The United States's share of the international education market has fallen from 40 per cent about ten years ago to 32 per cent.
Alarmed that the US is losing its share of foreign students to other English-speaking countries, government and university officials have called for a first-ever national strategy to market US higher education overseas.
In 1996-97, the US attracted 457,984 foreign students, a rise of less than 1 per cent over the previous year and the seventh consecutive year of little growth.
Ted Sanders, president of Southern Illinois University, said: "Past success has contributed to complacency." The US had not paid enough attention to developments such as university improvements abroad, tougher immigration restrictions, and competition from Australia, the United Kingdom and Canada.
Australia is attracting many Asians. "The best and brightest foreign students are now being aggressively recruited," Allan E. Goodman, president of the Institute of International Education, told a conference of university and government officials.
"We cannot continue to take for granted the flow of foreign students to US campuses, or underestimate the intellectual, strategic and financial resource they represent," he added.
Officials said other reasons for the decline included rising relative costs, the government's unwillingness to spend more money to attract foreign students and political and economic changes in some countries.
Defense Secretary William Perry said a decrease in government spending on research also threatened the dominance of US colleges and universities in science, a field that attracted a disproportionate number of foreign students.
Officials urged the US to create an agency to market universities and colleges overseas and beef up US Information Agency advising centres that give advice about institutions. They also want business and government leaders to promote higher education on trade missions abroad.
"While foreign governments are developing sophisticated and well-funded strategies to increase the international mobility of their students and faculty members, there is no parallel strategy or resource pool to encourage and facilitate international academic mobility by Americans," Dr Goodman said.
Since 1994, the US government's contribution to the Fulbright and Humphrey fellowship schemes has declined by 20 and 42 per cent. The USIA's overseas offices have also suffered years of budget cuts.
International students pay full tuition fees and spend an estimated $8 billion in the US. That makes higher education the country's fifth-biggest service export.