Some expect demand for private, career colleges to swell
State budget cuts due to faltering economy will likely decrease enrollment in public universities
Sacramento Business Journal - by Kelly Johnson Staff Writer
Dennis McCoy | Sacramento Business Journal
Western Career College president Jeff Akens visits the school’s nursing simulation lab in 2007.
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When economic times get tough, people head to college.
Jeff Akens, president of Western Career College, is still waiting for enrollment to spike. "We're not seeing it yet," said the head of the eight-campus private college system based in Sacramento.
But demand for this region's private and career colleges will swell, said Akens and other executives of local colleges. They all stand to benefit from a coupling of economic events: a possible recession and the state's $16 billion budget deficit resulting in cuts to public universities and community colleges just when more people want to enroll. Many will turn instead to private institutions.
Some schools are growing, but some administrators attribute increased enrollment so far to other factors, such as their own ramped-up marketing efforts.
The Association of Independent California Colleges and Universities has found that its member schools grew enrollment in the last two recessions, but there was a short lag. Enrollment "generally dipped slightly during the first year of each recession, followed by increases during the second year of the recession or the year after the recession," research associate Kathaleen Reed said.
There's a lag because of the initial uncertainty at public colleges. Once people realize there are fewer slots available at public institutions, they try the independents.
A tightening in the student-loan market -- following the overall credit crunch -- could, however, cloud how private colleges fare in the downturn. Without loans or with higher loan fees, some students may not be able to further their education.
Good times in bad times
Private colleges and universities with local operations said they're well-equipped to handle more students. They're nimble, can respond quickly and are used to adjusting their capacity. They'll primarily respond by offering more sessions of a course. In some cases, they also might offer online courses, new programs and larger classes.
During economic downturns, higher education lures people who have been laid off or fear they might be downsized. They want to make themselves more marketable by gaining a new skill, finishing a degree or earning an advanced degree. Some want to switch careers to an industry that's more likely to hire. If they can't find a job upon getting their bachelor's degree, they might continue on with their graduate degree.
It won't be as easy to turn to public institutions. Last month, when the deficit was still pegged at $14.5 billion, Gov. Arnold Schwarzenegger proposed $1.13 billion in cuts to higher education, including $524.5 million to community colleges, $331.9 million to the University of California system and $312.9 million to the California State University system. Colleges likely will respond by raising tuition, increasing class size and eliminating classes.
Most administrators were reluctant to estimate by what degree enrollment might increase. Golden Gate University, which enrolls 155 students in Roseville and 3,700 systemwide, might grow enrollment by 2 percent to 3 percent this fall, university president Dan Angel said. "Not gigantic," he added.
The Art Institute of California-Sacramento is growing as a new campus -- it opened last October and anticipates growing by 75 percent this year -- so it would be hard to isolate that growth from any economic effect, campus president Roger Gomez said.
MTI College in Sacramento is also beefing up enrollment. "We have noticed an increase. I can't say it's because of the downturn in the economy," said Ed Hardenbrook, vice president of operations of MTI. Instead, the boost is likely from new programs, including a new phlebotomy program and its Paul Mitchell cosmetology program.
WyoTech, an auto tech school in West Sacramento, expects steady growth with or without a recession, said Andy Vignone, vice president of operations for WyoTech's parent company Corinthian Colleges Inc. Students enroll because they have a passion for the work, he said, not because they're reacting to the economy.
The Career College Association had no data on enrollments during past recessions. "Our sector doesn't study itself very much," association president Harris Miller said.
Western Career College, for one, has found certain programs grow during recessions. Following the recession induced by the dot-com crash early this decade, Western Career College's medical assisting program in Sacramento saw enrollment grow by 50 percent between 2002 and 2004. Then from 2004 to 2007, as the economy rebounded, the program shrunk by 25 percent. Western's dental assisting program in Sacramento, another counter-cyclical program, experienced similar results.
Over at MTI, "In some downturns we've seen increases. Other times we haven't," Hardenbrook said. "It just depends on the training (students) want."
The general belief is that career colleges thrive in recessions. As unemployment rises, people return to school. That thinking, Miller said, is over-simplified. Yes, career colleges grow enrollment during economic downturns. But they also grow during times of low unemployment, as the last four years have demonstrated.
"The sector has grown dramatically both in good times and bad times," Miller said.
That partly explains why some private colleges with local operations said they don't need to prepare or do anything differently. They're used to scaling up or down based on demand. They track monthly unemployment figures. They're constantly reassessing and trying to anticipate student demand. They're also used to higher education funding crises in the Golden State.
"It's not a matter of doing anything differently," said Jo Hoffmeier, Northern California and Oregon territorial vice president of University of Phoenix. The university, which has four local campuses, is ready to respond to any increase in enrollment.
More classes, not bigger classes
Heald College, which serves about 1,200 students at its campuses in Rancho Cordova and Roseville, has grown enrollment systemwide of late, president Nolan Miura said, but he wouldn't say by how much. He attributed the growth so far to Heald's increased spending on advertising and other investments in the college.
"Right now we are planning for growth," he said.
Private colleges with local operations said they're nimble and could respond to increased enrollment within two or three months.
To serve more students, Heald would open up more sections of existing courses, Miura said. The college also could increase the course load of instructors in the short term and gradually hire more faculty.
Many administrators said they wouldn't increase class size. Their model is based on small classes with personalized attention.
Some would consider developing new programs, if warranted, but regulatory hurdles can make that difficult or time consuming. Besides, no school wants to make a major investment for what might be a short-term economic downturn, Miller said.
Private colleges also will respond to increased enrollment with online classes.
In January Heald College began offering online classes to existing students. Students, especially those with jobs and family obligations, need flexibility. Eventually, the college anticipates offering online classes -- even entire degrees -- to new students, Miura said.
Golden Gate University has offered a cyber program for a decade, but "we'll hit harder now," Angel said.
Attracting unskilled workers
Certain programs are more attractive in a down economy than others, but not everyone agrees which programs benefit.
Western Career College's nursing and dental hygiene programs are always full, regardless of the economy. The college's dental assisting, medical assisting, pharmacy technology and massage therapy programs are more likely to grow during a weak economy. That's because they attract more unskilled workers -- who often are the first to be laid off when the economy tumbles.
Golden Gate's Angel figures the university's business school will pick up additional students in a down economy. The law school, on the other hand, won't, he said. Earning a law degree requires a long commitment, and isn't something that people suddenly decide to do.
Miller said rising unemployment rates usually benefit colleges that offer programs requiring less than two years and that train for blue-collar, gray-collar or service worker jobs, including heating/air conditioning and auto repair.
For its member schools, the Association of Independent California Colleges and Universities, on the other hand, found that enrollments in graduate programs and professional schools such as dental and law schools actually benefit more from recessions than do enrollments in undergraduate programs.