Five reasons college enrollments may be dropping

  • Article by: RICHARD VEDDER , Bloomberg News
  • Updated: October 23, 2012 - 1:20 PM

State by state, enrollments appear to be down.

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Parents who are desperately trying to get their children into a top school may not believe this: U.S. higher education enrollments this fall might be lower - perhaps significantly so at some institutions - than they were a year ago.

Official national data won't be published for some time. Yet state by state, enrollments appear to be down, mostly at community colleges and at some four-year schools as well.

In Ohio, preliminary numbers from the Board of Regents of the University System of Ohio show a 5.9 percent decline, and the drop-off at one community college (Hocking) was so precipitous (more than 20 percent) that it had to dismiss staff.

In other Midwest states such as Michigan and Wisconsin, numbers at some institutions have fallen as well. In Arizona, one large Tucson- area community college (Pima) shows a decline of 11 percent.

Some flagship state universities are full up - the University of Arizona, for example, reports that total enrollment is at an all-time high - though the University of Colorado, for one, has enrolled fewer students. In several cases, state funding cuts may have precipitated some of the declines, but that isn't the whole story.

The huge decreases in the number of students in the past couple of years have been at for-profit universities. They have been hit by stricter federal regulations, a major reason that some of the biggest for-profits have shifted away from a business model focused on large enrollment growth.

There are five possible reasons cited for dropping enrollments.

First, the population of 18-year-olds is in decline, and that is where most freshmen come from. Although this is a legitimate explanation, the decline in this age group isn't large enough (roughly 2 percent in the past year) to explain big enrollment decreases.

Second, some admissions officials have been arguing that the turnaround of the economy is working to lower the numbers. It is true that enrollments are somewhat anti-cyclical. When the economy tanks, young people and even older adults who are unable to get jobs head to college, and go back to work when the job situation improves. Yet the year-to-year job growth in the U.S. is pretty anemic, certainly not enough to trigger much of an enrollment decline in most states.

Third, eligibility for federal financial assistance has been tightened. For example, a Pell Grant recipient formerly could receive grants for nine - yes, nine - years; now the limit is six years. Believe it or not, a fair number (more than 100,000, according to Pauline Abernathy of the Institute for College Access and Success) of previous recipients of that money were cut off, possibly leading them to drop out of school. This might be of some importance at schools with large economically disadvantaged populations.

Fourth, colleges may in some cases be pricing themselves out of the market. Although full tuition-increase data aren't available, it is virtually certain that this fall tuition fees rose a good deal more than the rate of inflation.

For example, the National Association of Independent Colleges and Universities has announced that its members raised fees an average of 3.9 percent for 2012-2013, almost double the 2 percent increase in the consumer price index. In recent years, public school tuition fees have risen even more (largely because of stagnant state subsidies). If that trend continues this fall, then public university fees are probably up close to 5 percent, about 3 percent after adjusting for inflation.

Last and possibly most important, concern appears to be rising about the rate of return on college investments. One estimate is that as many as 53 percent of recent college graduates are either unemployed or have relatively low-paying, low-skilled jobs.

For most, the college investment decision involves the long run, because the gains from higher education are presumed to accrue over many decades. Parents and students must look to the lifetime earnings prospects associated with a degree. College is at least as much a device to help employers screen applicants as it is a creator of human capital in the form of vocationally specific skills. And it is a very expensive screening device, the cost of which is borne by employees, not prospective employers.

To me, the long-term challenge is one of simple math. Two- fifths of adult Americans have associate degrees or more, yet less than that fraction of actual jobs are in the technical, professional or managerial fields that historically have been the vocational home for new college graduates.

Moreover, the proportion of graduates is growing faster than the number of high-paying jobs. A majority of the top 30 jobs forecast to have the most growth by the Bureau of Labor Statistics in the next decade require less than formal higher education. We are projected to need only 10,000 more biomedical engineers but 340,000 more customer sales representaties by 2020.

The math problem is even more fundamental. Not everyone can be above average. We don't live in a Lake Wobegon world. Some public leaders recognize the problem: Michigan Gov. Rick Snyder, for example, recently called for more emphasis on vocational education and less on four-year college degrees.

If the proponents of near-universal higher education get their way, in another couple of decades, more than half of adults will be college graduates - and by definition some of them will be in jobs that pay below average. The higher education establishment will then claim that in our complex world, post-graduate degrees are vital: a master's in janitorial science, for example. Isn't this over-credentialization leading to a huge waste of scarce human resources?

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Richard Vedder directs the Center for College Affordability and Productivity, teaches economics at Ohio University, and is an adjunct scholar at the American Enterprise Institute.

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