The Demographic Cliff: A Looming Crisis For Higher Education And The Economy

A recent article highlights a force I have written about often: The demographic shifts that will intensify over the latter half of this decade and into the 2030s. A brief summary of the article and issues follows.

The Looming Demographic Cliff and Its Ripple Effect on Higher Education and the Economy

A silent yet profound shift is taking place in the United States (and globally) one that will reshape higher education and have far-reaching economic consequences. The “demographic cliff,” a term used to describe the decline in the number of 18-year-olds available to enter college, has been looming since the Great Recession triggered a drop in birth rates. This decline is expected to manifest significantly by this fall, presenting an existential challenge to colleges and universities and broader implications for the nation’s economy.

The Decline in College-Age Students

The number of high school graduates, and thus potential college enrollees, will steadily decline. Projections from the Western Interstate Commission for Higher Education (WICHE) suggest a 13% drop by 2041, which translates to nearly half a million fewer students annually. Another analysis foresees a 15% decline by 2039. This drop follows a 15% enrollment decline between 2010 and 2021, including a sharp pandemic-era downturn.

Economic and Labor Market Implications

The consequences of fewer college graduates extend beyond campuses. A diminished pool of skilled workers could exacerbate labor shortages and hinder economic growth. By 2032, there may be six million fewer workers than needed, impacting industries like healthcare, teaching, and technology. Forty-three percent of these jobs will require a bachelor’s degree by 2031, further stressing the education pipeline.

Challenges for Colleges and Universities

The financial strain on colleges is already evident. Institutions like Iowa Wesleyan University have shuttered, with more closures expected. Smaller colleges are particularly vulnerable, and each closure represents an average annual loss of $67 million in local economic impact. Moreover, the perceived value of a college degree has waned, with fewer high school graduates opting for higher education.

A Glimmer of Opportunity

For students, this demographic shift creates a buyer’s market. Colleges are admitting a higher percentage of applicants, and inflation-adjusted tuition costs are declining. Yet, the financial and operational sustainability of many institutions remains precarious, requiring urgent adaptation.

A Need for Strategic Evolution

As Doug Moore, an expert in managing college closures, aptly observes, “You’ve got to evolve and adjust, or die.” The demographic cliff is not merely a challenge for higher education but a clarion call for reinvention. Addressing this crisis demands bold strategies to enhance the value proposition of a college education, attract nontraditional and international students, and reimagine workforce development to meet future economic needs.

The demographic cliff represents one of the most perplexing challenges of our time. By confronting it head-on, we can mitigate its impacts and ensure a thriving educational and economic future.

Originally published at http://frankdiana.net on January 8, 2025.