World to U.S. B-Schools: Thanks, but No Thanks

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"I can't tell you how many conversations I've had with students all over the world admitted to our school here who are just really wrestling with the question, 'Is this worth the investment?'" says Martinelli.

Political Sea Change

According to the International Institute of Education, business and management is the most popular field of study for international students in the U.S. Of the 623,805 foreign students enrolled in the U.S., 276,842 are graduate students, 16.3% of whom were studying in graduate finance or MBA programs in 2007, they said.

Some worry those numbers may not be quite as robust this academic year. Dave Wilson, president of the Graduate Management Admissions Council, an international association of business schools, says he expects that U.S. business schools will see dips in application numbers from countries like China and India, which have provided B-schools with a high volume of applications in recent years.

"You look at the cost, the difficulty of getting financing—and then suddenly our wonderful Congress decides they don't want you to come," Wilson says. "I worry people are not going to come at all."

One applicant from Israel, who did not want his name used because he hasn't decided where he'll be going to school, says he is considering turning down an offer from the University of Pennsylvania's Wharton School, his original first choice, in favor of attending Insead in France or Israel's Tel Aviv University. He's had trouble obtaining a no co-signer student loan at Wharton so far and moving his wife and two sons to the U.S. seems like too big a risk at the moment, he says.

"It would cost me more than quarter of a million dollars to come here, which is a lot, especially when you don't know what the future is going to look like in 2011," he says. "My wife and I have gotten cold feet."

Wave of Withdrawals

Business school admissions officers said they are trying to be as flexible as possible, given the circumstances. The University of Virginia's Darden School of Business has extended the deadline for submitting a deposit for all international students because the "situation is so uncertain," says Sara Neher, Darden's admissions director.

At the University of Notre Dame's Mendoza College of Business, admissions director Brian Lohr said he is "closely tracking" the decisions of international students admitted to the school. So far, only seven students, mostly from India and China, have turned down admissions offers, but he expects to see additional withdrawals soon.

"I just have this feeling that when the international students get down to the nitty-gritty of trying to figure out how they are going to pay for this, that we're going to see some folks fall out," Lohr says.

Some students have already made the decision to leave the U.S. behind. Juan Manuel, a student from Spain who worked in the U.S. for five years at the World Bank, was in the midst of applying to Columbia Business School and Wharton this fall when he received an acceptance letter from Insead in November. It would have been "totally impossible" to get a no co-signer loan for any of the U.S. B-schools at the time, says Juan Manuel, who declined to give his last name. So he accepted the Insead offer, arriving on the Fontainebleau campus in January, leaving behind a girlfriend and close-knit circle of friends in the U.S.

"A U.S. business school was always my dream, but I think I made a good choice," he says. "It hurts because part of my life was in the U.S., but looking towards my future, I felt I had no other choice but to come here."

Damast is a reporter for BusinessWeek.com.