Demographers say it will finally arrive nationwide in the fall of this year. This is when recruiting offices will begin to face the long-awaited drop in the number of applicants among the next class of high school students.
But the economic downturn doesn’t just affect universities and colleges. It’s a looming crisis for the economy, with fewer graduates ending up in jobs that require college education, even as international rivals increase the proportion of their graduate populations.
“The impact of this is economic decline,” says Jeff Strohl, director of the Center on Education and the Workforce at Georgetown University, bluntly.
As new data emerges, the outlook only worsens. An analysis by higher education consultancy Ruffalo Noel Levitz, based on the latest available census figures, now predicts a further decline in the number of 18-year-olds from 2033, after a brief rise. By 2039, according to this estimate, there will probably be 650,000, or 15% fewer per year than today.
These results are consistent with another new report, released in December by the Western Interstate Commission for Higher Education (WICHE), which indicates that the number of 18-year-olds nationwide who graduate from high school each year – and are therefore candidates for university. – will erode by 13%, or almost half a million, by 2041.
“A few hundred thousand a year doesn’t seem like a lot,” Strohl says. “But multiply that by a decade, and it will have a big impact.”
Fewer students means fewer universities
This comes after colleges and universities have 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 of more than 350,000 in the first year of the pandemic alone, meaning there are already 2.7 million fewer students than at the start of the last decade.
During the first half of last year, more than one college announced its closure every week. New research, led by the Federal Reserve Bank of Philadelphia, projects that the pace of college closures may now accelerate.
The news is not all bad. For students, this means a buyer’s market. Colleges and universities are admitting a larger proportion of applicants on average than they were 20 years ago, according to a new study from the think tank American Enterprise Institute. And tuition, adjusted for inflation, is falling, according to the College Board. (Housing and dining costs continue to rise.)
Ripple effects on the economy
The likely closure of more universities poses a threat to the economy in itself. Nearly 4 million people work in higher education, the NCES reports. Although the colleges most at risk are typically small, each closure results in an average loss of 265 jobs and an economic impact of $67 million per year, according to the economic software and analysis company Implan.
Although the decline in the number of 18-year-olds has been widely discussed in terms of its effects on universities and students, its implications are much broader.
“In an economy that depends on a skilled workforce, we are falling short,” says Catharine Bond Hill, an economist, former president of Vassar College and managing director of the higher education consulting firm Ithaka S +R.
She points out that, according to NCES data, the United States has fallen to ninth among developed countries in terms of the proportion of its population aged 25 to 64 with a postsecondary degree.
“We should be aiming for first place, and we’re not,” she says.
The shrinking supply of young people will contribute to “a massive labor shortage,” with about 6 million fewer workers in 2032 than there are jobs to fill, according to labor market analysis firm Lightcast .
Not all of these jobs will require a college education. But many will. Forty-three percent of them will need at least a bachelor’s degree by 2031, according to the Georgetown center. That means more jobs will require some type of postsecondary degree than Americans are currently expected to earn.
As-yet-unpublished research underway at Georgetown projects significant shortages in education, health care and other fields, as well as some skills shortages in 151 occupations, Strohl says.
“If we don’t stay ahead in innovation and college-level education,” he says, “we will see a decline in the economy and, ultimately, a decline in the standard of living. »
The labor shortage is already complicating efforts to develop the American semiconductor industry, warns the consulting firm McKinsey & Company, for example. That’s one of the main reasons production at a new $40 billion semiconductor processing plant in Arizona has been delayed, according to its parent company.
A labor shortage of the magnitude predicted for the next has not occurred since the years immediately following World War II, when the number of young men was reduced by death and disability , say Strohl and others. And this labor shortage coincides with a wave of retirements among experienced and educated baby boomers.
A multitude of complex demographic factors
“This is a remarkable moment in our history,” said Luke Jankovic, executive vice president and general manager of Lightcast. “We have a lot of people moving from economic producer to economic consumer, and there just aren’t enough people following them to replace them.”
The decline in the number of 18-year-olds is compounded by other problems, including a sharp decline in the share of Americans in the workforce — particularly baby boomers who retired early and men who derailed by drug addiction or incarceration. The share of men 20 and older in the labor force has fallen from about 76% at the start of the Great Recession to about 70% today, the Bureau of Labor Statistics reports.
The decline in the number of high school graduates through 2041 is expected to be most severe in the Northeast, Midwest and West, where fertility rates have generally been lower than other regions and where fewer families have moved. In total, 38 states will see declines, WICHE estimates, some 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, that will largely be driven by one group: Hispanic students. The proportion of Hispanic high school graduates, nationally, is expected to increase from 26% to 36% by 2041.
But Hispanic college attendance is below the national average and is declining, according to statistics from the U.S. Department of Education.
All of these present “a combination of factors that we’ve never seen before,” says Emily Wadhwani, a senior director at the Fitch ratings agency who works on higher education.
Concerns about the value of a college education
Meanwhile, declining enrollment has been compounded by a decline in the perception of the value of a college or university degree. One in four Americans now say it is extremely or very important to have a bachelor’s degree to get a good job, according to the Pew Research Center.
Among high school graduates, the share going straight to college has declined from a high 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 to the higher education sector, Wadhwani says, “is a renewed sense that it’s worth it.”
Demarée Michelau, president of WICHE, calls these trends “the most perplexing set of problems facing higher education planners and administrators in a generation.”
There are of course other customers for colleges, including international students, students over 18, and graduate students.
But these other sources may not be enough to offset future declines, experts say.
As Donald Trump prepares to begin 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 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, according to calculations by the Philadelphia Fed. Many older students say they are discouraged by the cost, or have families and jobs that colleges don’t always allow, or they started college but dropped out and are reluctant to return.
On the campus of Iowa Wesleyan, the old gymnasium was stripped of its hardwood floors and anything of value and then demolished. The first stone fell into the rubble. It bore the date of the college’s founding: 1842.
“In 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 is also an important source of well-paying jobs that are not replaceable.
The closure process, he adds, “is brutal and painful.”
And yet he knows that in the years to come, more colleges and universities will likely fall under the auctioneer’s hammer and the wrecking ball:
“Colleges and universities face a staggering number of variables.” “It’s supply and demand. You must evolve and adapt, or die.
