In its 24-year history, it is the first time that the US EB-5 visa program has almost run out of visas for the current fiscal year. The main reason is the large and growing demand for these visas from Chinese citizens. The EB-5 visa program requires applicants to invest at least $500,000 to get permanent residency in the US.
Till recently, this visa program did not even hit its annual limit of 10,000 visas for potential investors and their family members. But this year, the demand for these visas has been overwhelming.
According to law, no single country can be issued more than 7% of the total number of EB-5 visas per year, but the US government has allowed any unclaimed visa slots to be handed over to China. It is estimated that about 85% of the quote is going to Chinese applicants.
Students in the United States apply for EB-5 visa because all other paths to permanent residency in the country are more difficult.
Twenty-five year old Eric Zhu started the EB-5 application process one year before graduating from the University of Missouri-Columbia. He thought he had little chance of staying in the US on an H-1B visa, which is usually granted to foreign workers in the fields of science, technology and engineering. For Zhu, EB-5 seemed to be a more convenient way to obtain permanent residency in the US since he could use his parents’ money to make the necessary investment.
Zhu looked up a number of agencies specializing in helping foreigners use the EB-5 process, but he heard several stories of fraud done by such agencies. “There are so many unreliable EB-5 agencies out there. A loss like $500,000 probably means nothing for a really wealthy family. But for me, it’s too risky,” Zhu said. Eventually, he decided not to apply, and took his chance with the H1-B program instead.
Last year, the number of foreign students studying at American universities reached a new high of 819,644. Among them, 200,000 were Chinese students.
There are limited opportunities to stay in the country after graduation. According to the current visa system, the maximum number of H-1B visas that can be issued is kept at 85,000 per year for private employers. Of these, only 20,000 are set aside for graduates of US universities.
Under the EB-5 scheme, in addition to investing a minimum of $500,000 in a US business, the applicant must also prove that he or she created or preserved at least 10 full-time jobs in the country.
On October 1 this year, a new batch of 10,000 EB-5s was made available again. The State Department predicts that very soon they will be seeing a more permanent backlog in EB-5 visa applications from China and the waiting time could stretch to two years at first and then up to three years.
At present the backlog is of about 10,375 applications. Such hold-ups is a big cause of worry among Chinese students trying to stay longer through this visa program. In case the student turns 21 while their application is under process, they would not be able to claim to be a dependent of the parent who is making the required investment.
On the other hand, the EB-5 program has also attracted criticism for its potential of getting abused by the wrong people. “Like any program, there are good people and bad people in the program. And it’s both important for the immigration agency and Security and Exchange Commission to exercise proper oversight to allow the good projects to go forward and to stop the fraudulent projects,” says Stephen W. Yale-Loehr, immigration law professor at Cornell Law School.
However in spite of the risks, it is a program that should be expanded, according to Yale-Loehr. “It’s a program that’s a four-way win. It’s a win for US tax payers because it brings in foreign money to help develop projects at no expense to the taxpayer. It’s a win for U.S. workers because it creates jobs. It’s a win for U.S. project developers because it allows them to get money for projects that might not be able to get otherwise. It’s also a win for the foreign investors because they get a green card from their investment in United States.”
As per the 2012 estimates of the US Citizenship and Immigration Services, the EB-5 program had created more than 49,000 jobs. The US government also says that the program has generated more than $6.9 billion in new investment ever since it was launched in 1990.