They are not directly affected when applying for h1b but think about it what this means to both employers and students. It's a signal that immigration policy can change on a whim. For employers, hiring foreigners has always been cumbersome and now it's even worse due to the uncertainty. For students who starts working on h1b, you are in "immigration jail" in the US for years

My understanding is that depends heavily on whether you’re from a quota country. If you’re from India, you’re in immigration jail for decades. If you were from Costa Rica, the H1B is much more decent path.

If this doesn’t apply to foreign US university students then this policy actually helps those students because it will free up spots in the lottery for them or eliminate the lottery, and reduce the quota line for quota country student currently studying.