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America Is About to Hand Its Best Founders to Its Rivals -
by Josh Wolfe (cofounder + partner, Lux Capital) + Deepak Hegde (Professor NYU Stern)
On June 17, the White House cleared the final regulatory checkpoint for a Department of Homeland Security rule that would cap F-1 student visas at four years, shorten the post-graduation grace period from 60 days to 30, and replace 30 years of “duration of status” admission with discretionary federal review. Federal Register publication is imminent. The effective date will follow 60 days later — putting the rule on track for early fall.
The press has framed it as a question about students. It is not. It is a question about whether the federal government should override one of the most productive talent markets the world has ever known — and hand a competitive edge it took 50 years to build to Beijing, Ottawa, and Brussels.
Consider Jan Koum, a Ukrainian immigrant who arrived in the United States at 16 and worked as a janitor while attending San Jose State. He applied for jobs at Twitter and Facebook; both rejected him. A résumé without a degree did not impress recruiters. So he started his own company. Five years later, Facebook bought it — WhatsApp — for $19 billion.
The labor market made a $19 billion mistake. The entrepreneurship market corrected it. That correction — quietly, across decades, without subsidy or industrial policy — has been America’s quiet competitive advantage. It is what the new rule would unwind.
Consider who the F-1 cohort actually is. Roughly three-quarters of foreign nationals who earn STEM PhDs at American universities stay; for Chinese and Indian graduates, the rate exceeds 80 percent. They are the population from which one in four U.S. unicorns draws a founder; counting all immigrant pathways, more than half of America’s billion-dollar startups have at least one. Without immigrants, that herd would be cut in half.
The cap does not fit the work. The median U.S. STEM PhD takes 5.7 years; physics PhDs average six. The rule is not long enough to finish the degree it regulates. Every foreign physicist, computer scientist, and materials engineer in serious graduate work will need an immigration officer’s permission to keep going. Sometimes she will not get it.
Andrew Ng arrived on an F-1 at Carnegie Mellon in 1993, spent five more years on his Berkeley PhD, and co-founded Coursera, Google Brain, and DeepLearning AI. Jensen Huang, founder of Nvidia, spread his Stanford master’s over eight years while working at LSI Logic. Fei-Fei Li, the “godmother of AI” now running World Labs, took six years to finish her Caltech PhD. Charles Zuker, grandson of Eastern European Jews who fled to Chile during the Holocaust, came to MIT at 20 and co-founded the biotech Kallyope. None of them moved at the four-year pace. Each one’s continuation past year four would have been an officer’s coin flip.
There is a name for this pattern in economics. Labor markets cannot observe ability directly; they read signals — degrees, schools, prior employers, accents. When the signal underrates the worker, she rejects the wage and becomes the residual claimant of her own talent. She starts a company. Entrepreneurs, the data show, score higher on cognitive tests than equally credentialed employees, and lower on credentials than equally able ones. America’s edge has never been about polishing the resumes the world’s HR systems approve. It is about absorbing the people those systems miss.
This is happening now, in artificial intelligence. A March 2026 NBER paper linking Census records to 42,000 AI researchers finds the share working in industry rose from 48 to 68 percent between 2001 and 2019 — and the decline in the U.S.-born share is “almost entirely accounted for” by Chinese- and Indian-born researchers stepping in. The American AI revolution is being built, in significant part, by exactly the foreign STEM PhDs the rule would turn away.
The rule converts what was an arbitrageable labor-market mistake — talent the market underrated, corrected by entrepreneurship — into an irreversible immigration decision. An officer reviewing an extension at year four cannot see a future founder. He sees a delay, a discretionary file, one of hundreds on his desk, and optimizes against the application that becomes tomorrow’s headline.
The talent is already moving. A March 2025 Nature survey found 75 percent of U.S.-based scientists who responded considering leaving. Fall 2025 brought a 17 percent drop in new international student enrollments. The European Research Council saw a 31 percent jump in applications for its flagship grants, with “particular growth” from U.S.-based researchers, and doubled its relocation top-up to €2 million. Canada committed $1.2 billion to attracting foreign talent. China launched a visa for international STEM graduates.
And the F-1 rule does not stand alone. The wage-weighted H-1B lottery just ran for the first time, the $100,000 H-1B fee comes up for renewal in September, and a new USCIS policy now pushes green-card applicants to leave the country and apply abroad — so even a founder who beats the four-year cap may have to leave the United States to secure the right to stay.
The reform that would actually serve American workers — a startup visa, a stapled green card for STEM PhDs, an exemption from country caps that trap Indian and Chinese graduates in decade-long queues — is the one Congress keeps refusing to pass. At a minimum, the administration should not be using regulatory authority to make the problem worse.
America has spent 50 years operating one of the most efficient talent markets on earth: a system that quietly absorbed the people the world’s labor markets underrated and let them reprice themselves through entrepreneurship. No subsidy built it. No industrial policy created it. The F-1 rule replaces that market with the discretion of an immigration officer. Let it take effect, and the United States loses not just the founders it never identified, but the mechanism that found them — and the rest of the world picks up the difference.
English
