One Way Colleges Can Weather The Coming Enrollment Squeeze

By Derek Newton
Reposted from Forbes, with permission.

Nathan Grawe, who’s pretty much the national expert on the subject and has written two books on it, recently told an industry newspaper that we can expect, “a national decline of approximately 10 percent in the enrollment pools for two-year and regional four-year colleges,” which are predicted to be impacted the most by the coming national decline.

That’s a big story but not the story. Or at least it’s not the whole story. The secondary, potentially larger, story is what schools plan to do about it.

Grawe put the two together, saying, “While demographic challenges are real — particularly in the Great Lakes and Middle Atlantic — colleges and universities can shape their experiences of those challenges through active engagement. Indeed, proactive campuses are already taking action through initiatives in admissions, retention, academic programming, and collaboration to prepare themselves to serve students of the future.”

The Autherine Lucy Clock Tower at the Malone Hood Plaza stands in front of Foster Auditorium on the University of Alabama campus in Tuscaloosa, Ala.
FILE – In this June 16, 2019 file photo, the Autherine Lucy Clock Tower at the Malone Hood Plaza stands in front of Foster Auditorium on the University of Alabama campus in Tuscaloosa, Ala. The number of foreign students coming to U.S. colleges and universities continued to fall last year, according to a new report from the Institute of International Education, but the Trump administration says the drop should be blamed on high tuition costs and not students’ concerns over the nation’s political atmosphere. The number of Chinese students at the University of Alabama has decreased by 43% over the past two years, to 266, according to the university’s annual enrollment report. (AP Photo/Bill Sikes, File)

That feels right.

To use the cliché’, it is what it is. The demographic tide is going out. And Grawe has hit on a few things colleges can do.  

Another thing colleges can do, something we never say out loud, is get more money from their students. It’s possible that getting more money from students and their families isn’t discussed in public often because it’s garish. Some may even consider the idea, in the glare of the student debt strobe light, borderline obscene.

Nonetheless, if a school’s enrollment is going to drop 8% in a given year, getting about 8.6% more from each student is a break even. The good news is that, for many schools, getting more money per student may be entirely possible – even without raising sticker price tuition. In fact, there are three reasons to think that over the coming decade plus, colleges may find more students willing and able to pay for their education even if sticker prices remain flat.

One is that the demographic shift that is going to reduce the number of teenage freshmen will also deliver more potential families who are able to pay more to send their kids to college. In his 2018 book, “Demographics and the Demand for Higher Education,” Grawe’s predictions are for “steady growth in the number of young people with the profile of a full-pay student” — that is from relatively high-earning families with degree-holding parents. “We can anticipate healthy increases in the number of such students over the next decade,” he wrote.

It’s just a projection based on demographic markers and will vary by region and type of school. But still, Grawe says there’s a likely increase in students who can, and may be likely, to pay a greater share of their tuition bills – a net 10% increase by 2029.

The second reason that schools may be able to get more revenue from students is that, unsurprisingly, demand for elite schools — those in the top 50 or so — is expected to grow over the decade, even in the face of an overall decline in enrollments.

Given the correlation between desire for elite schools and family resources, if those elite schools don’t expand their classes and the supply of well-off families goes up, more students with more means will filter down to schools in the top 250, the regional privates and non-flagship state colleges. If elite schools continue their essential work to recruit and enroll more students from less affluent backgrounds, that filter down flow of wealthy students will be deeper and faster.

Interestingly, both the increase in the number of students from top-income and high degree attainment homes and the increased demand for elite schools are an echo of impressive and unprecedented work colleges did in the 1970s and 1980s — granting degrees in record numbers overall and increasingly to women, first-generation students and under-advantaged minorities.

Aside, it’s a shame that story isn’t told more often.

Anyway, the third reason to think colleges may be able to increase their revenue per student is that some schools are getting smarter in how they allocate aid and recruit and admit their students. They are using tech and data tools to help them spread discounts and grants more equitably while they, as a bonus, lower their recruitment costs.

Last month, for example, Florida Tech, a private non-profit college said they not only increased their enrollments this year — up 3% while their sector was down an average of 8.5% — they actually also increased their revenue per student.

Not every school will be able to do that, many won’t even try. But there’s reason to think that in the face of the inevitable coming drop in eligible freshmen enrollees, colleges are anything but unarmed. Getting more revenue from the students they do get may be the most direct, potentially most valuable play – boosting their bottom lines without boosting their price tags.

Originally published on Forbes on January 27, 2021.