By Nathan Grawe
Demographic change is a constant force. College campuses are often at the forefront of the shifting composition of each generation.
An evolving demographic trend—low fertility—suggests new challenges ahead for higher education. Looking forward 18 years from the 2008 recession, we can anticipate a sizable decline in prospective college students beginning in 2026.
My own work seeks to understand what these trends mean for the demand for higher education. At first, it seems obvious: fewer young people means declining demand. However, no school serves a representative swath of students; community colleges, regional colleges and universities, and institutions with a national draw each serve different niches within the whole.
Two-year colleges and nonselective four-year schools can expect a path that follows population trends. Because these schools serve a relatively representative subset of students, and because about 70 percent of graduates attend college the fall after completing high school, this result represents nearly inevitable population arithmetic. In contrast, the projected demand for highly selective schools deviates from the general population trend. Highly selective schools can expect an upward trend in demand—up about 10 percent between now and 2025. Even this upward trend, however, will be overcome by declining fertility, such that the projected demand for highly selective schools in 2029 is little higher than today’s.
In response to the falling numbers of prospective students, we might expect recruitment efforts in search of new markets. Still, even eliminating attendance gaps would not overcome declining fertility rates. As a result, intensified price competition also seems possible.
If changes to recruitment are insufficient, institutions will likely look for adaptations outside the admissions office. For example, colleges can recruit fewer new students if they increase their retention rates. Perhaps, most tantalizingly, some see the potential for online tools to reduce instructional costs—a desirable goal in an era of greater competition.
Particularly in the Northeast and Midwest, where declines are already well under way, we should anticipate ongoing disruption, innovation and price competition.
Nathan Grawe is a professor of economics at Carleton College.
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