Economic stimulus offers relief to career college students

Career colleges report healthy enrollment gains, while community colleges struggle with increased enrollments and declining revenues

The stimulus package designed to relieve the country’s economic woes would bring more relief to students than to the career colleges that educate them, observers agree.
If anything, educators say, the recession has helped proprietary schools by delivering a wave of new students.

“Based on all the conversations I’m having, career colleges are doing well attracting students,” said Harris Miller, CEO and president of the Career College Association. “I’m hearing that all across the country. Enrollments are up.”

That’s the case in Minnesota, Missouri and Texas, administrators in those states say.
“The entire market in Minnesota is up,” said Keith Fossen, who serves as treasurer for the Minnesota Career College Association. “All the traditional career colleges that do traditional associate degree programs are marking good enrollments.”

Enrollments at the state’s 18 career colleges are up 26 percent, a figure Fossen says was reported by a colleague who quoted Minnesota Office of Higher Education figures.

Fossen, president of Northwest Technical Institute in Eagan, Minn., and his wife, NTI Chief Academic Officer Dr. Amy Nelson, agree that while enrollments are up, students they enroll in architectural design and drafting programs are having more trouble paying tuition.

“What we’re seeing is that parents’ financial situations are affecting how much they can give to their children,” Fossen said. “What that means is that students are forced to borrow more money.”

The financial difficulties are comparable in Texas, even though the state’s economy is considered healthier than many others.

Jeanne Martin, current chair of Career Colleges and Schools of Texas, agrees that proceeds from the economic stimulus package – largely, an increase in the maximum Pell grant amount – are more likely to help students than their schools in the short-term.

“It’s a crystal ball because no one really knows how it will wind up,” said Martin, who also is president of Career Quest, a for-profit college in San Antonio. “State-wide and country-wide, with the few colleagues I’ve spoken to, enrollments are up.”

But Martin adds a caveat, one that other observers also mention.

“The hardship stories are increasing,” she said.

Increasingly, Martin says, career colleges are encountering students – often employed while attending school – who can pay some, but not all, of their tuition.

“The last few months we’ve had more and more students not being able to pay,” she said. “We have to find ways within reasonable limits to scholarship some of these students.”

Although the pool of private lenders has shrunk as the result of the credit crisis, loans are still available, the observers say. But other issues can weigh on students and their families: Private loans require a history of good credit, something not always attainable by families in lower-income brackets, and can saddle those who obtain them with payments right after graduation.

It’s those factors that make the economic stimulus package’s increase in the maximum Pell grant an attractive option, the educators say.

The American Recovery and Reinvestment Bill of 2009 – the economic stimulus package presented by House Democrats and endorsed by President Obama – proposed a $500 increase in maximum Pell grant. That figure would positively impact students from lower-income families, many of whom are minorities and female heads of households.

“Given the demographic of the typical career college, that’s a significant amount of money,” said Miller, the Career College Association president.

Miller repeats a message heard in Minnesota and Texas, and one that’s presumably true for other states.

“Yes, the schools are in good shape,” he said, “but the reality is things are very tough for the students.”

A number of loan sources have shut down and many families can no longer use home-equity lines of credit to put their children through school, Miller says.

“What’s happened is that the schools themselves have become lenders to help students close that gap,” he said. “And that’s not where schools necessarily want to be.”

Although public community colleges often charge lower tuition than career colleges, their vocational programs may take longer to complete, the observers say. In addition, the colleges traditionally look to annual increases in tuition to keep up with rising costs and cuts in state funding.

That’s precisely the case in Missouri, where the new governor proposed having the state pledge not to cut aid to public colleges in return for the schools freezing tuition.

With Missouri facing a $1 billion deficit, cuts in state funding to all sectors are anticipated. It remains to be seen if the Republic majority in both the House and Senate will back Democratic Gov. Jay Nixon’s plan.

Given the uncertainty, community colleges offering technical and vocational training continue to prepare for cuts in state funding ranging from 15 percent to 25 percent.

Tom Vansaghi, associate vice chancellor for college and community relations at Metropolitan Community Colleges (MCC) in Kansas City, said enrollment is up 5 percent this spring. The spike in students coincides with a $3 million shortfall created by declining revenue from property taxes. Foreclosures and business closings contribute to the losses, Vansaghi says, and led the colleges it withhold 3 percent from the current budget.

“In the current year we already have a budget crisis because some of our revenue comes from property taxes,” Vansaghi said. “I think the understanding is that we can deal with funding cuts if we’re able to raise tuition.”

Unsure if aid will be cut, tuition frozen, or non-enrollment revenue streams continue to erode, Vansaghi says the colleges continue their contingency planning.

That triple whammy – increased enrollment, declining revenue, and the prospect of a tuition freeze – is also being discussed in Minnesota.

“When we’re hearing about the economic climate, the same exact thing is being said,” said Fosson, treasurer of the state’s career college association.

The economic stimulus package and its funding for state governments and “shovel-ready” projects may offer some relief. For example, a portion of Federal funding could help renovate MCC’s recently purchased Health Science Institute building, which would house nursing and other health programs.

Vansaghi said MCC has discussed seeking $5 million toward the $26 million it needs to get the Institute up and running.

“The health-care industry is in desperate need of employees,” he said. “There’s a shortage in nursing.”

Miller, the CCA president, believes that the economic stimulus package could have a greater direct impact on public two-year colleges – where financial pressures are mounting – than on private career schools.

“I think state universities and community colleges are in for a tough run the next couple of years,” said Miller, who also cites reduced state funding, increased enrollments and pressures to keep tuition down. “They’re really being put in an untenable position. They’re being asked to do more with less. I just don’t know how you get there from here.”

For career colleges, the pressing issue is to see relief for students and their families. Increasing the Pell grant limit is a step in the right direction, Miller says, since it could enable students to pay for school without borrowing money privately.

“We have this national commitment to higher education,” Miller said, “but not a commitment to keeping these students whole.”

David Knopf, a freelance writer from Kansas City, has reported for and edited newspapers that include The Tulsa World, The Kansas City Star, Liberty Tribune and the Jenks Journal. He currently writes for Missouri Lawyers Weekly, the Kansas City Daily Record, Sun Newspapers and At Home in the Northland and has won press association awards in both Missouri and Oklahoma.

Leave a Reply

Be the First to Comment!

Notify of