With straight A's and a slew of Advanced Placement courses under his belt, 18-year-old Chance Arnold figured he would be starting his college career at a well-known university such as Georgia Tech.

But one look at the school's price tag -- $18,330 annually -- was a wake-up call for Mr. Arnold and his family. The not-so-flashy hometown college, Dalton State, charged less than a fifth of the price. So, plans for his freshman year began to change.

"Georgia Tech is too expensive right now," said the Northwest Whitfield High School graduate. "I would rather save the money."

Since last year's college application cycle, a finance noose has tightened around many Georgia and Tennessee families. Parents who spent years putting money aside for their children's education have seen their savings decimated by unemployment or foreclosure.

And the economy is having a significant effect on students' college choices this year, according to a national survey released by FastWeb and Maguire Associates, a Massachusetts education consulting firm.

Nearly 67 percent of high school seniors and their parents said concerns about the economy influenced where they applied to college this year.

Students said they are much more likely to consider a public college or university because of the recession, and more than a quarter of students, just like Mr. Arnold, are considering starting off at a smaller school or a two-year institution to save money.

At Dalton State College in Dalton, Ga., applications are up 12 percent from last year, and at Chattanooga State Technical Community College the number of early registered students has shot up 30 percent, officials said.

John Schwenn, president of Dalton State, said he thinks smaller four-year and two-year schools are attracting many students who once would have gone to larger, more expensive schools.

Dalton State tuition is under $1,000 for a four-year degree program. The school is adding on-campus housing this year and making it easy for students to earn their general education requirements before transferring to another school, he said.

"We don't know where we are going to put all the new students," Mr. Schwenn said.

Chattanooga State and the University of Tennessee at Chattanooga are experiencing the same boom in applications.

Diane Norris, director of admissions at Chattanooga State, said by midmonth 2,066 students had registered to attend classes. By the time school starts, she said, officials are hoping to see a 3 percent to 5 percent increase in overall enrollment.

"We are cautiously optimistic," she said. "Historically whenever the economy is down, enrollment at schools such as Chattanooga State spikes."

At UTC, applications are up 20 percent, and officials expect an incoming freshman class of between 2,200 and 2,300, said Yancy Freeman, director of undergraduate admissions.

He said many students coming to UTC have told admissions officers that their original plans for college didn't work out.

"It has been a little bit strange. Part of it has to do with the economy," he said. "People that thought they were going to go away have decided to stay home."