Despite the increases, international students make up less than 4 percent of all students.
About 235,000 of the international students were from China, a 21 percent increase. A burgeoning middle class in China was cited as a factor. About one-third studied business and management once they arrived, the report said.
"Chinese students and their parents are looking for high-quality education, get the importance of international education, and it's making America the No. 1 destination because we actually have the capacity to absorb international students," said Allan Goodman, president and CEO of the institute.
The number of students from Saudi Arabia studying in the United States jumped 30 percent, to 45,000. These students are largely funded by a Saudi government scholarship program nearly in its 10th year, the report said.
By contrast, 283,332 U.S. students studied abroad for academic credit a 3 percent increase from a year earlier.
In the past 20 years, the number of U.S. students studying abroad has tripled. But less than 10 percent of American students study abroad during their college years. The United Kingdom, Italy, Spain, France and China were the top destinations.
A State Department program called 100,000 Strong, which officially started in 2010, aims to send 100,000 American students to China over a four-year period.
The report found that 14,887 Americans studied in China in 2011-2012 a 2 percent increase, but that doesn't include students going to China for noncredit programs.
"We encourage study abroad whether it's short term, long term, whether it's credit, noncredit," said Evan Ryan, a State Department official, on a conference call with reporters.
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