December 10, 2024

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In today’s issue: What the latest enrollment numbers might be telling us; how the CHIPS Act has something for everyone in higher ed; and do you need calculus to succeed in life?

THE LEAD

March will mark the fifth anniversary of when college campuses—and nearly everything else in our lives—shut down because of the onset of the Covid-19 pandemic. While some things that stopped overnight have come roaring back to normal—travel, for example—other things feel stuck in a new normal. Downtown offices remain vacant. Malls are empty. Legacy media is shedding viewers as it shifts from analog cable channels to digital streaming.

Higher ed hasn’t found its footing either in the last five years. A combination of the pandemic, questions about the value of the degree in a changing labor market, and last year’s FAFSA debacle, have all contributed to enrollment declines.

The latest figures from the National Student Clearinghouse Research Center out this month show that year-over-year enrollment of 18-year-old freshmen fell by 5% overall. A deeper look inside the numbers shows sharper declines among certain groups of students at particular types of colleges.

Three takeaways:

1. Market position matters. As I wrote in a 2022 white paper (free registration required), market position isn’t just rankings or prestige, but rather how institutions are perceived among the audience they’re trying to recruit. Among 18-year-olds, that market position is correlated with selectivity. The biggest enrollment declines this fall were at what could be best described as “middle-market” colleges—those that accept at least half of applicants (very competitive, in the chart below) and those that accept at least three-quarters of applicants (competitive). The most selective and the least selective colleges fared the best (even though both had declines).

2. White students are no longer a driver of enrollment. White students have historically made up the largest proportion of students and have long propelled the expansion of higher ed, especially more affluent students whose parents went to college (more on that in a minute). Last fall, white 18-year-old students were the only racial/ethnic group to see declining numbers; this fall, enrollment decreased among all racial/ethnic groups, with white students showing the steepest declines.

One thing to note here: In the aftermath of the 2023 Supreme Court decision that banned the use of race as a factor in admissions, all eyes have been on those colleges where seats are scarce and applicants abundant. While white enrollment fell the most overall, at the most selective colleges, it fell by less than 5% compared to Black freshmen, whose numbers at those top-ranked colleges dropped by nearly 20%.

3. Wealthier students have disappeared, too. While colleges have long tried to increase the enrollment of students underrepresented in higher ed, the students they most coveted were those from affluent neighborhoods (of all racial and ethnic backgrounds) because they tend to be better prepared academically and need less financial aid. This fall, the two biggest drops in enrollment by income were among the top two quintiles.

What’s happening?

Enrollment is often described as both an art and a science. Despite higher ed’s move to “moneyball” admissions in the last decade, with an increased use of data analytics to build their classes, the art half of the equation still plays a huge role.

College admissions is an emotional purchase. When I vacation at the Jersey Shore in the summer and take walks on the beach, I frequently notice the older people I pass wearing college sweatshirts. My assumption is that the name on the sweatshirt is where their grandchildren go, but inevitably when I ask, they’re thrilled to tell me it’s where they went 40 or 50 or 60 years earlier. What other purchase do we make at eighteen and are still thrilled to advertise the brand essentially forever?

While emotion still drives the decision-making process, I learned during the reporting for my forthcoming book that the equation is being rewritten by several trends:

1. Anger and frustration. My survey of 3,000+ parents for the book unearthed lots of frustration with the opaqueness of the admissions process and anger over the financial sacrifices it now takes to afford college. I’ll have a lot more to say about this in the new year, but here’s one excerpt from an open-ended comment in my survey:

“I am 44, and was told and sold on the idea of a solid middle class life, not rich, not poor if I got a degree. I got a teaching degree in 2003, and now at 44 years old, I am struggling. I make 56k and change. My husband works for our local hospital as maintenance. We can barely afford to buy a new house. We live paycheck to paycheck. Have virtually no savings. And hardly any to send our kids to college. And I was still paying off student loans until thankfully the Biden admin just forgave them. Being a special education teacher for my whole career is never financially what I expected or hoped for in terms of financial security and prosperity. I hope to ensure my kids choose career paths that will be fulfilling and lucrative, whether they be college or trades, and not have the mountains of debt I had to pay on my whole adult life.”

2. How we pay for college. Data I analyzed for the book about how Americans pay for college showed two distinct trends. One, families want to do something different with their money instead of stretching to pay for tuition. Fewer of them say that college is an investment in the future. Second, wealthier families are less willing to spend current income on college, meaning they either are holding out for more merit aid or “skipping over” colleges where historically they’ve been expected to pay full freight.

3. The full-payer is gone on many campuses. That last point above about skipping over a set of colleges that families with financial means would have paid for in the past is a critical point that I explore in a chapter in the new book. Colleges have trained families to get discounts and they can’t now untrain them. Indeed, these families want bigger discounts and are willing to trade prestige for it (unless it’s an Ivy-plus degree). This has significant consequences for schools just above the top of the pack that for decades got a significant number of families to pay full price.

