News: Enrollment boom

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SHADES OF GREEN

Enrollment boom

Community colleges foresee spike due to lost savings, layoffs

By Chris Pummer

Last update: 6:53 p.m. EST Dec. 9, 2008Comments: 21

SAN FRANCISCO (MarketWatch) -- Community colleges nationwide are bracing for a jump in enrollment as decimated college-savings accounts force parents to seek less-expensive higher-education options and rising unemployment sends laid-off workers back to school for retraining.

Wall Street's little-noted casualty has been the college savings amassed by parents for children, accumulating since birth in many instances. Those who failed to move 529 plan and Coverdell education savings account assets out of stocks and mutual funds and into money-market accounts as their children approached college age have seen their savings drop as much as 35% or more in the last year.

As college application deadlines approach for enrollment next fall, administrators at the nation's 1,200 community colleges anticipate tens of thousands of students who expected to attend four-year colleges will take an unplanned detour for one or two years in route to a bachelors degree.

That spike will come on top of a sharp increase in the number of laid-off workers enrolling in associate-degree and shorter-term certification programs to train for a new career or enhance existing skills.

"Even before the downturn, we've seen more high-school students going to community colleges first because of rapidly increasing costs of four-year schools," says George Boggs, president of the American Association of Community Colleges. "That enrollment pressure will increase even more dramatically as people who are unemployed or underemployed come back to learn new skills."

Says Jeff Kraus, an assistance vice chancellor for the Virginia Community College System: "Many parents who diligently saved for junior's college, tucking away $25 a pay period in a mutual fund for 15 years, are in a serious jam now. Community college can be an affordable option that will give their child good value for the money."

Michigan's dilemma

Community-college enrollment has long been countercyclical, says Michael Hansen, president of the Michigan Community College Association. During periods of economic growth, enrollment holds steady or even falls -- and then rises sharply during slumps in the business cycle.

Michigan's carmaker-dependent economy has lagged the nation since the last recession in 2001 and its community-college enrollment is testament to that hardship. The total number of full- and part-time students at the state's 28 community colleges fell 10% from 1995 to 2000, and has since risen nearly 25% through 2008. Hansen expects systemwide enrollment may rise another 10% in the next year alone.

"Clearly the big unknown right now is the fate of the Big Three. If some early projections are correct, with restructurings or mergers, we may get tens of thousands more students," Hansen says.

"We might not have the capacity to handle that, especially for high-demand programs like nursing or alternative energy," Hansen says. "Someone who used to put in seats for GM may decide they'd like to become a nurse, but there's a three-year waiting list at some of the colleges for those programs despite the nursing shortage."

Funneling systems

With the cost of many four-year-private colleges surpassing $200,000, enrollments and tuitions at state universities have been rising faster than at private schools due to soaring demand.

Like many states, Virginia saw the financial wisdom of channeling more in-state students to community colleges for their first two years of higher education -- rather than building or vastly expanding costlier four-year schools -- by promising automatic transfers into its state universities with a minimum grade-point average.

The result: Community-college graduates can even gain automatic entry into the University of Virginia in Charlottesville, one of the top public universities in the country. The program has proven especially valuable for underachieving high-school students who upon proving themselves capable in community college can complete their bachelor's degree at state universities for which their high-school transcripts would have denied them access.

"Word of the guaranteed-transfer agreements we have with 30 public and private four-year schools is only now beginning to penetrate into the marketplace," Kraus says. "We think it's going to become incredibly popular even after the economy recovers."

The California experience

In the last six years, the cost of tuition, fees and room and board at University of California campuses has risen more than 50%. Where once California's higher-education costs were among the lowest in the country, due to long-running state budget crises it will cost in-state students more than $23,000 to attend a "UC" beginning next fall.

Add to that the fact many required general-studies and major prerequisite courses are so overcrowded, it can take five years to get into all the classes needed to graduate.

By taking those required courses at community colleges for credits automatically accepted at the UCs, students can live at home their freshman and sophomore years, pay a third of the annual tuition, save room and board costs, transfer into most UCs with a minimum GPA, and graduate in four years with a highly regarded UC degree.

A wise course

Any parent or student forced by finances to first attend community college should recognize the tremendous value the option represents rather than feel like victims of circumstance, Boggs says. The average annual tuition at U.S. community colleges is just $2,300 and the access to professors is almost universally better than at four-year schools.

"Huge lecture classes don't exist on community-college campuses; the largest lecture classes are usually 70 to 80 students, and that's just in science courses where you then break off into labs," Boggs says. "You won't be taught by some graduate-student TA (teacher's assistant)."

Boggs recommends enrolling early in the coming year because certain classes may fill up. And if students planning to pursue a bachelor's degree have an idea where they want to complete their studies and the major they'll take, they should be sure they're earning credits that will transfer.

As for hammered college-savings accounts, consider leaving those funds untouched for a year or two while paying community-college tuition out of pocket. The account may regain some value in the near future and cover a more considerable share of the student's two or three remaining undergraduate years -- and perhaps even some graduate-degree costs.