State Dept. pulls visa sponsor's designation (AP) - A company will no longer be allowed to arrange special federal visas for foreign college students to work at a Pennsylvania candy factory because the State Department - acting on complaints about poor labor conditions - has revoked the organization's certification. Students spent weeks protesting their working conditions at the factory that packed Hershey chocolates. They complained of hard physical labor and pay deductions for rent that often left them with little money. The non-profit Council for Education Travel USA, known as CETUSA, can no longer bring in students under the J-1 Summer Work Travel program. It is rare for the State Department to take such action. A State Department official said Thursday that the company lost its designation on Jan. 30 - nearly six months after the workers began protesting. Nearly 400 students worked at the plant. A telephone message left for CETUSA, whose corporate office is in San Clemente, Calif., was not immediately returned. The company's website said it has sponsored tens of thousands of students from over 50 nations since 1995. The State Department's action comes a year after an Associated Press investigation exposed widespread abuses in the J-1 program, which annually allows more than 100,000 foreign college students to work in the U.S. for up to four months. It comes the same week that the AP obtained a Jan. 18 State Department memo proposing a major overhaul of the troubled program. "The State Department is to be commended," said Danielle Grijalalva, executive director of the Committee for Safety of Foreign Exchange Students. However, we will continue to look to the U.S. Department of State to make sure its sponsors adhere to the Federal Regulations which were written to protect foreign students. The overhaul memo was written by Adam Ereli, assistant secretary for the State Department's Bureau of Educational and Cultural Affairs, to Assistant Secretary of State Ann Stock. It outlined critical and significant changes to the program, which has been a source of embarrassment for the agency. Late last year, Secretary of State Hillary Rodham Clinton ordered a thorough review of the program. The proposed fixes would prohibit students from working in factories, manufacturing, retail shipping and packing operations and seafood plants. Another change: Capping the number of hours a student could work at 40 - a move the agency predicted would be "by far the most controversial." "Almost all SWT employers expect their participants to work more than a 40-hour week," Ereli wrote. Critics say that's one of the problems with the program: Students, like the ones in Pennsylvania, are often exploited - working long hours with no overtime and forced to live in substandard housing. The AP interviewed dozens of students across the country who complained about working conditions, many in resort areas in Florida, the Carolinas and Pennsylvania. Saket Soni, director of the National Guestworker Alliance, an advocacy group that helped the students, said in a statement that the ban is a "big win" for students and called it "a blow against the larger trend of labor recruiters and companies using guestworkers to hollow out industries and undercut wages and conditions all over America." The AP also found that third-party brokers forced some women - mostly from Eastern European nations - to work in U.S. strip clubs. The State Department estimates that the rule change will cut 5,000 to 8,000 jobs, of which two-thirds were "highly localized in Alaska and the Pacific Northwest." But Ereli warned that sponsors and businesses that depend on the student labor could push back. "The seafood packing industry and the sponsor that supply workers to the industry are making a concerted effort to oppose this prohibition," Ereli said in the memo. The J-1 program began in 1963 as a cultural exchange. Participants must be college students in their home countries and are required to work while spending their summer breaks in the U.S. The idea was to allow them to make money and explore and learn about America in the hopes of fostering cultural understanding. But over time, the program became as much about staffing businesses as cultural enrichment. Businesses that hire a foreign student over an American can save 8 percent because they don't have to pay Medicare, Social Security and unemployment taxes. Also, the foreigners must have their own health insurance. Many businesses insist they need the seasonal labor during busy times, especially in resort towns. The students can be found waiting tables, flipping burgers or cleaning hotel rooms across the United States.