So what happens next?

As Hemingway once said about bankruptcy, it’s gradual, then sudden.

For higher ed, the gradual part is in the rear-view mirror. That was the last six years. One data point I continue to highlight is this one: the percentage of high-school graduates who go right on to college. It peaked at 70% in 2016. In 2022, the last year available, it dropped to 62%. That’s hundreds of thousands of young people who are not in college. Yes, some of them went into the workforce, but many are also part of 1 in 5 global NEETs (not in employment, education, or training). In the U.S., that number is 11%.

This enrollment decline and the coming demographic cliff has led to lots of predictions about colleges closing. A new working paper out this month looks at past predictions of college closures—and then what actually happened—to see if we could accurately forecast the future. The authors considered two different scenarios of enrollment declines—one abrupt and another slower drop.

The tl;dr version: if the worst-case predictions of an abrupt drop come to pass, an additional 80 colleges could be forced to shut down each year—which is almost double the average rate. On the other hand, a more gradual drop in enrollment results in only an additional 5 colleges closing.

Colleges are clearly hoping for the gradual decline, but planning for the worst-case scenario. In just the past two weeks, I’ve been asked by presidents and trustees at three institutions to come speak to their boards in the coming months about the landscape of higher ed. These three colleges represent a significant portion of the higher ed sector (a liberal-arts college, a medium-sized private, and a public flagship). The issues facing all three are different, but there was one thing in common they wanted me to talk about: M&A.

M&A is not quite the right term to use in higher ed. There are very few acquirers in the industry. Northeastern University can only buy so many colleges. Mergers might happen more often, but in my experience, colleges wait too long to have those conversations before they’re put on a death sentence.

The better strategy is deeper strategic partnerships, something I dubbed the “networked university” back in 2017. I predict we’ll see more of this approach in 2025.

The question is will these partnerships just be the updated version of back-office sharing or truly new models. My hope is that we’ll see innovative solutions in higher ed.

Consider what Comcast did recently by announcing it would spin off its cable assets into a holding company called SpinCo.

Could we imagine a bunch of colleges spinning off their weakest academic assets into a new institution that can actually take advantage of scale and perhaps even invest in majors that some institutions see as distressed, perhaps the languages or the humanities?

Death by a hundred cuts at small colleges, which we’re seeing now where they’re shutting down departments and ditching majors, doesn’t help anyone.

Chips and Higher Ed

On the latest episode of Future U., Michael Horn and I took a deeper dive on the bipartisan CHIPS and Science Act, the $280 billion effort passed by Congress and signed into law by President Biden in 2022, to reduce the dependence of the U.S. on foreign manufacturers for microchips and other advanced technologies

As Shalin Jyotishi, founder and managing director of the Future of Work and Innovation Economy Initiative at New America told us, there is something for everyone in higher ed in this effort.

✈️ To see for ourselves, Michael and I traveled to Boise, Idaho, where the Community College of Western Idaho (CWI) has become a must-see educational partner for other institutions looking to partner with new chip factories. Boise is home to Micron, which is expanding its chip-making facility in Idaho, as well as building a new one in Upstate New York.

⬇️ This cool machine in the video below is in CWI’s Mechatronics Lab, which trains students for jobs in building and maintaining modern factories. But getting people interested in these advanced, well-paying careers isn’t as easy as it should be, as Robert Novak, chair of industrial automation at CWI, told me and Michael in the episode.

🎧 Listen to the full episode on your favorite podcast platform and subscribe to Future U. And thank you to Ascendium Education Group for its exclusive sponsorship of this episode.

SUPPLEMENTS

🔎 New College Search Guides. I’ve updated the free college search guides on my website, which were produced with the support of Corebridge Financial. You can download them here.

📈 International Enrollment Up. “The number of international students in the United States hit an all-time high in the 2023-24 academic year,” wrote Karin Fischer in her newsletter, Latitudes, “but the driver of the growth wasn’t new students coming to campus. Instead, the increase was fueled by recent graduates staying in the country to work.” A few other trends Karin pointed out:

• For the third year in a row, there were more international graduate students in the United States than undergraduates.
• A country in sub-Saharan Africa (Nigeria) has cracked the list of the top 10 sending countries.
• While Indian enrollments increased, the number of Chinese students declined.
• The number of Americans studying overseas increased 49% in 2022-23, but remains below pre-Covid levels. Almost two-thirds of those students went to Europe, with Italy, Britain, Spain, and France the most popular destinations.

🧮 Do you need calculus to succeed in life? Well, thousands of parents who took a survey I conducted for my next book, think you do to at least get into a top-ranked college. 86% said it was needed for admissions. And now three quarters of college admissions officers agree that AP calculus, in particular, is among the top math courses that carry the most weight in their decisions. That’s according to Jill Barshay from The Hechinger Report who reported this week on a new survey from National Association for College Admission Counseling. Read more and weigh in on the debate over calculus on my Facebook post about this new survey.

Until next time, Cheers — Jeff