Enrollment in postsecondary education was declining in some areas even before the arrival of Covid-19. The pandemic accelerated the drop to historic levels, with undergraduate enrollment plummeting by nearly 500,000 in the fall of 2021. When many institutions returned to in-person classes in 2022, colleges and universities saw nearly a million fewer students than before the start of the pandemic.
Following two very difficult years, enrollment declines have begun to level off, according to figures from the National Student Clearinghouse Research Center. However, postsecondary education may be changed for years to come. As your clients plan postsecondary savings or seek investment opportunities, they may benefit from insights into factors driving enrollment changes and the possible impact may be of fewer students attending colleges.
That an enrollment drop-off might be a one-time phenomenon as potential students simply took a “pandemic gap year” before enrolling in college does not appear to be the case. The National Student Clearinghouse found that among 2020 high school graduates who chose not to enroll in college, just 2% enrolled a year later.
More broadly, the finances of postsecondary education appear to be a key concern among people who choose not to attend college. According to a report from Strada Education Foundation, expectations that education will be worth the cost have fallen by 18% since the start of the pandemic. In a 2022 survey conducted by The Harris Poll, 51% of U.S. adults indicated that the cost impacted their ability to pursue education after high school. With
average student loan debt per borrower of $37,113 in 2022, the high cost of higher education is clear.
Other factors cited by those who choose not to attend college include the need to work to help support their family, a degree not being necessary for the job they want, and nearly 1 in 3 who said they just didn’t want to get a degree. The recent tight labor market may also mean that more potential students are deciding to join the workforce while some employers are showing more willingness to train workers with necessary skills rather than requiring degrees.
Whatever their motivations, men are the biggest group foregoing postsecondary education. Women began to surpass men in college enrollment decades ago. By the fall of 2020, 58% of all undergraduates (9.2 million students) were female, while male students made up just 42% of undergraduates.
Overall, enrollment declines have been especially steep at community colleges, which have traditionally helped students enter good-paying jobs that meet modern market needs but don’t require a four-year degree.
Community colleges also offer some of the greatest value in higher education. Public two-year colleges have an average in-state tuition of $3,860, according to College Board data, compared to $10,940 for public universities and $39,400 for private four-year colleges.
Students attending public two-year colleges fell to 4.5 million in 2022, down from 7 million in 2010, according to data from the National Student Clearinghouse Research Center. Beyond declining enrollment, community colleges also struggle with low graduation rates — 43% of community college students earn degrees within six years compared to an overall national completion rate of 62%.
Shortages of workers in key professions may be compounded by current declines in qualified graduates from both two-year and four-year colleges. A pre-pandemic study from researchers at Cleveland Clinic Lerner College of Medicine and elsewhere estimated a shortage of over 900,000 registered nurses nationwide by 2030. That number is likely larger with a growing number of post-pandemic resignations.
Similar worker shortages are reported in cybersecurity, where demand is twice as high as worker supply, and construction, where more than half of companies report difficulty finding qualified workers. A coming wave of retirements by baby boomers may compound worker shortages, with estimates of as many as 31 million jobs left open.
Some signs of a post-pandemic return to higher education may be on the horizon. Community college enrollment increased 0.5% in the spring of 2023, after a decade of declines including 8.2% in 2022 and 10.1% in 2021. The increases are fueled by younger students entering community colleges, including dual-enrolled high school students, who begin their college
education while still in high school. Overall undergraduate enrollment began to stabilize, dropping just 0.2% in the spring, while graduate enrollment continued to drop by 2.2%.
As the post-secondary education landscape continues to change — and impacts are felt by companies of many kinds — FundVisualizer can help you understand the opportunities and implications for client investments. Use FundVisualizer to evaluate more than 30,000 funds, ETFs, and indexes. Learn more at FundVisualizer.com.
Putnam Retail Management.