Why College Enrollment Is Declining — and What It Means for the Economy

Once bustling lecture halls now reverberate with emptiness on innumerable campuses. In addition to being statistical, the drop in college enrollment is also emotionally, financially, and profoundly personal. According to Ted Mitchell, president of the American Council on Education, this change is “a perfect storm,” a confluence of cultural skepticism, growing expenses, and demographic decline. His remarks ring with urgency and caution, suggesting a shift that might completely alter the way Americans live, work, and learn.

For many years, going to college represented social advancement, better employment, and upward mobility. That promise seems noticeably diminished today. Tuition is increasingly seen by families as a risk rather than an investment. According to a 2023 Pew survey, more than half of Americans question whether a four-year degree is worthwhile and will yield a significant return. Younger generations have been remarkably successfully influenced by this sentiment to pursue shorter, skill-based learning options that appear more feasible and cost-effective, such as certificates, apprenticeships, and micro-credentials.

One cannot overlook the financial burden. For almost twenty years, tuition has increased more quickly than wages, forcing students into debt that feels particularly heavy. Nowadays, a lot of young adults choose not to pursue higher education at all after weighing the expense of college against the possibility of finding work sooner. Traditional enrollment has drastically decreased as a result of this cost-benefit analysis, particularly among working-class families who are unable to defend the trade-off between education and financial security.

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Another level of complexity is added by demographics. This is the much-discussed “demographic cliff.” Since the Great Recession, birth rates have drastically decreased, which means that colleges have fewer high school graduates to hire. Forecasts indicate that the number of college-aged students will decline by 650,000 annually by 2039, which is a glaringly obvious sign of the difficulties that lie ahead. Consequently, the talent pool that drives economic innovation is at risk due to a narrowing pipeline that feeds into higher education.

Once a dependable source of funding, international enrollment is also struggling. The number of international students studying in the United States is declining due to stricter visa regulations and changing political environments. NAFSA estimates that the number of international students may have decreased by up to 15% this school year, resulting in an annual economic impact of almost $7 billion. These students frequently pay full tuition, and the money they spend on housing and transportation supports local economies. Less diversity, less funding, and fewer scholarship opportunities for domestic students have resulted from their absence.

President Hilary Link saw this effect firsthand at Drew University in New Jersey. Visa issues caused nearly one-third of her incoming international class to withdraw. “Even a slight change in enrollment can have disastrous consequences for smaller institutions like ours,” she said. Her remarks capture the delicate balancing act that universities currently have to perform between reinvention and survival.

prestigious universities like Stanford and Harvard continue to enjoy relative safety. They are exceptionally resilient to demographic shocks because of their endowments and international renown. However, there is tremendous pressure on hundreds of regional and mid-tier colleges. The bulk of first-generation and low-income students—those who most rely on accessible education—are educated at these institutions. “It’s a tale of two realities—the rich schools grow stronger while smaller ones struggle to stay alive,” observes economist and former Vassar College president Catharine Bond Hill.

The effects on the economy are extensive. From engineering to healthcare, important industries rely heavily on college graduates, and a lack of educated workers may impede innovation and productivity. Nearly 43% of new jobs will require at least a bachelor’s degree by 2031, according to Georgetown University’s Center on Education and the Workforce. However, current enrollment trends point to a shortage of qualified professionals in the future. The director of the center, Jeff Strohl, cautions that “we’ll see a decline in economic strength and living standards” if education is not adequately funded.

Industries are already feeling the pressure. Despite record government funding, the semiconductor industry—a key driver of technological advancement—faces acute talent shortages. According to labor analytics company Lightcast, there may be six million open positions in the United States by 2032, many of which call for advanced training or college degrees. The effects go beyond GDP; they also have an impact on income distribution, innovation, and the country’s ability to compete internationally.

Community colleges, on the other hand, are becoming a positive countertrend. Previously regarded as secondary options, these institutions have demonstrated remarkable adaptability. They provide career-focused, flexible programs that are especially helpful for low-income students and working adults. Their rise in part-time enrollment indicates that although Americans still place a high value on education, they are looking for it in ways that fit their obligations in real life. “Community colleges are becoming the nation’s most responsive education system—affordable, accessible, and highly efficient,” notes Genesis Santiago of the Association of Community College Trustees.

This flexibility is changing the way that education and employment are related. Community colleges are generating graduates who directly address changing labor demands by incorporating partnerships with industries. Green technology, logistics, and healthcare certificates are filling important labor shortages. The goal of this model is very clear: education that immediately leads to opportunity.

However, there are significant structural issues with the larger system. The 2024 FAFSA fiasco demonstrated how entire cohorts can be derailed by inefficient bureaucracy. Low-income students were disproportionately affected by the 9% decline in completion rates brought on by glitches in the new aid form’s implementation. Many put off or completely gave up on their plans to attend college in favor of short-term certifications or immediate employment. The brittleness of the connection between enrollment and access was made clear by this one policy failure.