U.S. Colleges Face an Enrollment Drop

This is not a recent issue. It is one that has been on the horizon and actually arrived a few years back. A greater impact is starting to be felt now. In 2023 the 181-year-old Iowa Wesleyan University closed due to lack of enrollment and the resulting shortage of funds. As the population decreases in the US so will the numbers of students who may go to college.

There is also a trend of fewer high school student wanting to go to college. The results will be experienced in technological manpower shortages which will require a higher education beyond high school and a bachelor’s degree.

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U.S. colleges face enrollment drop, fewer high school seniors

Pickup trucks with trailers and cars with yawning trunks pulled up onto untended lawns in front of buildings from which people lugged books, furniture, mattresses, trophy cases and artwork.

Anything else of value had already been sold by a company that specializes in auctioning off the leftover assets of failed businesses. At least one of the buildings was soon to be demolished altogether, its red-brick walls dumped into its 1921 foundation.

This was the unceremonious end of Iowa Wesleyan University, a 181-year-old institution that closed in 2023 after financial losses due in part to discounts it gave out as it struggled to attract a shrinking pool of students.

When a college closes, “all the things that are mementos of the best four years of a lot of people’s lives are sold to the highest bidders,” says Doug Moore, founding partner of a firm that has helped handle the logistics of shutting down four colleges in the last few years, including Iowa Wesleyan.

The outlook, Moore and other experts say, is that there will likely be many more such scenes in the years ahead. That’s because the current class of high school seniors scheduled to graduate this spring will be the last before an expected long decline begins in the number of 18-year-olds — the traditional age of students when they enter college.

A “demographic cliff” with big implications for the economy

This “demographic cliff” has been predicted ever since Americans started having fewer babies at the advent of the Great Recession around the end of 2007. A falling birth rate that has not recovered since then. A slight blip occurring after the COVID-19 pandemic, according to the Centers for Disease Control and Prevention.

Demographers say it will finally arrive nationwide in the fall of this year. Recruiting offices will begin to confront the long-anticipated drop-off in the number of applicants from among the next class of high school seniors.

But the downturn isn’t just a problem for universities and colleges. It is a looming crisis for the economy, with fewer graduates eventually coming through the pipeline to fill jobs that require college educations. This occurring even as international rivals increase the proportions of their populations with degrees.

“The impact of this is economic decline,” Jeff Strohl, director of the Georgetown University Center on Education and the Workforce, says bluntly.

As fresh data emerges, the outlook is getting only worse. An analysis by the higher education consulting firm Ruffalo Noel Levitz, using the latest available census figures, now projects another drop in the number of 18-year-olds beginning in 2033, after a brief uptick. By 2039, this estimate shows, there will likely be 650,000, or 15%, fewer of them per year than there are now.

These findings sync up with another new report, released in December by the Western Interstate Commission for Higher Education (WICHE), which says that the number of 18-year-olds nationwide who graduate from high school each year (and are therefore candidates for college) will erode by 13%, or nearly half a million, by 2041.

“A few hundred thousand per year might not sound like a lot,” Strohl says. “But multiply that by a decade, and it has a big impact.”

Fewer students can result in fewer colleges

This comes after colleges and universities already collectively experienced a 15% decline in enrollment between 2010 and 2021, the most recent year for which figures are available, according to the National Center for Education Statistics (NCES). That includes a drop-off of more than 350,000 during the first year of the pandemic alone, and it means there are already 2.7 million fewer students than there were at the start of the last decade.

In the first half of last year, more than one college a week announced that it would close. More new research from the Federal Reserve Bank of Philadelphia, projects the pace of college closings could now accelerate.

The news is not all bad. For students, it means a buyer’s market. New research by the think tank the American Enterprise Institute finds colleges and universities on average are admitting a larger proportion of their applicants than they did 20 years ago. When adjusted for inflation, tuition is declining, according to College Board. (Housing and dining charges continue to increase.)

Ripple effects through the economy

The likely closing of more colleges is by itself a threat to the economy. Nearly 4 million people work in higher education, the NCES reports. Though the most imperiled colleges tend to be small, every one that closes translates to, on average, a loss of 265 jobs and $67 million a year in economic impact, according to the economic software and analysis company Implan.

While the falloff in the number of 18-year-olds has been largely discussed in terms of its effects on colleges and students, the implications are much broader.

“In an economy that depends on skilled labor, we’re falling short,” says Catharine Bond Hill, an economist, a former president of Vassar College and the managing director of the higher education consulting firm Ithaka S+R.

She points out that, based on NCES data, the United States has fallen to ninth among developed nations in the proportion of its 25-to-64-year-old population with any postsecondary degree.

“We should be aiming for No. 1, and we’re not,” she says.

