The future of enrollments looks unsettled through 2030, Fitch Ratings report shows

There are universities rising above inflation and pressure to report record numbers, but the least selective are in trouble.

It has been a banner start to the fall for some colleges and universities, which are reporting the largest new enrollments in their history. That includes the University of Alabama, the University of Kentucky and Purdue University and even smaller regional institutions in Iowa, Michigan and Illinois.

And yet, amid the splendor being splashed across social media from the chosen ones came a lightning bolt of bad news this week from financial services company Fitch Ratings, which said higher education enrollments overall likely will not recover quickly from the effects of the pandemic and other market pressures. It expects the losses to continue for another year or more, with higher education finally seeing some relief by 2025. But even then, any gains by four-year publics and privates are expected to be below 1% through 2030. The institutions most likely to be impacted, the agency said, are those with less-than-stout academic standards.

“Enrollment pressures will be felt unevenly,” Fitch Ratings officials said in their report. “The most selective universities, few of which saw any significant enrollment declines during the pandemic, are expected to see steady student demand. Enrollment at less selective, typically smaller, four-year degree institutions is unlikely to rebound to pre-pandemic levels this fall, further straining budgets given their higher dependence on student-generated revenues.”

There are other big drivers behind Fitch’s assessment, including the economy, but also how much students and families perceive the value of higher education vs. other options.

“Enrollment growth is further complicated by inflation, a strong labor market and employer initiatives to attract and retain workers, including on-the-job training, certification programs or relaxation of college degree requirements,” Fitch analysts said. “This mirrors a longer trend, particularly in certain sectors, of relaxing degree requirements and focusing on skills-based hiring criteria.”

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Although the National Student Clearinghouse Research Center has yet to release official data on fall enrollments–last year saw around a 3% decline–Fitch said early numbers from the National Center for Education Statistics show an expected drop of 1.6% for the 2022-23 academic year. That would further the declines felt since the pandemic began to more than 10%.

Some areas of the country–and even within states–might be more susceptible to declines in the future just based on demographics. For example, enrollments fell off the cliff in the Midwest from 2015 to 2020 and dropped hard in the Northeast, based partly on populations waning. All other areas fell as well, though not with the same thud, helped by growth in high school-age students. The South and Southwest are expected to see big gains among that group next year.

Another population key to enrollments is international students, which also nosedived during the early stages of COVID-19 but have made a bit of a comeback. Still, U.S. higher education might be hard-pressed to get back to pre-pandemic levels in the next couple years, experts from Fitch warned.

“Through July 2022, visas issued to students from China and India will meet or exceed student visas issued for those countries for all of 2021, although the weaker Chinese economy and geopolitical tensions may affect the visa pipeline,” analysts noted (with China being the far-and-away leader of international students sent to the U.S.). “We anticipate fall 2022 will see incremental growth in international student enrollment from 2020-2021 lows, although levels are likely to remain below the most recent peak in 2018-2019.”

Market pressures aside, performance really will depend on how well individual institutions can respond to them. Some have done extraordinarily well because they are most selective and can afford to be, with applications and interest soaring. Others are doing their best to attract more students, offering better financial aid packages, keeping tuitions level or reducing them and providing an array of services, resources and flexibility that students now expect.

The record-setting enrollment surge at Purdue is backed by application numbers that have grown by 30,000 over the past decade. Several factors have contributed, including a heavy boost to research initiatives and increasing the number of faculty but notably because it has remained affordable and kept tuition level.

“Our Fall 2022 enrollment is a clear demonstration that students and their families see Purdue as an exceptional educational value,” said Jay Akridge, Purdue provost and executive vice president for academic affairs and diversity. “Our commitments to outstanding teaching and experiential education and the resulting nationally ranked programs, combined with our commitment to an affordable and accessible education, are bringing record numbers to West Lafayette. The most exciting part is thinking about the mark these Boilermakers will leave on our world after they complete their studies here.”

Chris Burt
Chris Burt
Chris is a reporter and associate editor for University Business and District Administration magazines, covering the entirety of higher education and K-12 schools. Prior to coming to LRP, Chris had a distinguished career as a multifaceted editor, designer and reporter for some of the top newspapers and media outlets in the country, including the Palm Beach Post, Sun-Sentinel, Albany Times-Union and The Boston Globe. He is a graduate of Northeastern University.

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