Is the Economy to Blame for Declines in College Enrollment?

Posted By Donna Fuscaldo on February 1, 2016 at 2:56 pm
Is the Economy to Blame for Declines in College Enrollment?

Blame it on an improving economy or flattening number of high school graduates, but either way – enrollment in four-year for-profit institutions and two-year community colleges is down for the fourth straight year, according to the National Student Clearinghouse Research Center.

Late last year, the educational reporting non-profit released its enrollment data analysis for the fall of 2015. It found that year-over-year, enrollment at post-secondary schools decreased by 1.7 percent. At four-year for-profit schools, the enrollment decline was 13.7 percent, while at two-year public colleges the decline was 2.4 percent. Four-year private nonprofit institutions only saw a 0.3 percent decline while enrollment in four-year public schools enjoyed a slight uptick of 0.4 percent. Overall, public sector enrollment declined 2.3% in the fall of 2015.

While four-year private nonprofit and public schools are faring better than their two-year and for-profit counterparts, enrollment overall isn’t up by a significant rate. Part of the reason: the economy.

“Four-year [for]-profits and two-year public [colleges] enroll a high percentage of students over age 24 that came back to college during the recession,” says Jason DeWitt, research manager at National Student Clearinghouse Research Center. “Now with an improving job market, a lot of those students are going back to the workplace.”

During the recession of 2008 and 2009, the unemployment rate hit a record high of 10% in October of 2009 and remained high for several years. Today, however, the employment picture is much better, with the unemployment rate standing at 5% as of December. “In general, college enrollment and the unemployment rate are counter-cyclical,” says DeWitt. “When the unemployment rate goes up, college enrollment rates go up. Two-year public schools are the most affected by that.”

For-profit schools facing a number of issues

While community colleges can fairly point to the economy for the decline in enrollment in recent years, the story is more complicated when it comes to for-profit schools. Sure, they are getting hurt by older clientele who are opting to forgo school for a job. But they are also under a lot of scrutiny by regulators, and that could be causing potential students to rethink their choice.

With student loan debt at a record high of $1.3 trillion and many graduates finding themselves underemployed or unemployed, the government has set its sights on for-profits, arguing they are partly to blame, as many are churning out graduates who aren’t prepared for the workforce and/or have more debt they can realistically pay back. The Department of Education has launched investigations into a number of for-profit schools, contending that they aggressively recruited students, charged hefty fees and then left them unprepared to find jobs.

In November, the Department of Justice announced a landmark settlement with for-profit school Education Management Corp. (EDMC), the second-largest for-profit education company, in which Education Management agreed to pay $95.5 million. The settlement resolved allegations that it violated federal and state False Claims Act provisions by falsely claiming it was in compliance with Title IV of the Higher Education Act.  The main cusps of the government’s lawsuit was that Education Management unlawfully recruited students by “running a high pressure boiler room where admissions staff were paid based purely on the number of the students they enrolled.” According to DeWitt, the decline in enrollment at the four-year for-profits is a combination of increased scrutiny, an older student body returning to the workforce and some litigation.

Colleges rethinking their mission

Also hurting colleges across the board is a shift in demographics in terms of the number of graduates coming out of high school. According to U.S. Census Bureau, in 2000, 25.7 percent of the population was under 18. That declined to 24 percent in 2010. By 2020, it is expected to decline further to 23.9 percent. That means there will be less students graduating high school and thus attending college.

While declining enrollment is bad news for colleges and universities, it isn’t for the students attending these schools. That’s because community colleges, in particular, are forced to rethink their mission and in many cases get back to their roots when faced with declining enrollments, says DeWitt. He says colleges are getting more insightful about their marketing and are finding ways to reach students that would be the best fit for their institution. What’s more, it has forced conversations among school leadership about what schools were founded for and how to get back to their original missions. “They are thinking about what they offer that is really unique,” he says.

Donna Fuscaldo
Donna Fuscaldo is a freelance journalist hailing out of Long Island, New York. She has also written for,,,, Business Insider, Dow Jones Newswires and the Wall Street Journal.

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