Demographics Are Destiny (Maybe?)
[Today’s Tuesday Reading is from Jack Wolfe and David Sweetman of MOR Associates. They may be reached at [email protected] and [email protected].]
The number of high school graduates, post 2025, will drop substantially, particularly in the Northeast and Midwest. Higher Education is likely to look quite different in a decade or so. Despite decreases in student enrollment as a result of these shifts, there are lots of choices that one can make to sustain revenues. It may even be that the changes being made during the pandemic could set the stage for success. There will also be huge changes in our demographic mix. We need to “Get up on the Balcony” to view all this, and then act strategically.
What’s happening with High School Graduates (HSGs) and College Enrollments?
Post 2025, the number of HSGs will drop. We currently graduate 3.77M high-schoolers nationwide. This will increase 4% by 2025, drop 9% by 2036, and then continue downward. The reasons include: (1) drop in birth rates from the 2008-10 recession, and (2) more restrictive immigration policies. While the bulk of the decline is in the Northeast, mid-Atlantic, and Midwest, the South and Southwest may see very modest growth.
Total college enrollments peaked in 2010-11 at 25.2M students (70%+ in public institutions); by 2018, that had dropped by 12%. The total number of colleges is also declining: in 2012, we had 4,726 two and four year colleges. By 2018, that dropped by 12% to 4140. A substantial portion of the decline (via closure or merger) occurred in small private schools with under 1,000 students.
Other than large R1 universities, the vast majority of schools are tuition dependent for sustainability. This tuition dependence, particularly if combined with high costs from new debt-financed facilities, puts schools most at risk from enrollment declines. Moody’s Analytics, primarily a credit risk assessment agency, has been sounding the alarm here for a decade. In 2019, it analyzed 933 private colleges, and found 72% of them with medium to high financial risk.
What’s happening to our Demographic Mix in the U.S.?
In 1940, 90% of the U.S. population was classified as “White.” In 2020, that number was at 60%, and continues to decline. Those under age 16 turned majority-minority in 2019. Projections show that we will be a majority-minority nation in just over 20 years. Reasons include: (1) birth rates are higher in non-White populations; and (2) immigration, even if temporarily slowed, helps increase both diversity and population.
Let’s focus on our younger population – that’s most meaningful to college enrollments. The Class of 2019 and projected Class of 2036:
What do we need to do to insure the FULL integration and success of what will surely be a majority-minority college population?
How Can We Seize the Opportunity of these Changes in Enrollment?
Let’s agree that we must sustain or grow revenues – there are far more opportunities here to do so than we might initially think:
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Continue our current marketing efforts. We all have a loyal market following – continue a high level of attention to them, their legacies, and your immediate geography.
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Continue raising acceptance of remote learning. In the past year, with thanks to many of you, this has increased immeasurably. This opens up broader geographies, both domestically and internationally. For those with strong brands, your imprimatur has cachet. What can you do to create and market a high quality, at least partially remote, product offering?
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Better serve lower socioeconomic status. In top universities, only 24% of students matriculate from the bottom 80% of socioeconomic classes. We have an underserved and BIG market here. We need more new and different approaches. For example, can we design a three year degree with the first year residential, second year largely remote, and the third year a mix dependent upon major, all while cutting the overall price by half or more? Benefits abound to both citizenry and productivity with a far broader swath of our population with a GREAT education.
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Design curriculum for ALL backgrounds. Can we develop meaningfully integrative courses, policies, and support systems to insure a GREAT education for all backgrounds? Institutions need to tailor and market curricula that serve growing populations while demonstrating the value of the institution..
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Standard market expansion. And there are still non-traditional students, matriculation and transfer agreements, selected certificate programs, targeted programs such as health science paraprofessionals, etc. For example, I (Jack) serve on the Board of Trustees of a 3,600 student college which added a Physician Assistant program seven years ago. This year, we had 900 well-qualified applicants for under 100 openings, all at a price of $104,000 for a 27-month program.
Summary
The times, they are a-changin’, or so goes the song. Enrollments will decrease in the near future. For most, enrollment decline means revenue decline. Our mix of students will also change. For those who rise to the “Balcony” and think and act strategically, this will be an era of opportunity. Where will YOU be, and how will YOU act?