Climb or Die

When the college enrollment crisis comes, many small private colleges won’t survive.

By Anthony P. Carnevale

We often write about the haves and the have-nots in today’s economy: those with some postsecondary education and those without it. Likewise, there’s a growing divide between the have and have-not institutions in our higher education system. While public university systems and selective private colleges have relatively secure futures, small, less-selective private colleges face looming enrollment declines and financial difficulties that threaten their survival.

Recent headlines describing falling college enrollment during the pandemic merely foreshadow what is to come for higher education. Lower birth rates have led to demographic changes that will bring on a dramatic decline in college enrollment in the latter half of the decade. The number of new college students in the United States is projected to plunge by 15 percent between 2025 and 2029. The enrollment dropoff will be most severe in the Northeast, which is home to a disproportionate share of the country’s colleges and universities.

At the same time, the growing share of students with two parents who each have a college degree could actually increase the size of the applicant pool for selective colleges. In the late 2020s, a larger share of the students headed to college will be from families in which both parents have a bachelor’s degree. The share of students who have two parents with bachelor’s degrees will increase to around 19 percent of all high school graduates by 2029, a 7 percentage point increase from 2012. Because these families are likely to favor sending their children to selective colleges — and would be prepared to pay tuition — selective colleges could see continued or even growing competition for admission.

Public colleges and universities are likely to react to the change in demographics quite differently. Limited public funding and constraints on raising tuition will likely force these colleges, particularly non-selective regional institutions, to become more efficient. Much of our higher education system is excessively duplicative. Individual college campuses generally offer a full slate of academic courses and majors, enabling students to select their program of study cafeteria-style. A public college system with 20 four-year colleges, for example, probably offers an English major at almost every campus. Financial realities will likely lead systems like that to offer a major in English at half or fewer of the campuses, with online English courses available to students at the other campuses. The cost efficiencies that would result from these reforms would intensify the price advantages that public colleges have over private institutions, making the public colleges more attractive to students.

With elite private colleges and public college systems likely to withstand the enrollment cliff, smaller, less-selective private colleges will be left to compete for a shrinking pool of applicants. Colleges need to offer students prestige or career preparation, or have a large endowment or unique niche, to have a competitive advantage. Many small private colleges in areas of declining populations have none of these attributes. They are more or less interchangeable in the eyes of prospective students, and some will not succeed in a crowded field.

For small private colleges, the next few years are the time to climb or die. More than 60 nonprofit higher education institutions have already closed or merged since 2016. Moody’s Investors Service projected that annual college closures will eventually increase to 15 per year, up from 11 in 2018. And Robert Zemsky, Susan Campbell Baldridge, and Susan Shaman predicted in their 2020 book, The College Stress Test, that about 100 of the country’s 1,000 private liberal arts colleges were likely to close over the next five years.

It is imperative that students are informed if their college is at risk of closing because the closure could mean having to transfer to another institution to finish their studies. Unfortunately, students are not always able to transfer all of their credits to another institution, resulting in lost time and money. More transparency about the risk of college closures could help prepare students and hold institutions accountable. A 2019 Massachusetts law, for example, enabled the state to monitor private colleges’ finances more closely and ensure that at-risk colleges create contingency plans for their students. Similar measures in other Northeast states, where college closures are especially likely, could improve the chances that students at imperiled colleges are able to graduate.

Of course, college closures and mergers don’t just leave students in the lurch. They also threaten hundreds of higher education jobs, hiring prospects for local employers, and even the local economies of small college towns. In the long term, lower college enrollment could mean fewer people with bachelor’s degrees joining the workforce, despite continued demand for highly-educated workers.

Dr. Carnevale is the director and research professor at the Georgetown University Center on Education and the Workforce. CEW is a research and policy institute within Georgetown’s McCourt School of Public Policy that studies the links among education, career qualifications, and workforce demands.

Thanks to Kathryn Peltier Campbell, Martin Van Der Werf, and Emma Wenzinger for editorial feedback; Artem Gulish for quantitative feedback; Johnna Guillerman and Fan Zhang for graphic design; and Sojung Ha for publication support.

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