In 2009, international admits to graduate schools have declined, a first in five years, according to a Businessweek article published earlier this week.

Though the report found a 4% increase in international applications, the total number of international applications received this year is still below 2003 application levels at many of the 253 schools that responded to the survey.

The findings come a time when international students are increasingly getting cold feet about coming to study in U.S. graduate schools. Many are worried about their job prospects and the daunting challenges associated with obtaining an H-1B visa to work in the U.S. after graduation. A number have had trouble securing financing to study in the U.S., a problem exacerbated this year when many graduate schools lost the contracts for the co-signer loan programs on which many international students had depended, and had to scramble to find replacements.

Experts say international students are increasingly turning their sights to business programs in Asia and Europe, where a number of top business schools have emerged in recent years.

Main issues seem to be xenophobia, current economic conditions, and issues with acquiring an H-1B visa. A recent Techcrunch post agrees with this, supplying an additional explanation of a phenomenon known as a “reverse brain drain“.

We’re already seeing the reverse brain drain as smart immigrants take their US educations and experience building companies and creating technology back to their home countries.  But now, xenophobia and the lack of any sensible H-1B visa policy is keeping the world’s brightest minds from coming to the U.S. in the first place.

The United States economy will surely take a hit as more and more international students decide to take grad school elsewhere (or forgo it altogether). We contacted Alfonso Mendoza, President of the Graduate Student Association, for a brief comment about the situation. That brief comment evolved into a whole post on his blog. Mendoza agrees with the problems regarding the visas, and he focuses on another issue: globalization.

The saying “America, the land of opportunity” implies people must be physically located here to find economic opportunities.  But with IT technology facilitating the way these companies conduct business, the physical location of their employees becomes less important and to many young foreign professionals, America does not have to be the land of opportunity. With companies choosing to set up branches in countries like India and China due to lower operational costs, these young foreign adults now have the benefit of being educated in their home country and starting their careers with one of these companies that offers a highly attractive salary.

So what do you think is the most important reason for the decline in international grad students? More importantly, what can be done to make America the land where grad students flow like wine, where beautiful international students instinctively flock like the salmon of Capistrano (find the other 2 Dumb and Dumber references in recent posts for a pat on the back!)?