Demographers say it will finally arrive nationwide this fall. This is the time when recruiting offices will begin to face the long-awaited decrease in the number of applicants from the next graduating class.
But the decline is not just a problem for universities and colleges. It’s a looming crisis for the economy, with fewer and fewer graduates coming to fill jobs that require higher education, even as international competitors increase the share of their population with degrees.
“The impact of this is economic decline,” said Jeff Strohl, director of the Center on Education and the Workforce at Georgetown University.
As new data emerges, the outlook gets worse. An analysis by higher education consulting firm Ruffalo Noel Levitz, using the most recent census data available, now predicts one more drop in the number of 18-year-olds in early 2033, after a brief spike. By 2039, that estimate suggests there will likely be 650,000, or 15%, fewer of them per year than there are now.
Those findings sync with another new report released in December by the Western Interstate Commission on Higher Education (WICHE), which said the number of 18-year-olds nationwide who graduate from high school each year — and are therefore college applicants — will fall by 13%or nearly half a million, by 2041.
“A few hundred thousand a year might not sound like a lot,” says Stroll. “But multiply that by a decade and it has a big impact.”
Fewer students means fewer colleges
This comes after colleges and universities have already collectively experienced a 15% decline in enrollment between 2010 and 2018. and 2021, the latest year for which data is 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, and means there are already 2.7 million fewer students than at the beginning of the last decade.
In the first half of last year, more than one college a week announced it would close. Even more new research from the Federal Reserve Bank of Philadelphia shows that the pace of college closings now it can be accelerated.
The news is not bad. For students, this means a buyer’s market. On average, colleges and universities are accept a greater proportion of their applicants than 20 years ago, new research from the American Enterprise Institute think tank found. And tuition, adjusted for inflation, decreasesaccording to the College Board. (Accommodation and meal charges continue to increase.)
Ripple effects in the economy
The likely closing of more colleges is in itself a threat to the economy. Nearly 4 million people work in higher education, NCES reports. Although the colleges most at risk tend to be small, any closing means medium loss of 265 jobs and $67 million in annual economic impactaccording to economic software and analysis company Implan.
Although the decline in the number of 18-year-olds is largely discussed in terms of its effects on colleges and students, the implications are much broader.
“In an economy that depends on skilled labor, we’re falling short,” says Catherine Bond Hill, an economist, former president of Vassar College and managing director of higher education consulting firm Ithaka S+R.
She points out that based on NCES data, the United States has fallen to ninth place among developed nations in share of the population aged 25 to 64 with some post-secondary degree.
“We should be aiming for No. 1, but we’re not,” she says.
A shrinking supply of young people will contribute to a “massive labor shortage”, p an estimated 6 million fewer workers in 2032 more than the jobs that need to be filled, according to labor market analysis firm Lightcast.
Not all of these jobs will require college. But many will. Forty-three percent of them will require at least a bachelor’s degree by 2031, according to the Georgetown center. That means more jobs will require some kind of college degree than Americans are now expected to earn.
As-yet-unpublished research being conducted at Georgetown predicts large shortages in teaching, health care and other fields, as well as some level of skills shortages in 151 occupations, Stroll said.
“If we don’t maintain our edge in innovation and college-level education,” he says, “we’re going to have a decline in the economy and ultimately a decline in living standards.”
Labor shortages are already complicating efforts to expanded the American semiconductor industryfor example, warns the consulting firm McKinsey & Company. That’s the main reason why production at a new $40 billion semiconductor processing facility in Arizona is delayedaccording to the parent company.
A labor shortage on the scale predicted for the coming one hasn’t happened since the years immediately after World War II, when the number of young men was decimated by death and disability, Strohl and others say. And that worker shortage coincides with a wave of retirements among experienced and well-educated baby boomers.
Multiple complex demographic factors
“This is a landmark moment in our history,” said Luke Jankovic, executive vice president and general manager of Lightcast. “We have a lot of people moving from economic producers to economic consumers, and there just aren’t enough people coming up behind them to replace them.”
The decline in the number of 18-year-olds is compounded by other problems, including a steep decline in the share of Americans in the labor market — especially baby boomers who retired early and men derailed by substance abuse or incarceration. The share of men 20 and older in the labor force has declined from about 76% at the start of the Great Recession to about 70% todayreported by the Bureau of Labor Statistics.
The decline in high school graduates by 2041. expected to be most severe in the Northeast, Midwest, and West, where fertility rates are generally lower than in other regions and to which fewer families have moved. in everything 38 states will see a declineWICHE estimates, some are 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, meanwhile, it will be largely due to one group: Hispanic students. The share of high school graduates who are Hispanic nationwide is expected to grow from 26 percent to 36 percent by 2041.
But Hispanic college attendance is below the national average and is downshows US Department of Education statistics.
All of these things represent “a combination of factors that we haven’t seen before,” said Emily Wodwani, a senior director at credit rating agency Fitch who works in higher education.
Concerns about the value of a college education
Meanwhile, enrollment declines are exacerbated by declining perceptions of the value of a college or university degree. One in four Americans now say that having a bachelor’s degree is extremely or very important to getting a good job, the Pew Research Center found.
Among high school graduates, the share going straight to college has declined from a peak of 70% in 2016 to 62% in 2022the most recent year for which the figure is available.
The only thing that will restore stability to the higher education sector, says Wadhwani, “is a renewed sense of worth.”
Demare Michelo, WICHE’s president, calls these trends “the most perplexing set of issues facing higher education planners and administrators in a generation.”
There are other customers for colleges, of course, including international students, students over 18, and graduate students.
But these other sources may not be enough to offset the coming declines, experts say.
Now that Donald Trump is about to begin a second presidential term, 58% of European students say he is less interested in coming to the United Statesaccording to a survey conducted in October and November by the international student recruitment company Keystone Education Group.
And despite the attempts of colleges to recruit students over 25, their numbers are so fell in half since the Great Recession, the Philadelphia Fed estimates. Many older students say they are discouraged by the cost, or have families and jobs that colleges don’t always accommodate, or have started college but dropped out and have little tendency to go back.
On Iowa Wesleyan’s campus, the old gym was stripped of its hardwood floor and anything else of value, then torn down. The cornerstone fell into the pile of rubble. It bore the date the college was founded: 1842.
“In so many of these towns, their identity is inextricably tied to the college that’s been there forever,” said Doug Moore, the man leading the liquidation. “It’s a huge source of local pride. It’s also a big source of good-paying jobs that aren’t substitutable.”
The process of stopping him, he adds, “is brutal and painful.”
Still, he knows that more colleges and universities are likely to go under the auctioneer’s hammer and the wrecking ball in the coming years:
“You have a staggering number of variables” facing colleges and universities. “It’s supply and demand. You must evolve and adapt or die.
