Class dismissed: Colleges expected to close as enrollment numbers tank

It’s no big secret that the price of attending a four-year college or university in the United States is out of control. It’s almost gravity-defying how the cost of college has increased over regular inflation over the past twenty years. In fact, more than 500 for-profit private colleges have closed in the past decade according to the Wall Street Journal, “three times the number in the previous decade.”

The news is about to get worse, and the pilot in the cockpit hears a stern warning. 2025 will have a lot of turbulence followed by possible weekly plane crashes of colleges and universities that can no longer afford to open their doors. This new reality is the ultimate law of supply and demand and families in America are voting with their feet.

LOW ENROLLMENT AND FINANCIAL STRUGGLES REQUIRED THE CLOSING OF ALL FACULTIES: ‘IT’S REALLY UNFAIR TO EVERYONE’

WHY DO FACULTIES CLOSE SO QUICKLY?

Enrollment

Trending experts have a new terminology they call the “registration cliff.” Number of students enrolled in the course colleges and universities dropped by 15% from 2010 to 2021, and only 62% of US high school seniors now go straight to college.

That’s a stark contrast to nearly fifteen years ago, when that number was 68% in 2010, according to government data. Many students who choose to pursue postsecondary education are low-income students, but even those with means are beginning to choose alternatives. We’ve also seen a jump in competition for in-state colleges and universities where parents can enjoy in-state tuition and other possible scholarship programs offered only to in-state students.

In addition to the fact that some students are taking certificate courses instead of going to college, some are starting work, and some are considering alternative career paths, we are facing record low birth rates in the United States, which will have the long-term effect of declining college and university enrollment .

This low birth rate trend started about 17 years ago. After reaching an all-time high in 2007, the Great Recession hit in 2008, causing the fertility rate to plummet. The national birth rate fell 23% between 2007 and 2022, and fast-forwarding to today, it’s not obvious that twenty-something Generation Z is itching to start a family. This drop in total birth rate therefore, beginning next year in 2025 and lasting until 2037, we will see a large drop in enrollment as the 2008 baby begins to reach college age.

It’s not money… It’s money

Over thirty years of providing financial advice to families across America and the number one complaint in the planning process is not how much money someone will need for retirement. The dialogue quickly shifts to how it will be possible to fit two, three or even four children through four-year college education.

Colleges and universities are beginning to feel the financial pain.

Although these higher institutions pay no federal income or estate taxes, the higher total operating costs of five-star businesses and state limits on tuition increases for public colleges have limited the ability of colleges and universities to increase tuition revenue. Combined with an overall market where families are voting with their feet to attend less expensive colleges and universities, this has strained the ability of these institutions to remain fiscally solvent.

While there are more than 150 colleges and universities boasting more than $1 billion in endowments, there are scores of others struggling to enroll, struggling to retain academic talent, and figuring out how to maintain facilities at the level developed by new students to expect. from school.

This can not only affect school itself, but also the surrounding towns or cities where local business is built around the school. On average, each college or university that closes affects 265 jobs and $14 million in labor income. To keep their heads above water, some colleges have reduced teaching staff and areas of academic study, but this will not be enough to face the Titanic-like cold water that many universities and colleges will face.

Alternative career paths

Under DOGE we could eventually see Institute for Education eliminated. And with the possibility of Pete Hegseth becoming the new Secretary of Defense, we could see a new proposal for young people to join the United States military.

We don’t yet know what the future of education in the United States will look like, but it’s very possible that teenagers in high school will have four potential 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 employees than white-collar workers, reversing a decades-long trend in the US labor market. Let’s take plumbers as an example. The United States is expected to have a shortage of about 550,000 plumbers by 2027, which is bad news given the cost of repairing plumbing and the time it will take to find someone to fix it. This type of statistic is universal across all lines of home service clerks.

There are also great careers in the military, and military recruitment has been in steady decline for the past 40 years. At the end of fiscal year 2023 (September 2023), three branches reported that they had not met their recruitment goals: the Navy was at 80% of the target number, the Army at 77%, and the Air Force 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 members of the US Armed Forces will decrease by approximately 6% from 2012 to 2022, from 1.4 million to 1.3 million. We will need more young people to join the military in the next 10 years.

Closures are coming

The cost of tuition and fees plus room and board for a four-year private college averaged $58,600 in the 2024-2025 school year. Adjusted for inflation, that’s roughly $250,000 for one child through a four-year college education. If parents and students continue to question the high cost of a college education, we could see record low enrollment rates over the next decade and more colleges close their doors and go out of business. Classes are not in progress!