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EB5 INVESTORS MAGAZINE

Why many investors dream of EB-5 to help achieve educational goals for their children

By Robert Garmong

America is the go-to destination for the majority of the world’s overseas students [1]. Nearly a quarter of all border-crossing students choose the U.S. as their destination [2].  Despite a recent drop-off, international enrollments in American schools and universities remain strong, with an estimated 1.1 million students in 2017 [3].  A major priority for most foreign nationals who are considering EB-5 investments in America is education for their children.

There is good reason for the U.S. to be the world’s destination of choice for education. Employers around the world list problem-solving ability as one of the hardest-to-find leadership skills, and America’s schools are commonly regarded as leaders in teaching this skill [4].  While schools around the world are attempting to shake age-old traditions of rote memorization, American schools encourage independent thinking in research and writing from kindergarten on.

American universities offer top-notch faculty, excellent facilities and flexibility for students. There is more tutorial support, and creativity is fostered more than in most other educational systems. While other university systems have recently devoted major resources to attempting to create an education for critical thinking, independence and entrepreneurialism, the U.S. has been on the forefront of this for decades. Perhaps most importantly, American schools encourage real-world, practical knowledge, rather than merely abstract theories.

However, recent developments have made the goal of a U.S. education more difficult for many people to attain. Both tightening U.S. government policies and economic developments have made it harder than at any time in recent memory for foreign students to attend American schools and to stay in the U.S. for work after graduation. EB-5 can be an excellent route to American education, avoiding many of these pitfalls. The goal of EB-5 is U.S. legal permanent residency, which benefits students at all levels, from the very first visa application to post-graduation.

F-1 VISA

Admission to a U.S. school, college or university does not automatically grant a student visa, and while the U.S. government does not issue data on the number of visa applications denied, it is not a trivial number. Students may be denied for reasons such as inability to support themselves, concern that the student will not return to his or her home country after their studies, and even mistakes in the application paperwork. A student on an EB-5 visa does not need an F-1 visa, so none of these concerns need apply.

Even after one has received an F-1 visa and begun American studies, there is no guarantee of future return to the United States. There have been cases of students who returned to their home countries only to be denied re-entry to the United States. Usually, this results from paperwork errors and the like, which can be cleared up relatively quickly. However, such concerns simply do not apply to green card holders. Permanent residence in United States brings peace of mind.

PRE-UNIVERSITY

Many foreign students attend private boarding schools that cost an average of nearly $40,000 per year [5] . American residents, however, have an alternative: tuition-free public schooling from approximately the ages of 6 to 18 (grades 1 to 12). American public schools provide an education that is often just as good as, or even superior to, expensive private schools [6]. The U.S. student visa (F-1) cannot be used to attend free public schools in the U.S. If one wants to use an F-1 student visa to attend an American public school, the parents must pay the entire cost to the local school district, which is estimated by the U.S. government’s National Center for Education Statistics to be an average of $10,556 [7]. This does not include room and board or other expenses.

UNIVERSITY APPLICATIONS

While free public K-12 education is a good start, there is more. Attending a U.S. high school may be a benefit to university applications. American high schools employ guidance counselors who perform many functions, including assisting university applications. The same functions that agencies in another country may charge thousands of dollars to perform are done for free by the guidance counselor at an American high school. This includes helping the student select the right college or university, making sure he or she has the right preparatory classes, getting letters of recommendation, and making helpful suggestions if there are elements of the students’ applications that need to be shored up, such as work experience or extracurricular activities [8].

Admissions departments at competitive American universities require proof of English proficiency. However, any student who has attended at least two years of high school in which the primary language of instruction was English can skip the requirement of an ESL exam, at many universities.

In some states, top-scoring high school students gain automatic admission to flagship state-funded universities, usually with certain additional testing requirements. In Texas, which is the most generous, every student who graduates near the top of their high school class and earns a reasonable SAT or ACT score is guaranteed admission to the flagship University of Texas at Austin. Other states that have guaranteed admissions currently include California, Iowa, Colorado, Mississippi, Missouri, Montana, Oregon, South Dakota and Florida. The exact details vary by state.

IN-STATE TUITION

A further benefit can be calculated in dollars and cents: U.S. residents can benefit from significantly reduced in-state tuition at state universities in their state of residency. Many of the most famous American universities are funded by state governments. These include the University of California at Berkeley, the University of Texas, the University of Michigan, the University of California at Los Angeles (UCLA), The Ohio State University and many others. At these universities, residents of their sponsoring states pay substantially reduced tuition rates. The residency benefit varies from state to state, but the average is $15,512. The average of tuition and fees for in-state students is $10,202; it comes to $25,714 for out-of-state students, including foreigners [9].

