[carbocation]

Sure it does explain the difference, or at least it is easy to see how it could. From my experience interacting with foreign high school students from across the globe, they generally do not understand the hierarchy of higher ed in the US. At least, the ones I interact with have little knowledge of the reputations of colleges outside of Ivies + Stanford + MIT. (Clearly, you could argue that college rep != college quality, but that is a totally different discussion.)

Consequently, you could end up with a student body of pretty highly qualified foreign students but American students that didn't make the cut at more desirable colleges in the US. (Again, there are plenty of reasons why great students choose colleges that are not high on the prestige list, but this effect doesn't need to be large to be real.)

[RK]

I know a number of foreign students who came to the US as undergrads and essentially threw a dart at a map of the US.

For some reason I have met a number of Japanese students that spent 4 years at schools I had never heard of (like X+State+University+Branch Campus in a tiny town). And they usually were very good students who went on to good grad programs, employment, etc.

The point being that the quality/reputation of the school will not be proportional in the same way to the quality of the domestic students versus the quality of foreign students.

A final anecdote, when I was at a university in Germany, I saw a cheesy poster advertising a scholarship to study in the UK, sort of "Apply Now! Come to England!". The scholarship: The Rhodes. I asked a few Germans and none of them had heard of the Rhodes Scholarship, which is probably the most prestigious scholarship in the English speaking world.

[telemachos]

Actually, many people think of the Rhodes as tainted (because it includes an athletic component) and rate the Marshall Scholarship more highly. (If we're ranking go-to-England scholarships, at least...)