More students may opt to stay in state

With the weak economy causing family finances to take a hit, university officials said they expect prospective students to be more fiscally conservative when it comes time to choose a college.

A recent study by financial aid website MeritAid.com found some students may put off school for a year, but officials here said students will likely opt instead to save money by staying in state and avoiding pricey private universities.

"The conversations that we're having out on the road [while recruiting] are the same as we've had in the past," said Shannon Gundy, director of undergraduate admissions. There's not a panic."

Though official numbers for undergraduate applicants are not yet tallied because the first deadline is tomorrow, Gundy said all indications point toward an applicant pool comparable to previous years.

The study by MeritAid.com surveyed over 2,500 prospective college students about the impact the economy is having on their college plans. The study found that 57 percent of the students surveyed are now looking to attend a less prestigious college due to affordability and 48 percent are more concerned than ever about being able to afford college at all. Furthermore, 16 percent of prospective college students said they are now putting their college search on hold for a year due to the economy, the survey found.

With the price difference between in-state and out-of-state universities, and private and public universities, more students could apply to state schools rather than private or out-of-state universities. According to University System of Maryland documents, the number of students attending a public Maryland university has increased by 4 percent over last year, with a record high of 143,416 enrolled students.

"Whenever you have the economy going down - though the economy is still experiencing some growth; it grew 2.8 percent in the second quarter - you will probably get an increase in college enrollment" because students want to avoid the recession and poor job market, said John Lott, a visiting research scientist studying the economy. "You have to get negative growth for several quarters for those kind of things to be happening."

Sarah Bauder, director of student financial aid, agreed students are not yet distressed about this year's finances. She said she expects calls will soon start pouring in about financial aid for next year.

"You can predict what's going to happen," she said. "I don't think [students will put off school]. They may think, 'Maybe not my first choice, but my second choice that makes sense financially will drive my decisions.'"

To make more sensible financial decisions, Bauder said she predicts more parents will use the "Terp Payment Plan," a layaway-style plan to gradually pay off tuition. She also mentioned the shift to in-state public universities over more expensive options.

The weak economy is also affecting state-sponsored 529 plans, college savings plans that are similar to 401k retirement plans. The value of 529 plans has fallen 7.6 percent as of the second quarter of this year according to Financial Research Corp., a Boston financial consulting firm.

Through the plan, parents can contribute money to an account, where it will be divided and invested in the financial market. As the stock market fluctuates, the amount of money in a 529 plan fluctuates, too.

"It is affecting everyone, especially the [high school] seniors that are looking at colleges now," said Thomas Friscia, a junior kinesiology major. "I'm sure they're weighing out the schools that are a lot more expensive simply because the loans will be too big."

Finance professor Albert Kyle cautions students against taking out large student loans.

"I think that college students should learn to be careful in the way they manage their own finances," he said in an interview Sept. 23. "So I kind of favor a plan where instead of having a lot of student loans, college students kind of worked their way through school over a longer period of time so that when you graduate your debts are not that big. Plans like that are a bit more cautious because students should be careful running up a lot of debts."

Bauder is an equally strong proponent of university students using the current economy as a means to learn financial responsibility.

"I always think good things come out of the bad," she said. "So if raised financial awareness [and] less credit card [use] comes out of this, I think that will be a good thing."

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