The diminishing supply of young people will contribute to “a massive labor shortage,” with an estimated 6 million fewer workers in 2032 than jobs needing to be filled, according to the labor market analytics firm Lightcast.

Not all of those jobs will call for a college education. But many will. Forty-three percent of them will require at least a bachelor’s degree by 2031, according to the Georgetown center. That means more jobs will demand some kind of postsecondary credentials than Americans are now projected to earn.

Still-unpublished research underway at Georgetown forecasts major shortages in teaching, health care and other fields, as well as some level of skills shortfalls in 151 occupations, Strohl says.

“If we don’t keep our edge in innovation and college-level education,” he says, “we’ll have a decline in the economy and ultimately a decline in the living standard.”

A scarcity of labor is already complicating efforts to expand the U.S. semiconductor industry, for instance, the consulting firm McKinsey & Company warns. It’s a major reason that production at a new $40 billion semiconductor processing facility in Arizona has been delayed, according to its parent company.

A worker shortage of the magnitude projected for the coming one hasn’t happened since the years immediately after World War II, when the number of young men was reduced by death and disability, Strohl and others say. And this worker shortage coincides with a wave of retirements among experienced and well-educated baby boomers.

A host of complex demographic factors

“It’s kind of a remarkable moment in our history,” says Luke Jankovic, an executive vice president and general manager at Lightcast. “We have a lot of people moving from economic producers to economic consumers, and there just aren’t enough people coming up behind them to replace them.”

The falling number of 18-year-olds is compounded by other issues, including a sharp drop in the proportion of Americans in the labor market — particularly baby boomers who retired early and men derailed by substance abuse or incarceration. The proportion of men 20 and older in the workforce has declined from around 76% at the start of the Great Recession to around 70% today, the Bureau of Labor Statistics reports.

The decline in high school graduates through 2041 is projected to be most severe in the Northeast, Midwest and West, where fertility rates have been generally lower than in other regions, and to which fewer families have moved. In all, 38 states will see declines, WICHE estimates, some of them much steeper than the national average: 32% in Illinois, 29% in California, 27% in New York, 20% in Michigan, 17% in Pennsylvania.

In places where the number of high school graduates remains stable or increases, meanwhile, it will be largely because of one group: Hispanic students. The proportion of high school graduates who are Hispanic, nationwide, is expected to rise from 26% to 36% by 2041.

But Hispanic college-going is below the national average and has been going down, U.S. Department of Education statistics show.

All of these things present “a combination of factors that we haven’t seen before,” says Emily Wadhwani, a senior director at credit-rating agency Fitch who works on higher education.

Concerns about the value of a college education

Falling enrollment, meanwhile, has been made worse by a decline in perception of the value of a college or university degree. One in four Americans now says having a bachelor’s degree is extremely or very important to get a good job, the Pew Research Center finds.

Among high school graduates, the proportion going straight to college has fallen, from a peak of 70% in 2016 to 62% in 2022, the most recent year for which the figure is available.

The only thing that will restore stability in the higher education sector, says Wadhwani, “is a renewed sentiment that it’s worth it.”

Demarée Michelau, the president of WICHE, calls these trends, “the most perplexing set of issues to face higher education planners and administrators in a generation.”

There are other customers for colleges, of course, including international students, students who are older than 18 and graduate students.

But these other sources may not be enough to make up for the coming declines, experts say.

Now that Donald Trump is about to start a second presidential term, 58% of European students say they are less interested in coming to the United States, according to a survey conducted in October and November by the international student recruiter Keystone Education Group.

And despite colleges’ attempts to recruit students over 25, their numbers have fallen by half since the Great Recession, the Philadelphia Fed calculates. Many older students say they are discouraged by the cost or have families and jobs, which colleges don’t always accommodate, or they started college but dropped out and have little inclination to go back.

On the campus of Iowa Wesleyan, the old gym was stripped of its wood flooring and whatever else had value and was then ripped down. The cornerstone fell into the pile of rubble. It bore the date of the college’s founding: 1842.

“In so many of these towns, their identity is inextricably linked to the college that’s been there forever,” says Doug Moore, the man who oversaw the liquidation. “It’s a huge source of local pride. It’s also a big source of good-paying jobs that are not replaceable.”

The process of shutting it down, he adds, “is brutal and painful.”

And yet he knows that in the coming years, more colleges and universities will likely go under the auctioneer’s gavel and the wrecking ball:

“You have a staggering number of variables” facing colleges and universities. “It’s supply and demand. You’ve got to evolve and adjust or die.”

“U.S. colleges face enrollment drop, fewer high school seniors,” NPR, John Marcus as taken from “America is about to face the “enrollment cliff,” and the economy could suffer,” The Hechinger Report