Nishant Banore got one step closer to his dream of attending a business school in the U.S. when he received an offer of admission this fall from UCLA's Anderson School of Management. Banore, founder of I-Alive, a nonprofit that educates Indian youth about healthy living, was even more excited when the school told him he'd landed a lucrative $30,000 fellowship, a coup in an especially competitive year for B-school admissions. The Indian applicant's enthusiasm quickly waned though as he considered his job prospects in the U.S. after graduation. With limited H-1B job visas available, a shaky economic climate, and new restrictions on hiring foreign workers in the financial services sector, attending an American B-school all seemed all of a sudden too big a risk to take.

"I don't think I can leave my family's future on luck and hope," says Banore, who lives in Mumbai. He turned down Anderson this week to attend one of the top B-schools in India, the Indian School of Business.

For years, American business schools have effortlessly attracted a diverse body of international students, eager to come for a top-rate business education and the chance to work in the U.S. after graduation. But diversity at top B-schools across the country may take a hit this year, as a growing number of international students put off plans to attend school or decide to attend schools in their home countries instead. Though it's still too early to tell what the impact will be on next year's class, a growing number of students from China, India, Europe, and the Middle East say they are considering, or have already decided, to decline their acceptance offers to prestigious U.S. business schools.

Job and Visa Worries

Meanwhile, a growing number of foreign students studying in the U.S. said they plan to return home after graduation, according to a study by the Ewing Marion Kauffman Foundation released onThursday. The students fear that they will not be able to find a job after graduation and a substantial majority—85% of Indians and Chinese, and 72% of Europeans—are worried about obtaining work visas, according to the study. The attitude of students, particularly the Chinese, towards employment opportunities has shifted, as well. Nearly 52% of Chinese students said they believed China had the best job opportunities, vs. 32% of Indians and 26% of Europeans. That's a sharp change from the 1980s and '90s, when most skilled immigrants believed the best job opportunities could be found in the U.S., the foundation says.

The shift comes at a time when the climate for international students in the U.S. has become increasingly chilly. New rules under the Troubled Assets Relief Program (TARP) have imposed strict hiring restrictions on any companies receiving the federal bailout funds that hire H-1B workers. Bank of America rescinded 61 offers to second-year international MBA students this March, heightening concerns that other banks may soon follow suit, or worse, that there will be a general halt on H-1B guest-worker visas.

Complicating matters, international students are facing difficulty obtaining funding for B-school. In the past, most students participated in loan programs that allowed applicants to obtain up to $150,000 without a co-signer to assume stewardship of the loan should the borrower default. The banks that used to offer these programs have withdrawn from the loan market, and some top schools have still not yet announced replacement programs.

At the University of Chicago Booth School of Business, applications from international students are down, and prospective admitted students are worried about their job prospects going forward, says Rosemarie Martinelli, Chicago's admissions director.

"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."

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