As college enrollment plunges, schools must adapt to post-pandemic reality

A college degree is still the ticket to better earnings and a more successful career. Data from the U.S. Bureau of Labor Statistics continues to support the traditional idea that college is the path to a better life, but fewer Americans seem to be buying into it these days.

The higher education world is in shock after a second consecutive year of dramatic declines in college and university enrollments this fall. Numbers from the National Student Clearinghouse Research Center reflecting about three-quarters of the country’s post-secondary institutions show a 3.5% drop in undergraduate enrollments this year and a two-year decline of 7.8% since 2019. The drop-off last year was not unexpected in the early stages of the pandemic, but a second large decline has raised concerns that fewer Americans see the value of post-secondary education.

The drop-off last year was not unexpected amid the early stages of the pandemic, but a cumulative 6.6% drop over two years has raised concerns that fewer Americans see the value of post-secondary education.

“In the last 50 years, we’ve seen nothing close to the steep decline in enrollments over the last two years,” said Doug Shapiro, executive director of the National Student Clearinghouse. “With the population growing and the complexity and demands of the labor market increasing, it’s hard to imagine that we could see such a large decline.”

Normally, post-secondary enrollments run counter-cyclical to the economy. They rise in recessions and uncertain economies as people look to retool and add skills to expand their opportunities. That happened after the 2008 recession when enrollments — particularly at community colleges — surged.

Not this time. The outbreak of Covid-19 drove the unemployment rate to 14.8% virtually overnight early last year as community lockdowns crushed low-wage sectors like hospitality, restaurants and retail trade.

The recovery in those sectors has been slow and uneven but it has gathered steam to the point where a tight labor market is now pushing low-end wages higher.

“Those hit hardest by the pandemic are now thinking about how to get back into the labor market, not school,” said Maria Flynn, CEO of Jobs for the Future, a non-profit focused on the American workforce and education systems. “I expect that dynamic will continue into 2022.”

While the drop in college and university enrollments occurred across public and private institutions with two- and four-year programs, community colleges have been hit the hardest, falling 6% this year after a staggering 9.4% decline last year.

Public four-year programs were down a more modest 2.5%, compared to a 1.6% fall in 2020.

There is, however, a wide disparity among schools in all categories, with less selective schools — those serving low and middle-income students — seeing the biggest drop in enrollments.

Martha Parham, vice president of public relations at the American Association of Community Colleges, isn’t surprised by the numbers.

“About 29% of our student population are first-generation Americans and most of them work full- or part-time,” she said. “The pandemic decimated the service industries and lower socio-economic groups were more negatively impacted.”

She said that federal funding through the CARES Act helped institutions develop online learning models and cover unbudgeted costs from the pandemic, yet she worries that the enrollment declines will have lasting effects.

“Our colleges are funded in arrears after enrollments,” she said. “It could be a couple of years before we see the full fiscal impact of these declines.”

Shapiro says she’s worried that negative signals about the financial distress of both students and institutions could result in still further declines. “I think the bite of affordability really stands out now,” Shapiro said. “Students are more skeptical about the value of a four-year degree and they’re more wary of student loans and taking on debt.”

There were 44.8 million borrowers with federal student loans in 2017, according to Federal Reserve data, and total student debt was $1.73 trillion at the end of the second quarter. The average debt of graduates with a bachelor’s degree in the class of 2019 was $28,950, per the Institute for College Access and Success. The still-rising cost of college and university is clearly giving potential students pause.

The drop in higher education enrollments could still be temporary. So could the tight labor market and rising wages.

Flynn, however, thinks the plunge in college enrollments signals a turning point for higher education and workforce training systems. She believes educational institutions need to better align their offerings with in-demand jobs.

They need to partner with companies and other institutions to offer students clearer pathways to economic advancement. And they need to offer “competency-based” learning models, online and in-person, that advance students as they master skills rather than according to a standard timetable.

“This is a sea change, and the pandemic has accelerated the change,” Flynn said. “The disruption to higher education has people questioning things in a deeper way.

“We’ll learn a lot in the next 18 to 24 months, but I don’t think things will go back to the prior status quo.”