For decades, a college diploma was seen as the golden ticket to a good job and long-term income growth. But college enrollment has been on the decline since 2010, decreasing nearly 12% in the last 14 years. On top of that, the population of college-aged students is on the verge of dropping as well.
Although there has been a slight rebound in enrollment the last two semesters, many factors are contributing to the growing concern over what will happen if more U.S. students opt out of a four-year degree in favor of work opportunities. What’s changed over the last decade to cause such a shift in education trends? Let's go over four primary factors, as well as the potential impact of this alarming trend on the U.S. economy.
4 Reasons College Enrollment is Declining
There’s no single reason behind the decline in college enrollment. It’s actually the combination of multiple factors happening at the same time.
#1: Lower Birth Rates During the 2008 Recession are Catching Up
Birth rates in the U.S. reached a peak in 2007, only to dramatically drop when the Great Recession of 2008 hit the economy – and families’ feelings of financial stability. That means the population of prospective college students is about to drop as kids born in that period are now reaching their late high school years.
According to one estimate of birth cohorts, the number of high school graduates is expected to decrease from 3.9 million in 2025 to 3.5 million by 2037. Those numbers may look even more dramatic at a regional level. Northeast and Midwestern states are likely to have much more dramatic declines in their future high school graduates, while many states across the South and the West may actually grow their graduating classes.
Using this data, it’s possible to assume that college enrollment may also vary based on location. However, there are other factors not related to geography that also impact how many students choose to attend college.
#2: Uncertainty for International Students Seeking to Enroll
International students make up about 6% of college students in the U.S. and provide colleges with a major financial benefit since they typically pay full tuition. But the pandemic caused a short-term decrease of 15% of international students in the fall of 2020.
And while that number has steadily rebounded in recent years, there is major uncertainty when it comes to how the Trump administration’s policies will impact his cohort of applicants. During his first term, foreign student enrollment was down 12% in the first three years (pre-pandemic), but the president has recently indicated new support for H-1B work visas given to international workers with specialized skills.
Ultimately, how enrollment among international college students will be impacted by the next four years is unclear but could potentially decline alongside domestic students.
#3: Increasing Costs of Attendance Cause Major Barriers
For many young Americans, the rising cost of college tuition and other related expenses is becoming prohibitive, especially as they consider the burden of student loan debt. Since 1963, inflation-adjusted tuition prices have increased nearly 200% and tuition at public four-year colleges have jumped over 36% between 2010 and 2023.
Those price increases have taken a major toll on the financial wellbeing of college graduates, who collectively owe $1.773 trillion in student loan debt. 91% of young adults report that these loans are a key driver of their financial stress, impacting both their mental and physical wellness. It’s no surprise, then, that 85% of adults without a higher education degree cited cost as a factor in not going to college.
It’s simply becoming cost prohibitive for some prospective college students to make the leap into enrollment rather than entering the workforce directly after high school.
#4: Young Adults are Skeptical of the Value of College
A final contributing factor to the drop in college enrollment? An increasing number of Americans simply don’t buy that a college degree is worth that hefty price tag. Only 25% of adults in the U.S. think it’s important to have a four-year degree in order to land a well-paying job.
And many industries that require less education are ramping up their compensation packages to fight for employees. Manufacturers, retailers, and restaurants are frequently offering higher hourly rates and even sign-on bonuses that are attractive to younger adults.
That may not be the best financial move in the long run, since workers with higher degrees tend to earn more, but the perceptions around the value of college play a very real role in high school students’ decision-making.
How Changes in College Enrollment Could Impact the U.S. Economy
So what do these changes in college enrollment mean for American workers and the economy in general? There are definitely some challenges ahead.
Impact on American Workers
On an individual level, people may earn less over the course of their lifetime. BLS research shows that employees with a high school diploma earn nearly 40% less than those with a Bachelor’s degree. Additionally, people with no college degree tend to have a higher unemployment rate.
Impact on the U.S. Job Market
If college enrollment continues to decline, many critical industries will face even more challenges in the years to come. As students pursue degrees with higher ROIs (like STEM-related programs), less lucrative, yet essential, positions will experience greater hiring gaps.
For instance, healthcare and teacher shortages are already an issue across the country. By 2028, the American Hospital Association predicts a shortage of 100,000 critical healthcare workers. And teacher shortages already impact 86% of public schools that report hiring challenges, particularly in science, foreign language, and special education.
Impact on Local Economies
Decreasing college enrollment also has an economic impact on rural areas known for their colleges. 125 colleges and universities have already closed or merged since 2016. When this happens, small towns lose local jobs and businesses, even beyond campus employment – restaurants, retail, hospitality, construction, and other industries also suffer.
Consider the Long-Term Impact of Today’s College Decisions
Young adults in the U.S. certainly have a lot to think about when weighing their post-high school plans. It may seem like a good idea to skip college, but the financial ramifications are real. And as industries requiring four-year degrees work to attract a shrinking talent pool, you may set yourself up for even higher earning potential in the future.