Getting In August 20, 2009, 2:45PM EST

Foreign Admits to U.S. Grad Schools Plunge

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Chinese Applicants Offset Decline

The one bright spot in the report came from China, where applications were up 14% and the Middle East and Turkey, a region that posted a 22% increase. Admissions offers, meanwhile, were up 13% for China and 10% for the Middle East and Turkey—without which the 3% overall decline would be a lot worse.

Applications from China continue to be strong because there is a strong demand for graduate education due to recent growth in China's undergraduate education market, says Bell. But there are not enough spots for students in China's top graduate schools and, as a result, many prospective Chinese students continue to turn to the U.S. for graduate education, he says.

While the appeal of studying in the U.S. may be losing some of its luster for some international students, demand from domestic applicants continues to grow, with upticks in applications and admissions offers. While 75% of graduate schools received more applications from prospective U.S. students in 2009 than 2008, just 55% received more international applications. At the same time, 58% of the schools surveyed reported an increase in offers of admission to U.S. citizens, while just 45% of schools reported an increase for international students this fall.

"If this decline in admissions turns into a decline in enrollment, this could mark the first time we see a shift from recent trends, with U.S. citizens making up a larger share of first-time enrollees this fall, and international students a smaller share," says Bell, who notes that the council will release the results of an upcoming report on international enrollment at graduate schools in November.

The shift is perhaps being felt most acutely in business schools, which are a big draw for international students; 61% of all foreign students in the U.S. are in the business, engineering and physical science fields, CGS says.

Applications to business programs were up 7% this year, but admission offers were down 5%, the biggest gap of any of the academic fields surveyed in the report.

This finding could be attributed to a deluge of international applications this year at the top business schools in what was an especially competitive year, says Bell.

"The top-tier business schools get inundated with applications and the acceptance rate is very low, even in a good year, so it seems like it was a little harder this year perhaps for international students," says Bell.

At the University of North Carolina's Kenan-Flagler Business School (UNC Kenan-Flagler Full-Time MBA Profile), applications from foreign students were down 16% vs. a year ago. Application volume from India was down about 25% this year, while South Korea applications sank 20% ; the countries represent two of the five largest international markets for the school, says Sherry Wallace, Kenan-Flagler's director of MBA admissions. As a result, the school admitted 20% fewer foreign students this year. International enrollment for the fall now stands at 22% of total enrollment, down from 29% in a typical year, Wallace says.

The school purposely exercised more caution this year when it came to making admissions offers to international applicants, Wallace says.

"We wanted to make sure that the students that were given the opportunity to enroll were people that were going to have the best chance of being successful in a trying economy," she says. "Obviously, we think we are doing that every year, but perhaps we paid more attention this year."

International enrollment also has dipped at Babson College's Olin Graduate School of Business (Babson Full-time MBA Profile), where foreign students comprise 35% of this year's incoming full-time MBA class, down from 44% last year, says Dennis Nations, Babson's MBA admissions director. International application volume at the school stood at 59% of total applications this year, up from 56% the pervious year, with applications still steady from countries like India, South Korea, and China, Nations said. But admitted students faced a number of challenges when it came to accepting admission offers this year, he noted, from securing loans to worrying about their job outlook post-graduation. For some, studying in the U.S. was too great a risk to take, he says.

"There are those that are admitted to the program who say, 'At the end of the day I want to be employed, and I have better prospects for that outside of the U.S.' " he says. "Many employers have put international diversity off to the side, because they know they have more bureaucratic challenges to work through now to get those students employed, and that message has gotten out loud and clear to students."

Damast is a reporter for BusinessWeek.com.