Paul L. Caron

Sunday, September 15, 2019

The Great Enrollment Crash

Chronicle of Higher Education, The Great Enrollment Crash:

Students aren’t showing up. And it’s only going to get worse. ...

Higher education has fully entered a new structural reality. You’d be naïve to believe that most colleges will be able to ride out this unexpected wave as we have previous swells.

Those who saw modest high-school graduation dips by 2020 as surmountable must now absorb the statistical reality: Things are only going to get worse. As Nathan Grawe has shown, a sharp decrease in fertility during the Great Recession will further deepen the high-school graduation trough by 2026. Meanwhile, the cost of attendance for both private and public colleges insists on outpacing inflation, American incomes continue to stagnate, and college-endowment returns or state subsidies can no longer support the discounting of sticker prices. ...

This perfect storm has changed, and will continue to change, student and family college-choice behavior for the next decade and more. I see this playing out across three dimensions: majors, money, and mission.

[Majors]  As any number of reports have shown, students have been inexorably marching away from the traditional liberal-arts majors. One such report from the American Academy of Arts & Sciences noted that bachelor’s degrees in the humanities represented 17 percent of all degrees conferred in 1967, compared with 5 percent in 2015. ... 

[Money]  The handwriting was probably on the wall, as the national, first-year discount rate had already crested the 50-percent mark; according to the National Association of College and University Business Officers (NACUBO),  it was 39 percent as recently as 2008. This steep rise is significantly fueled by colleges that have adopted the airline pricing model: If the plane is going to fly anyway (and if there are still spots open), no harm in getting even pennies on an otherwise unsold ticket. For colleges discounting at or above the national figure, this is unlikely to be a sustainable strategy. However, in the meantime, they are no doubt pulling students away from colleges that expect full-pay or better-pay students to foot the true bill. In short, price sensitivity is a structural reality when supply (number of college beds and desks) is greater than demand. ...

[Mission]  At the dawn of the 20th century, the railroad industry nearly collapsed. Why? Because industry leaders (wrongly) believed their primary mission to be railroading, not transportation. For too long, colleges — public and private, liberal arts and research-driven, rural and urban — have operated as if they’re solely in the higher-education business rather than in the broader postsecondary-education sector. ...  Consider this comment from May 2019 by Tim Cook, Apple’s chief executive: “I don’t think a four-year degree is necessary to be proficient in coding. I think that is an old, traditional view.”

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There's a secular trend toward a higher percentage of high school graduates enrolling in college, especially in 4 year institutions. So even with flat or declining population of 18 year olds, you tend to get increasing to flat enrollments.

Most of the decline in enrollments since 2010 has been at the 4 profits and for 2 year degrees.

High quality 4-year institutions will be fine. It's the overflow capacity (i.e., for-profit online education and certificate programs) that should be worried.

Posted by: Forecast | Sep 16, 2019 2:14:39 PM

"You are being too nice. The politicization of universities, so that almost anything outside of STEM, business and nursing/health professions is now leftist agitprop "

Even assuming that this is true (protip: it's not!), those three disciplines now account for nearly HALF of college majors. True story.

Posted by: Unemployed Northeastern | Sep 16, 2019 8:03:34 AM

I think most of your analysis is solid with the exception of the throwaway line "American incomes continue to stagnate." Even the NYT reported in May that wages are rising: "Why Wages Are Finally Rising, 10 Years After the Recession" ( Moreover, a recent news report stated "Over a Million Households Climbed to Middle Class Under Trump, Census Data Shows" ( At our institution, the percentage of DACA students has increased dramatically, offsetting the drop in American students. They are also serious, responsible, and dedicated students, probably because their parents (and themselves) are paying for their education. We see this often in data where a linear trend in one area is offset by a counter-trend elsewhere. Most notably, the cities that enact strict gun control laws see an increase in gun crime. Go figure.

Posted by: Lucius | Sep 16, 2019 5:51:40 AM

James hits it out of the park with this straightforward insistence that you can’t escape the laws of economics, no matter how credentialed you are.

Paul alludes to the fact that higher ed is filled with faculty, administrators and a subsidized student enrollment who argue violently that these economic laws shouldn’t, and therefore don’t, apply to them. But as usual, the bill comes due and with heavy interest.

U. Akron had a free-spending president who got them $60M in debt. When they brought in a replacement who started discussing “austerity” the faculty rebelled and sent him away with a vote of “no confidence.” That’s just one example of how the current members are acting out in their denial of reality. States like OH, IL and CA have large, legacy systems of public higher education, along with ample private colleges. They are already feeling the pinch, but won’t acknowledge it, so it’s going to get ugly when the denial can’t continue.

Posted by: DrTorch | Sep 16, 2019 5:32:09 AM

If Universities were responsible for collecting student loan debts, they would be more serious about price and the "quality" of the students, and the sloppiness of their school.

Posted by: James Conley | Sep 16, 2019 4:42:27 AM


You are being too nice. The politicization of universities, so that almost anything outside of STEM, business and nursing/health professions is now leftist agitprop (and the left is taking over and ruining those three areas as well) is as much to blame for the decline in enrollment in colleges as the demographics.

If you tell 50%+ of the country that they are a bunch of Nazi, racist deplorables who deserve to die a horrible death, don't be surprised if they refuse to deal with you.

Posted by: Eric R. | Sep 16, 2019 4:30:40 AM

A generally mediocre product (basic liberal arts bachelor's program) that is over-priced and has a shrinking market. And they think they can "weather" this "wave"? It's more like going over a waterfall than riding a wave. They aren't going to end up in the same position as they started.

Posted by: ruralcounsel | Sep 16, 2019 3:57:43 AM