Education

College Enrollment Is Falling, And Why Spending More Money Is Not The Answer.


While Stanford and the Ivy League schools brag each year about increased applications, the reality is that for many schools, enrollment is falling. Data from the National Student Clearinghouse Research Center shows that overall college enrollment fell by 13 % in the past decade. That means, of course, that some schools saw an even bigger drop. State University of New York reported that since 2011, the school system which is home to 64 colleges has seen a nearly 20 % drop in enrollment, from 468,000 in 2011 to 375,620 for the 2021-2022 academic year, the New York Post reports, citing data from the SUNY System Administration Office of Institutional Research and Data Analytics.

The National Student Clearinghouse blames falling enrollment on two changes: an overall decline in the number of high school graduates, and low unemployment rates, which have enticed students to go straight to work instead of college. Add to this a declining birthrate due to the 2008 recession: colleges will likely see fewer students each year.

With fewer “customers” available, more colleges are having trouble staying in business. Some schools, including well-known ones like Hampshire College and Sweet Briar College, have barely hung on. When both schools announced that they would close, emergency fundraising from alumni pulled both back from the brink of shutting down. But schools that don’t have a Ken Burns to rely on may not be as lucky: Inside Higher Ed reported that for the past few years, about 5-6 private schools close each year, including Newbury College in 2018 and Southern Vermont College in 2019. Others, such as the New Hampshire Institute of Art and New England College, have merged in order to survive. The rich diversity of American institutions could be compromised, if the trend continues.

On an individual level, many schools are seeing fewer students every year. Drawing upon the Department of Education’s Integrated Postsecondary Education Data System (IPEDS) data of all public and private, non-profit colleges, ACTA’s research confirmed that 50% of colleges had fewer students in the fall of the 2019-2020 school year than they did in the 2009-2010 school year, a pattern that will likely continue in the 2020-2021 school year, as students may be hesitant to pay thousands in tuition for online classes and social distancing. For community colleges, enrollment is falling even more.

Despite falling enrollment rates, however, spending per-student at colleges and universities has only grown in recent years, even when adjusting for inflation. The American Council of Trustees and Alumni examined the effect that rising per-student costs has on student outcomes, including both tuition and graduation rates, in a recent paper, The Cost of Excess. The research, based on a regression analysis of 1529 four-year colleges and universities, identified three major types of spending – instructional, administrative, and student services – that show a statistical correlation with an increase in cost in the following year’s tuition. While these cost centers tend to show a correlation with higher graduation rates, the report found that their impacts are ultimately extremely limited:  unless expenditure is carefully targeted, a hypothetical “average” public university would have to spend thousands of dollars more per student to see an increase in graduation rates of more than a few dozen students.

Thus, in the aggregate, each year, higher education spends more money, costing students more but without providing much more in graduation rates in return. Some discerning and thoughtful new programs will have positive results. But the findings of this large scale analysis is a dire caveat emptor warning for higher education leadership. In spending more money on bureaucracy, non-instructional programs, and  extravagant recreational amenities like the lazy river and aquatic center at Louisiana State University, luxury dorms, massive new athletic facilities, and land acquisitions, colleges are truly gambling. Will such investments entice incoming students away from the colleges’ competitors and increase the revenue stream?  Will the spiral of expenditure and escalating cost of attendance be sustainable? As Manhattan Institute Scholar Oren Cass has often observed, the higher education experience has morphed into more of “an amusement park entitlement” rather than an important academic journey that should culminate in graduation with a high quality education at an affordable price. One thing we do know from recent research: ethnic diversity will decline. At public universities, a $1000 increase in tuition and fees correlates with a decline in racial and ethnic diversity of 4.5% Thus, the important goal of creating a productive campus culture can founder on the financial train-wreck of ever-escalating spending.

This increase in spending, and with it inexorably, tuition, means more student debt even as the pool of potential college enrollees falls. As more debt leads to more student loan defaults, this cycle of unrestrained spending will be passed onto taxpayers while colleges stand on the sidelines, at least until their ability to meet payroll comes into question.

And as the pool of high school graduates continues to shrink, and colleges are even more tempted to add expensive facilities or programs, it is imperative that taxpayers, trustees, and higher education leaders hold colleges accountable for how they spend their money and our money.



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