How demographic trends will affect college enrollment

27 May, 2025

And now for something completely different:

In the introduction page I articulated a desire to examine the second-order effects of the demographic shifts we are seeing in the US and worldwide.

One area to examine is college enrollment. US births peaked late in the last decade (around 2007), and if enrollment rates remain the same, institutions of higher education will have to compete for fewer and fewer students.

This situation is complicated by questions about the value of higher education, especially in a world where AI threatens to make many white collar jobs obsolete.

The biggest victims will likely be smaller institutions which lack the funding and name recognition of their larger peers.

Here¹ is an article which touches on some of these issues:

Demographic shifts have already caused financial pain for many institutions, with some states already seeing their ranks shrink. In the Northeast — home to many of the country’s private liberal arts institutions — high school graduate numbers fell from 637,000 in 2012 to 612,000 in 2024, a drop approaching 4%.

When Wells College in New York and Goddard College in Vermont shuttered last year, both cited demographic challenges.

...

A study released in December used machine learning techniques to forecast changes in college closure rates tied to the demographic cliff. The model, developed by researchers with the Federal Reserve Bank of Philadelphia, predicts that up to 80 additional colleges could close with an abrupt 15% decline in enrollment (from a 2019 baseline, chosen to avoid COVID disruptions) over the 2025-29 period.¹

Institutions are exploring various ways to respond to this and stave off financial distress. Strategies include improving retention rates and accommodating a much more diverse student body than a particular institution might be accustomed to. The latter might also include admitting older, "non-traditional" students. But the process of converting a typical 4-year University into one that serves the needs of adult learners is not straightforward. An 18 year old freshman is obviously very different from a 29 year old freshman (who might be holding down a job and supporting a family).

One does wonder if and when these factors will have an impact on the cost of education. Theoretically lower demand should translate into lower tuition costs for students.

#USA #education