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If an applicant with an existing B1/B2 visa applies for an F1 visa and it is refused, is the B1/B2 still valid. Could he enter the US or would the B1/B2 be cancelled at the Port of Entry? The Consulate General of India status shows that "your passport is still with Consular Embassy." What does this mean?

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While the B1/B2 continues to be valid, an entry with that visa is likely to subject you to questioning at the border. Customs and Border Patrol (CBP) has access to the shared database and can see the F1 refusal as well as the consular official's notes on why it was not approved.

Depending on circumstances, attempting to enter with the B1/B2 could result in a refused entry and, perhaps, invalidation of the visa. You would have to present convincing evidence that you have no intentions of studying in the US, that you are just visiting, and that you have concrete plans and significant reasons to return home. Should you successfully enter on the B1/B2, don't make the mistake of then applying to change status to F1; the refusal is on record, and such an action could call into question your current, and any future, visas.

As far as the notation about your passport, it's simply that, nothing more, showing the document location, at the Consulate, before it being returned to you.

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    If the F1 is refused for, say, a 214(b) are you sure the consulate itself won't cancel the B-1/B-2 on the same basis? They are certainly allowed to cancel a visa if they receive evidence that the purpose of travel is inconsistent with that which the visa was issued for, and it is way more efficient for everyone if the consulate cancels the visa rather than waiting for the CBP to do it at the border. I'm hence thinking that if the consulate refuses the F1 but leaves the B the CBP is not so likely to second-guess that. – Dennis Jul 15 '17 at 18:42
  • @Dennis absolutely could be, but for purposes of responding to OP, I didn't want to speculate as to the reason for the refusal: it could be as simple as university fees were not paid. – Giorgio Jul 15 '17 at 18:45
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It depends on whether the consulate cancels the B1/B2 visa when you go into apply for an F1 visa. Consulates sometimes cancel existing visas when you go in to apply for a visa (before you know whether you are approved or denied for the visa you are applying for), although I am not sure whether they would do so for a B1/B2 and F1 case.

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