Since the financial crisis of 2007-08, Americans have had fewer babies. As a result, about ten years from now, there will be a big dip in the number of college-age students.
This “birth dearth” has prompted Nathan Grawe, Professor of Economics at Carleton College, to analyze the dynamics of demographic shifts and consider how schools might prepare for a significant decrease in demand. Grawe meticulously presents his findings in his insightful and practical new book, Demographics and the Demand for Higher Education.
The sad statistical reality is clear. Grawe summarizes the looming demographic headwinds:
“In an apparent response to the financial crisis, the nation’s total fertility rate has plummeted by more than 12 percent since 2007. And so, beginning in 2026 the number of native-born children reaching college age will begin a rapid decline. The most recent data suggests fertility rates may have reached a bottom in 2013, but nothing so far suggests a meaningful recovery. The Great Recession did not simply delay births–it eliminated them.”
However, Grawe is cautious to explain that one can’t assume this generational trough will inevitably result in reduced attendance at colleges across the board.
Although this will be the general trend, the statistical forecasts complicate the matter, as enrollment patterns largely depend on regional, ethnic, and socioeconomic factors. Grawe writes, “As any admissions officer can confirm, while the number of college-aged children is an important component of higher education demand, who is in the prospective student pool is at least as important.”
To capture these metrics, Grawe has compiled statistics to create the Higher Education Demand Index (HEDI). By region, the HEDI measures not only the projected number of college-age students but also the probability of their college attendance. Here, probability is a function of variables such as income, parents’ education levels, race/ethnicity, and family types.
His analysis identifies particular variation in demand according to geographic region. Some areas, such as the Mountain West, will enjoy slight increases in demand, while others, such as the Northeast and East North Central, will encounter major reductions of 15% or more. Notably, “Atlanta and Charlotte represent the only hopes for noticeable growth east of the Mississippi River.” Most regions will have fewer college-going residents, and the nation will experience a significant net reduction in demand overall.
Elite institutions probably won’t suffer much from the “birth dearth,” according to Grawe: these super-selective schools can draw from a nationwide pool of applicants, making them less susceptible (though not immune) to regional variations in demand.
However, most non-elite schools mainly draw from their regional populations. For the many regional schools which exist in projected low-demand areas, the demographic destiny may in fact be demograpic doom. Two-year colleges, which are especially local in their student enrollments, may suffer even worse.
College administrators, you have been warned.
Although the challenges for colleges are significant, Grawe is careful not to portray this as a hopeless scenario. After all, this is an unusual problem in that one can see it coming, and measure it, many years in advance. The book’s later chapters offer many ideas on how policymakers and administrators might prepare for decreasing enrollments. For example, Grawe recommends a lean approach to staffing (e.g., avoid offering long-term commitments like tenured positions) as well as recruiting more non-traditional students–perhaps even retirees.
And what about the students from this smaller birth-dearth generation? Might they enjoy the benefits of a buyer’s market, as they shop among increasingly needy schools? Although Grawe’s book is written mainly for the benefit of educators, he gave us his thoughts via email on the student’s perspective.
Grawe predicts any student advantages will also vary by region: “I believe this will play out differently in different markets. In places like the Northeast where we see softness (to say the least) at all institution types, it should be easier for students to get into better schools without 17 extra-curriculars and 12 charity commitments.” In other areas, though, demand and competition dynamics may prevent students from gaining any special advantage. Plus, we’re not yet sure how schools may adapt and compete in response to this coming crisis.
Overall, though, the demographic shift should work in students’ favor. Grawe explained: “On average, students and families should have greater leverage. But if you decide that you absolutely have to attend one particular institution–even an institution in a down market, it may be that that institution has effectively adapted and effectively neutered your leverage. Families that remain nimble, open to considering a range of college options, will be more likely to take advantage of a market that is generally moving in their favor.”