The 31% decline is a direct result of the Scottish Government prioritising full-time courses for teenagers over part-time provision.
Ministers are still funding roughly the same number of hours of learning, but want to see youth unemployment reduced through the provision of longer courses that lead to recognised qualifications.
However, colleges, teaching unions and opposition politicians argue shorter courses are vital to help adult learners, women with families and those with learning disabilities.
The figures from the Scottish Funding Council (SFC) show a fall from 379,233 in 2007/08 to 257,913 in 2011/12.
They also show the number of teaching staff in colleges continues to fall – down by more than 1000 since 2009/10 to 5306.
Hugh Henry, education spokesman for the Scottish Labour Party, accused the SNP of "cooking the books" after initial Scottish Government statements on the figures ignored the fall in numbers.
"They are trying to hide the shameful reality of 121,000 fewer students in our colleges compared to when the SNP came to power," he said. "They are ignoring the massive cuts in the numbers of part-time students, which is hitting hardest in our poorest communities."."
Liz Smith, education spokeswoman for the Scottish Tories, added: "The decline in overall student numbers is a major concern", and Scottish Liberal Democrat education spokesman Liam McArthur said: "The SNP has denied college cuts have had any negative impact on opportunities, but this report lays out in black and white the grim facts."
However, Michael Russell, the Education Secretary, defended the Government's strategy, highlighting full-time equivalent figures that show 119,448 funded students – exceeding the commitment for 116,000 places. "Headcount measures are of limited value when looking at college activity because they do not distinguish between short part-time courses and those that are longer and more intensive," he said. "The same economic value cannot be attached to both."
The SFC figures also show more than one-third of college students studying vocational courses do not successfully complete their studies. Just 64% secure the qualification they embarked on, with 25% dropping out and 11% passing only some elements of the course.
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