By Suzanne Monyak

Law360 (July 7, 2020, 10:30 PM EDT ) The Trump administration's guidance barring international students from living in the U.S. while taking university courses solely online during the pandemic threatens to deliver a financial blow to higher education while cutting off the foreign talent flow at its feet.

Under the new guidance, issued Monday by U.S. Immigration and Customs Enforcement, international students will not be approved to enter or stay in the U.S. if all of their courses are online. The policy forces these students to choose between paying full tuition to take their courses online from their home country, or to transfer schools or drop out.

While the personal hit to students, and financial hit to universities who depend on their tuition dollars, may be immediate, immigration lawyers and policy experts say that these rules make the U.S. a less attractive destination for international students and could hinder U.S. technology innovation down the road.

"This is going to hurt that flow of international talent. There's going to be this gap," said Aaron Blumberg of Fragomen, Del Rey, Bernsen & Loewy LLP, who represents universities. "We may not see that impact for three, four, five years, but I believe we will see that impact."

The Monday announcement, which will be followed by a temporary final rule, sent universities scrambling and caused panic among the students themselves, both incoming students abroad as well as the many continuing students who stayed in the U.S. during the summer to avoid travelling internationally during the pandemic.

Many universities were in the process of finalizing plans for the fall semester in light of the pandemic, with fall semester start dates fast approaching. Harvard University had announced just hours before the guidance was released that it would bring fewer than half of students to campus and hold all courses online.

"They're all scrambling right now to try to figure this out," said Susan Cohen, a co-chair of Mintz Levin Cohn Ferris Glovsky and Popeo PC's immigration practice who advises universities in Boston on immigration matters. "It was a huge effort going on today in all the colleges and universities across the United States to figure this out in very short notice."

Ken Cuccinelli, the second-in-command at the U.S. Department of Homeland Security, told CNN on Tuesday that the guidance is "expanding the flexibility massively," given that previously rules have barred foreign students from taking more than one course online.

"The direction that has been charted here … provides massive flexibility, gives the opportunity to do anything short of 100% online classes," Cuccinelli said.

The higher education community, however, criticized the guidance for its lack of flexibility. Under the ICE guidance, for instance, if a university is forced to move entirely online mid-semester due to an outbreak, international students would be forced to quickly arrange travel to their home countries or risk immigration penalties.

"At a time when institutions are doing everything they can to help reopen our country, we need flexibility, not a big step in the wrong direction," Ted Mitchell, president of the American Council on Education, said in a statement.

International student enrollment in the U.S. has already declined by more than 10% since President Donald Trump took office, according to a March report by NAFSA: Association of International Educators. This latest guidance and new unpredictability could further push students to take a gap year, or switch schools entirely, attorneys said.

"If we can just tell students that you need to leave so dramatically, if a school decides to be online, something completely out of the students' control, it just creates an environment where there's so much insecurity for the students," said Nadia Yakoob, a California-based immigration lawyer.

The guidance also comes on top of the Trump administration's existing travel restrictions covering Iran, China, the United Kingdom and much of Europe and limited consular services that have so far prevented students with acceptances at U.S. universities from getting their visas.

Universities worry that between all of those restrictions, students will not likely be able to come to the U.S. to study this fall, and may not be thrilled to pay the high cost of an American education to take online courses from home. Others may hail from countries in different time zones, with restrictions on free speech, or with limited access to WiFi and electricity that could make online education from abroad difficult if not impossible.

Lynn Pasquerella, president of the Association of American Colleges and Universities, told Law360 that there are serious concerns about a revenue loss from students withdrawing, which could result in job losses for university employees. She also said that universities would see a shortage of graduate student teaching assistants if they are forced to leave the U.S. and disenroll.

"The more difficult it is for students to come study in the United States, the more we run the risk of eroding our mission, which is to provide a liberal education, to create knowledge, to engage in research that will further our society," she said.

The financial hit could mean more closures and mergers of smaller private universities, and a lower quality of education at larger public schools, predicted Kenneth Megan, associate director at the Bipartisan Policy Center's higher education project.

"Universities are cash strapped because of the coronavirus already," Megan said. "These new rules around foreign students is just going to make it even more difficult for universities that are already worried about their bottom lines."

It could also hurt companies who currently hire students with specialized skills through curricular practical training, a program that allows students to work during the school year in an industry relevant to their degree.

Yakoob said that she represents a tech startup that is currently employing a student with a masters in computer science who is currently pursuing an MBA. If that student's courses are fully online, she will have to depart the U.S., and her employer will lose a key employee just as companies are trying to reopen, Yakoob said.

But the pain caused by a drop in enrollment from international students won't just be felt by universities and their employees in the short-term, but could also have a longer term impact on the U.S. economy by disincentivizing international students from choosing to study in the U.S.

Yakoob, who said she has been receiving emails from worried students for the past day, said the restrictions are yet another "deterrent for prospective international students."

"I think a result is that, and I think it's obvious, that a lot of international students are going to make the decision to take a year off, maybe transfer to a school in their home country," said Blumberg, who described a "trickle down effect" on the economy from this disenrollment.

According to the NAFSA report, international students contributed nearly $41 billion to the U.S. economy in 2019 and, during the 2018 to 2019 school year, created nearly half a million jobs.

Foreign students choose to pursue STEM degrees at high rates, which can spur technological innovation. More than three-quarters of patents awarded to the top 10 research universities in 2011 had at least one foreign-born inventor, according to New American Economy, a bipartisan research firm founded by Michael Bloomberg.

"We're really shooting ourselves in the foot," said Dan Wallace, deputy managing director of NAE. "This is the absolute worst time to be turning away people who both through their talent and their innovation and skills are going to help create jobs now and in the future."

Meanwhile, other English-speaking countries like Canada have stepped up their efforts to draw top-tier global talent with stronger postgrad work programs and even paths to citizenship for foreigners who study there.

Courtney B. Noce, a shareholder at Greenberg Traurig LLP, said that her clients who recruit from top universities are already worried, and have been for months before this new guidance, that the Trump administration's immigration policies will undermine the talent pool available.

"Our companies feel that having access to that F-1 talent is very important to them," she said, referring to the F-1 student visa. "Our clients are always looking for U.S. workers as well. This is really just an overall talent pool interest for them."

ICE has yet to release the full text of the rule, and attorneys said that it will likely be challenged in court.

Leon Fresco of Holland & Knight LLP, former deputy assistant general for the U.S. Department of Justice's Office of Immigration Litigation, said that universities could claim that the guidance is arbitrary and without a reasonable rationale.

"What is the U.S. gaining by this? And that's going to be a hard one to say," he said.

He also said that students could claim their due process rights have been violated if leaving the U.S. at this time would put them in danger. Universities successfully convinced a court earlier this year to permanently strike down another Trump administration policy that put foreign students at risk of severe immigration penalties if they accidentally violated their visa status.

But even if the guidance is blocked in court, or later revised, some attorneys say that some of the damage to the U.S.'s reputation as a destination for students has already been done.

This new guidance "certainly does not help our ongoing efforts to try to attract and retain international student talent in this country," said Rachel Banks, senior director for public policy at NAFSA.

"The playing field was already starting to get stacked toward Canada because they were so encouraging of high skilled students," Fresco said. "Now we've moved from indifferent to hostile, that really changes the playing field."

--Editing by Emily Kokoll and Michael Watanabe.

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