through regulation. But the new proposal goes further by attaching a potentially prohibitive financial condition to participation.

 

That makes the final rule's reasoning as important as the fee itself. If DHS can demonstrate a sufficiently close relationship between the amount charged, programme integrity and its statutory responsibilities, the agency will have a stronger defence. If a court instead concludes that DHS has not adequately established the statutory basis for a charge of this magnitude, or that the agency failed to reasonably explain the rule's economic and policy consequences, the proposal could face a serious legal challenge.

 

The legal dispute, if the proposal becomes final, may therefore turn on a relatively narrow but consequential question: Congress has given DHS broad authority to regulate the conditions of F-1 status, but how far does that delegation extend when the agency attaches a financial condition capable of fundamentally changing access to practical training?

 

The answer could determine more than the fate of the proposed OPT charges. It could help define the boundary between administering an immigration programme and using delegated regulatory authority to substantially reshape it.