There is one crucial caveat for any potential EB-5 client who wishes to take advantage of in-state tuition benefits: These benefits apply only to residents of the state where the student wishes to attend university. EB-5 applicants would do well to choose where to live with an eye on the universities within each state. One advantage of the EB-5 regional center program is that the investor can choose to live anywhere within the United States.

What counts as a “resident” varies from state to state. Most states require the student and/or their parents to live there for at least a year before they qualify for in-state tuition. In most cases, whatever status you begin with stays with you throughout your years of studies. In other words, if a student is considered a non-resident when they start at the university, they will pay out-of-state tuition for the entire time they are at the university.

It should also be noted that many of the most famous universities in America, including the Ivy League, are private schools. For those universities, there is no discount for local residents. However, in whichever case, public or private, there are generally huge benefits for U.S. green card status in the form of financial aid and student loans. According to U.S. law, anyone who holds permanent residency is fully eligible for all federal student aid, including government-backed student loans. According to the National Center for Education Statistics, the average grants for a full-time undergraduate student came to $7,110, with an additional $9,480 of available loans [10]. This means that it should be possible for a U.S. resident student to attend public university with little to no upfront expense.

POST-GRADUATION

Many foreign students want to stay in the U.S. after graduation, but that can be very challenging [11]. In the past, the H-1B work visa provided a relatively straightforward path to remain in the U.S. However, H-1B, which used to be a relatively reliable path for many foreign nationals who have job opportunities to stay in the United States, has become increasingly difficult in recent years. The category has been oversubscribed for years, necessitating a lottery in which fewer than 40% of qualified applicants with job offers receive the visa. Increased restrictions under the Trump administration have further discouraged employers from even seeking to hire potential H-1B participants. The current immigration climate and policy is focused upon hiring U.S. persons for what would normally be H-1B positions. Even under the best of circumstances, the H-1B visa is tied to a particular employer, limiting one’s job mobility and placing the visa holder at the mercy of market forces.

For the savvy investor, who understands the program and plans carefully, EB-5 can be a great benefit to educational planning. EB-5 presents the ultimate in portability. It isn’t tied to a particular university, job or location. It is a liberation from many sources of stress and anxiety, enabling parents and their children to focus their attention where it belongs: planning their children’s best educational and career choices for now and into the future.  Nor is it only the present generations who stand to benefit. EB-5 means that generations into the future stand to benefit from all the opportunities of the U.S.

Notes:

[1] https://www.timeshighereducation.com/student/news/best-destinations-study-abroad-chosen-parents

[2]  https://www.migrationpolicy.org/article/international-students-united-states

[3]  https://www.politico.com/story/2018/11/13/colleges-foreign-students-trump-985259

[4] https://www.forbes.com/sites/hecparis/2018/05/17/the-most-important-leadership-skill-you-probably-never-learned/#69da949f7fc4

[5] http://www.collegebound.net/content/article/how-much-does-boarding-school-cost-/18833/

[6] https://news.virginia.edu/content/new-study-finds-low-income-students-do-not-benefit-private-schooling. Original paper: https://journals.sagepub.com/doi/10.3102/0013189X18785632

[7] https://nces.ed.gov/pubs2018/2018303.pdf

[8] https://www.usnews.com/education/blogs/international-student-counsel/2015/07/20/5-ways-studying-at-a-us-high-school-can-strengthen-a-college-application

[9] https://trends.collegeboard.org/college-pricing/figures-tables/2018-19-state-tuition-and-fees-public-four-year-institutions-state-and-five-year-percentage

[10] nces.ed.gov/programs/digest/d10/tables/dt10_351.asp

[11] https://www.npr.org/sections/ed/2018/07/10/599219792/u-s-degree-check-u-s-work-visa-still-a-challenge

Robert Garmong

Robert Garmong

Robert Garmong is an education and immigration consultant who has helped Chinese students successfully pursue their U.S. education dreams for more than 10 years. With a Ph.D. in philosophy from the University of Texas at Austin and a B.A. in economics and political science from the University of Chicago, he taught business ethics and philosophy in the U.S. and China for many years before leaving academia to focus on consultancy.

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