B-school admissions officers are used to dealing with the ups and downs of application volumes. This past year, though, full-time MBA programs have noticed a worrying trend. Fewer applications are arriving from overseas, and that's troubling for schools that want to give their classes an international edge.

At some schools, the dropoff is staggering. At the University of California at Berkeley's Haas School of Business, international applications fell 26% from 2003. The Wharton School noted a 24% decline in non-U.S. applications, while UCLA Anderson School of Management received about 20% fewer foreign applicants. At Michigan Business School, international applications were down more than 30%.

No single answer explains why international interest has lessened in countries like Argentina, Brazil, China, India, and Japan. Some B-schools blame the U.S. economy. Others say the decline only looks worse following the explosive growth in management education's popularity in the late '90s through 2002. During that time, a handful of BusinessWeek's top 30 full-time MBA programs began enrolling closer to 50% of their classes with foreign MBAs.

NEW OPPORTUNITIES.  A closer look reveals that compared to a decade ago, international applicants have more choices, which is starting to affect U.S. B-schools' market share. Global economies are improving, which means "new educational options and new employment options" in places like India, says David Wilson, president and CEO of the Graduate Management Admission Council, the nonprofit which runs the Graduate Manangement Admissions Test. At MIT Sloan, head gatekeeper Rod Garcia says the one-year programs offered by INSEAD and IMD in Europe, for example, are more appealing than the standard two-year degrees in the U.S., which could account for the decline in European applications at MIT.

Top programs outside the U.S. have often had more diverse classes, but having a global perspective is becoming an increasingly important piece of the B-school package for applicants. INSEAD has seen a small uptick of about 5% in applications from India. "The young professionals see the benefit of getting an international MBA, knowledge of international business, and bringing it back to their country," says Johanna Hellborg, director of admissions.

Switzerland resident Katja Berlinger says she chose INSEAD's Singapore campus over The Wharton School in Pennsylvania, where she was also accepted, because of the diversity of the student body. "That's where the European schools are really better than the American ones," she says. "When you have 50% to 60% of one nationality, it's pretty clear which opinion is ruling over the others." Berlinger, 30, says INSEAD's one-year option was also a more attractive choice because she'll forfeit less salary.

VISA VEXATION.  Meanwhile, U.S. schools might also be losing share to its northern neighbor because Canada's immigration policies are more relaxed. The tiny Queen's School of Business received 10% more applications from abroad, with more Chinese and Indian applications in the pile. The University of Toronto's Rotman School of Management saw applications dip 10% overall, while international applications dipped 23%, due to a sharp falloff from Chinese applicants. But Rotman did note an uptick in applicants from India, reading 177 applications from India in 2004, up from 128 the year before.

That's not surprising, since access to U.S. work visas is another source of angst for MBAs. Fewer H1-B work visas are being offered, which suggests to foreign students that they won't be able to take a job in Corporate America when they graduate. Just 65,000 new H1-B visas were awarded in 2004 (the cap was reached on Feb. 17, 2004), compared with 201,079 new H1-B visa applicants that got the nod in fiscal 2001, according to the United States Citizenship and Immigration Services, a division of the Dept. of Homeland Security.

Snagging a student visa also takes more patience in 2004 than it did in 2001. Consulates now interview all student visa, or F-1 visa, applicants, instead of selecting a few applicants to meet in person, as many did prior to September 11. And slightly more people applying for F-1 visas were denied in 2003, vs. 2001. The rejection rate for student visa applicants changed to 25.3% in 2003, up slightly from 22.9% in 2001, according to data provided to BusinessWeek Online from the Consular Affairs office of the U.S. State Dept. During that same period, 24% fewer people applied for student visas, with 288,812 foreign students applying in 2003, vs. 380,562 in 2001.

CLOUDIER JOB OUTLOOK.  But London Business School admissions head Julia Tyler says a more difficult visa process in the U.S. isn't driving students to schools in Europe. "There's this kind of assumption that because of the [recent] difficulty in getting a [U.S.] visa, that suddenly European schools will pick up huge swells of students," says Julia Tyler, head of MBA admissions at London Business School. That's not the case, Tyler says, adding that international applications have been relatively steady. "Every nationality's application [pool] has been somewhat flatter, or in line with the overall trend."

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