There is a misconception that declining demographics will cause a drop in university admissions. The idea of an "enrollment cliff" stems most recently from the December, 2024 Knocking at the College Door report, which projected a decline of 340,386 high school graduates between 2023 and 2041 (2024 WICHE Report). However, history contradicts this assumption. The very first Knocking at the College Door report in 1979 projected an even greater drop of 517,148 high school graduates by 1986 (1979 WICHE Report), yet university enrollment increased from 10,475,055 in 1980 to 10,797,975 in 1986 (NCES Total Fall Enrollment 1980-1986). This demonstrates that university enrollment is influenced by more than just high-school demographics.
University admissions consist of more than just the most recent high school graduates. Many students delay college enrollment - between 2012 and 2022, only 66% of high school graduates immediately attended college (NCES Immediate College Enrollment Rate). Additionally, foreign students also contribute to enrollments. Since multiple factors beyond demographics impact enrollment, focusing solely on declining high school graduates is misleading.
The real threat to university enrollments is the declining perceived value of a university degree. Public confidence in higher education has eroded, with only 36% of Americans expressing confidence in colleges in 2022, down from 57% in 2015 (Gallup). A 2023 survey found that 56% of Americans believe a four-year degree is a poor investment (WSJ/NORC). If universities fail to demonstrate their value, public skepticism will continue to grow.
Some university degrees offer poor financial returns, reinforcing doubts about their value. A 2024 report by the Foundation for Research on Equal Opportunity (FREOPP) found that (a) 23% of four-year degree programs and 43% of two-year programs have a negative return on investment; (b) 2-year degrees in liberal arts provide no return on investment and (c) more than 50% of master’s degree programs leave students financially worse off (FREOPP). By contrast, (d) trade certificates often provide higher earnings potential than bachelor's degrees. If universities fail to align their programs with economic realities, skepticism about their value will continue to rise and enrollment will decline.
Employers are reducing their reliance on degrees, diminishing their necessity in the job market. In the State of Higher Education 2024 report, 84% of current or prospective students cited employment-related outcomes—such as higher wages and job security—as the primary reason for pursuing education (Gallup). Yet a survey the previous year found that 55% of companies eliminated bachelor's degree requirements, and 45% planned to do so for some roles in 2024 (Intelligent.com). A 2022 Harvard Business School study found that 46% of middle-skill and 31% of high-skill jobs underwent a "degree reset," meaning employers dropped degree requirements (Harvard Business School). If universities do not greater align their programs to job market needs, they risk becoming irrelevant in the labor market.
Both students and employers want increased returns. Students want high or higher paying jobs upon graduation and thereafter that justify the substantial loans they will owe the banks. Students want lower costs and education delivered through flexible modalities so they can work at the same time and in some cases also take care of their families. Employers predictably want employees that will increase profits. Universities must therefore greater align the courses they offer with what the job market is willing to pay. Key strategies include industry partnerships to keep curricula relevant, affordable tuition models, flexible learning options, integrated career services, skill-based training, and transparent outcomes reporting. By implementing these strategies, universities can restore confidence and prove their worth to students and employers.
The good news is that universities have infinitely more agency than the demographic narrative suggests to redefine both their value proposition and their future.
Through strategic practice, universities can engage stakeholders, assess labor market trends, use data-driven decision-making, encourage cross-functional collaboration, implement agile policies, establish performance metrics, and align resources with changing demands. By focusing on strategic adaptation, demographic trends become just one more point in a more robust view. Those who look beyond demographics to possess greater clarity can increase enrollment and secure both their long-term viability and their essential mission.
Patrick Landers is VP of Strategy at Convene Lab, a strategy consultancy focused on strategic practice. Click here for a quick chat.