Declining Enrollments? Not Such a Big Deal

A new report released yesterday by the National Student Clearinghouse (NSC) reported that undergraduate enrollments were down 1.3 percent from the previous year, equivalent to 231,674 students from the previous spring. The biggest losses were in the two-year public sector, which accounted for over half of the losses (53 percent; 107,393), and the four-year, for-profit sector (33 percent; 67,637). The losses at the four-year public and private non-profit sectors were negligible.

A similar reporting was noted by the NSC in fall 2017, a more traditional measure of postsecondary participation compared with the spring semester. In that NSC report, total enrollment declined 1.0 percent, or 199,179 students. As with the spring 2018 report, about half of the decline was in the two-year public sector and 36 percent in the four-year for-profit sector, with negligible declines in the others.

What does this mean and why does it matter? I ask because people seem to be getting in a tizzy over these reports. Obviously, colleges worry about declining enrollments because it impacts their financial forecasting. For instance, 50 students may not sound like many, but if a private institution loses that many students from one fall to another, the financial impact of those losses could add up to $1.5 million pretty quickly, depending on the institution. And what is the impact of $1.5 million? Depending on the institution, $1.5 million could translate to 20-25 FTE employees. These issues are nightmares for business officers and executives, let alone academic deans.

Although these NSC data are interesting, the overall issue is relatively insignificant in the long-term. In preparation for this Swail Letter, I did a quick check on CDC birth records and the population trend of 18-24-year-olds in the US. There is no serious concern for enrollment worries as they should remain relatively stable over the next decade. My bet is that they will likely increase over that period of time with the aid of a rebounding of the two-year and for-profit sectors.

Still, the question remains: if things are so stable, why are the numbers down? First, let’s put this in perspective: we are talking about a 1.0 to 1.3 percent change, and given the nature of enrollments and the sheer size of the overall student population, these are data “blips.” Numbers vacillate for a lot of reasons, and as some people have noted about this new report, the issues are also about geography and are not steady across the country. Our concern should be focused on when blips turn to trends, and that isn’t happening at this time (ask me next year). Thus, the answer to the question of why this is happening is actually quite simple: it’s the economy.

Every higher education policy analyst understands that when the economy is good, enrollments, beyond the factors of demographics, decline. Why? People are employed and can find jobs. A certain bubble of the population will tend toward postsecondary education and training when the economy is bad and tend toward employment when it is good. Right now, with the economy humming at an unemployment rate of 3.9 percent, they are trending towards work. This percentage rate, by the way, is considered “full employment” by economists. As the President would like everyone to acknowledge, the unemployment rate has continued a downward slide since he was in office. And he’s right; it clearly has. Of course, the rate has been on a downward slide since the first year of the Obama Presidency, so one might choose words and data carefully given the nature of the economy versus the power of the office. The graphic below illustrates the trends in long-term unemployment by Administration, first with the Bush Administration, followed by Obama, and then Trump.

Table 1. Number of people in the United States who were unemployed for 27 weeks and over, 2008 to 2018 (in thousands)

SOURCE: https://data.bls.gov/timeseries/LNS13008636. Graphic by the Educational Policy Institute. 

Bubble students take quick opportunities in the work force because they can earn money. Many, especially at the two-year level, will choose to leave higher education (or not enroll) and re-enter the workforce because they are employable due to a strong economy. This perspective would also make sense in the for-profit sector, which also enrolls people who are on the bubble of employment.

Interestingly, the NSC also reported that the number of adult students (above 24-years of age) was also down. The argument above also would forecast this happening, too.

In the end, let’s keep a positive outlook. The economy is good. People are working, albeit we know that the people who are working and receiving benefits is a grave concern in the US. Take a quick look at the graphic below. The red dots and lines represent part-time workers in the 25-54 age range and the blue the full-time workers. The combination of the Great Recession and the introduction of Obamacare spiked the number of workers who moved from full-time to a part-time status, in large part because the economy was unsettled as well as employers knee-jerk reaction to reduce employee hours so they wouldn’t have to provide health care as a benefit. Only now do we see that the economy is strong enough that the trend is reverting back to pre-Great Recession numbers. That is a good thing.

Table 2. Part-time versus full-time employment ratios between 2007 to 2018 (April) for workers between the ages of 25 and 54.

SOURCE: https://www.advisorperspectives.com/dshort/updates/2018/05/07/the-ratio-of-part-time-employed-april-2018.

Declining enrollments are always a challenge for colleges and policymakers. But, ultimately, we must remember what we are here for, and that is to provide an education for those who desire and need it. Our job is not to admit people who actually want to be doing something else and we shouldn’t promote something behind the curtain when some potential clients already know what they want to do and how to get it. If and when those people are ready, we will be there for them. But if they want to work, that’s a good thing for them and the nation as a whole.

For right now, the data presented suggest that the issue of declining enrollments is much ado about nothing.