Several U.S. colleges have suffered from either mergers or shutdowns due to falling enrollment rates in recent years. In just this year alone, colleges have experienced at least 1 million fewer students enrolling compared to before the pandemic. There is no one reason for the decline. Factors vary from quickly rising education costs to a general drop in interest in attending a 4-year college.
The pandemic is also playing a role in the decrease in enrollment rates as pandemic-influenced financial struggles have caused current college students to either drop out, unenroll, or find new ways to pay off their tuition. The financial issues are also impacting high schoolers’ plans after graduation as more graduates become open to cheaper college options. 15% of high school graduates plan to go to public rather than private colleges, 27% are planning to take a gap year before heading to college, and 36% are choosing to attend a community college.
With college enrollment continuing to decrease, colleges will face growing competition against each other in order to get more students and enough revenue. Unfortunately, smaller schools and community colleges are struggling more with falling enrollment compared to bigger schools and highly selective universities. This could be because highly selective, prestigious schools have sought-after degrees that are higher in value in the eyes of the public. These colleges also have endowments big enough to be used as part of financial aid packages to incoming students.
Universities with endowments are able to use them to help run activities such as public service missions and general college operations. Schools that are able to spend around just 5% of their endowment yearly assume less risk when using their investments. Unfortunately, only 106 universities have endowments worth over $1 billion.
There are a few ways you can make sure your choice in college is financially stable before you officially enroll. You can see whether your college is spending less than 5% of their endowment in endowment reports, ask for the college’s tuition discount rate, or look for warning signs in news reports. However, even if your college does close, you can be prepared so that it doesn’t have a discouraging effect on you. Understanding whether the school will sign transfer agreements after closing, contacting a legal aid office near you for help, and researching your federal loan discharge options can help you prepare for a possible closure.
With the effects of the pandemic being felt even now, both students and colleges can expect falling enrollments to be a continuing trend for a while.