Dive Brief:

• More students will likely opt to attend college closer to home as a result of the pandemic, a shift that stands to hurt institutions that rely heavily on out-of-state enrollees, explains a new Moody's Investors Service report.
• Meanwhile, states that tend to lose residents to colleges elsewhere could benefit from the trend. In all, seven in 10 states get more than 20% of their college enrollment from out of state.
• Public colleges are more likely than private institutions to gain more from the shift, which comes as recruitment intensifies and colleges' fall plans remain unclear.

Dive Insight:

In the fall of 2018, more than one-third of first-time students in New Jersey, Hawaii, Connecticut, New Hampshire and Vermont attended college out of state, the report explains. Those states in particular could benefit from more students attending college in their home state.

New Jersey is taking steps to make that happen. Ten of its public four-year institutions recently banded together in a campaign to draw back students enrolled in colleges elsewhere with the promise of an easy transfer process and an opportunity to help the state recover from the crisis. The program's website also points out that tuition "may be lower" than at students' current school.

Moody's analysts say in-state enrollment at New Jersey colleges could increase "significantly" this fall if the state takes a while to contain the coronavirus and the economic contraction is protracted. New Jersey is one of a handful to recently announce that new arrivals from select states will be required to quarantine for 14 days upon arrival.

If New Jersey lost all of its first-time out-of-state students but retained all those from within the state, its colleges would increase their enrollment of first-time students by 41%, based on 2018 data, the report notes. Other states that would see an uptick in first-time students include Alaska, Hawaii, Illinois and Maryland. However, more than 70% of states would lose students under those conditions.

Further, the shift is more likely to benefit public institutions than private ones, the report explains, due largely to students' desire for lower-cost options. Community colleges, in particular, stand to benefit — and not only because they tend to cost less.

Students who may have otherwise gone to a four-year university are more likely to enroll in a community college than stop out altogether, said Susan Fitzgerald, who leads Moody's coverage of the higher ed sector. "The opportunity costs are high for doing that and the alternatives are weak," she added.

The report comes as colleges' plans for how they will operate this fall trickle out nationwide and as a highly competitive recruitment season enters the summer. A significant share of institutions are trying to bring students back to campus, while others have committed to mostly online instruction.

Most schools Fitzgerald is talking with are on track to meet their enrollment goals. "But it's only June," she added. "A lot of schools are looking to see what's going to happen with summer melt and what the course of the virus will be."

The 20% losses that were forecast at the start of the pandemic are unlikely, though. Fitzgerald notes that those surveys took place early during the health crisis, when students and colleges were unsure of how it would affect reopening. Moody's is projecting a 2% to 4% increase in enrollment across the sector this fall, with community colleges and less-expensive public colleges standing to gain students. 

Even where enrollment increases, colleges may still find themselves financially strained. In a report earlier this year, Moody's analysts projected net tuition and auxiliary revenue will fall 5% to 13% per student across the sector as students seek more affordable options and colleges offer more financial aid.

In Moody's latest report, North Dakota, Rhode Island, Vermont and New Hampshire are among the states most vulnerable to a decrease in out-of-state students, with 40% or more learners coming from elsewhere. Alaska, Texas, New Jersey and California can expect the least impact from the forecasted changes in where students enroll, with 10% or fewer students coming from out of state.