Class dismissed: Colleges expected to close as enrollment numbers plateau

It’s no big secret that the cost of attending a four year college or the university in the United States is out of control. It’s almost as if gravity defies how the cost of college has risen relative to regular inflation over the past twenty years. In fact, more than 500 private nonprofit colleges have closed in the last decade according to the Wall Street Journal, which was “three times as many as in the previous decade.”

The news is about to get worse and there is a stern warning announcement coming from the pilot in the cockpit. The year 2025 is going to have a lot of turbulence followed by potentially weekly plane crashes of colleges and universities that can no longer afford to open their doors. This new reality is the supreme law of supply and demand and families in America are voting with their feet.

LOW ENROLLMENT AND FINANCIAL STRUGGLES FORCE NY UNIVERSITY TO CLOSE: ‘IT’S REALLY UNFAIR FOR EVERYONE’

WHY ARE UNIVERSITIES CLOSING AT SUCH A FAST RACE?

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Trend experts have a new terminology they call the “enrollment cliff.” The number of students enrolled in degree-granting programs. colleges and universities fell 15% from 2010 to 2021 and only 62% of high school seniors in the US go immediately to college right now.

That’s a stark contrast to nearly fifteen years ago, when the figure was 68% in 2010, according to government data. Many of the students who choose not to receive postsecondary education are low-income students, but even those with means are beginning to choose alternatives. We have also seen increased competition for state colleges and universities where parents can enjoy in-state tuition and other potential subsidy programs offered only to resident students.

Beyond the fact that some students are taking certification courses instead of going to college, some are entering the workforce, and others are considering alternative career paths, we are experiencing a record number of new babies in the United States, which will have a long-term impact. on reducing enrollment in colleges and universities.

This trend of low birth rates began about 17 years ago. After reaching an all-time high in 2007, the Great Recession hit in 2008, causing fertility rates to plummet. The national birth rate fell 23% between 2007 and 2022, and fast-forward to today, it’s not obvious that Gen Z twenty-somethings are eager to start a family. This decrease in general birth rate That is why starting next year, 2025, and continuing through 2037, we will see a significant decline in enrollment as babies begin to reach college age in 2008.

It’s not the money… It’s the money

Over thirty years providing financial advice to families across the United States and the number one complaint in the planning process is not how much money someone will need to retire. The dialogue quickly turns to how it will be possible to subject two, three or even four children to a four-year college education.

Colleges and universities are starting to feel the financial pain.

Although these higher institutions do not pay federal income taxes or real estate taxes, the higher overall operating costs of running a five-star operation and state-imposed restrictions on tuition increases for public universities have limited capacity. of universities to increase tuition income. Add to this the general market in which families vote with their feet to attend lower-cost colleges and universities, and it has put great pressure on the ability of these institutions to remain financially solvent.

While there are more than 150 colleges and universities that have more than $1 billion in endowments, there are many others that are struggling with enrollment, fighting to maintain academic talent, and pondering how to keep facilities at the level that new students university students have grown. expect from a school.

This can not only affect the school itself, but the surrounding towns or cities where local businesses are built around the school. On average, each college or university that closes affects 265 jobs and $14 million in labor income. To stay afloat, some universities have cut teaching staff and cut areas of academic study, but it will not be enough to face the Titanic cold water that many universities and colleges are about to face.

Alternative career paths

Under DOGE we may eventually see the Department of Education removed. And with Pete Hegseth likely to become the new Secretary of Defense, we may see a new pitch aimed at young people about joining the United States military.

We don’t yet know what the future of education in the United States will look like, but it’s entirely possible that teenagers in high school will have four possible career paths in the future.

1. College or university

2. vocational school

3. Entrepreneurship

4. military

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It is now harder to find blue-collar workers than white-collar workers, reversing a decades-long trend in the U.S. labor market. Take plumbers as an example. The United States is expected to be short about 550,000 plumbers by 2027, which is bad news because of the cost of fixing pipes and the time it will take to find someone to fix them. These types of statistics are universal across all lines of manual home service workers.

There are also great careers in the military and military enlistment has steadily declined over the past 40 years. At the end of fiscal year 2023 (September 2023), three branches reported missing their recruiting goals: the Navy was at 80% of its target number, the Army was at 77%, and the Air Force was at 89%. %. The Marine Corps and Space Force were the only branches to meet their recruiting goals.

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The total number of active duty service members in the U.S. military decreased by approximately 6% between 2012 and 2022, from 1.4 million to 1.3 million. We will need more young people to join the military over the next 10 years.

Closings are coming

The cost of tuition and fees plus room and board for a private four-year university averaged $58,600 in the 2024-2025 school year. With inflation, that’s roughly $250,000 for a child to complete a four-year college education. If parents and students continue to question the high price of a college education, we could see enrollment fall to historic lows over the next decade and more colleges close their doors and operations. Class is not in session!