Is business school losing its buzz? After a golden era for the master of business administration degree, new figures show demand for the traditional, two-year MBA program is slumping.

More than three-quarters of business programs responding to a recent Graduate Management Admission Council survey reported that applications declined last year. More remarkably, 41 percent reported that applications were down more than 20 percent.

The GMAC thinks applications to business schools were flat or down slightly. But that figure can be misleading because some students apply to many schools.

A better indication may be the GMAT, the standardized test for business school admission. As of June 30, 7 percent fewer GMAT tests had been taken compared with last year, and, compared with the record year of 2002, the figure is down more than 25 percent.

The good news for business schools is that interest in their often more profitable executive MBA degrees -- shorter programs for older students who continue working -- is strong. More than half of those programs reported an increase in applications.

Still, two-year MBA programs remain the primary focus of many business schools. Wharton and Harvard may never have to worry about filling classrooms, but schools that saw MBA programs as a cash cow and rushed to develop them might.

During the 1990s, business schools were hot as many sought training to ride the Internet wave. They also flourished during the bust, as many people viewed business school as an agreeable way to sit out the economic downturn and return to the job market with a better credential.

Now, the GMAC ascribes much of the decline in interest to the improving economy. Daphne E. Atkinson, GMAC's vice president of industry relations, said interest is returning to historical norms, and people are more likely to choose an MBA because it will help, not because they are unemployed.

"There was some flow into the pipeline driven by some serious externalities: people looking for options in the wake of a meltdown in the economy," she said.

But the numbers reflect other challenges. GMAT numbers are down more among foreign students than U.S. test-takers, with interest from China and India fading in particular.

That may reflect worries about visa restrictions that have affected almost all of American higher education. But it also may show international students are finding preferable alternatives overseas, threatening America's position as the leader in management education.

"There's no question that over the last decade places like INSEAD [campuses in France and Singapore], London Business School, ESADE in Spain have become much more part of the places you would consider going to get an MBA," said Jeffrey Pfeffer, a professor at Stanford University's Graduate School of Business. Atkinson said the real change is that Chinese and Indian students are finding better job options, and now even quality MBA programs, in their home countries.

But Pfeffer also said that the numbers probably reflect growing skepticism about the value of an MBA. That argument is the topic of a new book by McGill University professor Henry Mintzberg, "Managers Not MBAs," which has received widespread attention.

"I think people are becoming more skeptical about this," Pfeffer said. "It's been in the wind for a long time, the fact that unless you get an MBA from a really top-notch school, the value is not clear."

He also noted MBAs are becoming more expensive. Finishing a two-year degree can cost students $100,000 or more.

Atkinson said the degree is still valuable. The latest survey reports no decline in applicant quality, and in the group's most recent MBA graduate survey 60 percent described the value of their degree as "outstanding" or "excellent," and 28 percent called it "good."