By Liz Weston
LOS ANGELES Nov 18 U.S. college enrollment is
declining. That may cause students and their parents to hope
tuition costs will go down, but they should not count on that.
In classical economics, lower demand typically triggers
lower prices, at least until unprofitable companies merge or go
out of business and shrink supply. It does not necessarily work
that way, though, in the world of higher education.
In the fall of 2012, published tuition and fees for in-state
students at four-year U.S. public schools rose just 2.9 percent
from a year earlier, the smallest increase in 33 years, the
College Board reported. At private schools, published prices
rose 3.8 percent, lower than the increases in recent years.
At the same time, the number of students enrolled in
colleges and universities fell by nearly half a million after
two decades of substantial growth, according to the U.S. Census
Moody's rating service has warned that enrollment
declines threaten the finances of many colleges.
Enrollment was certainly on the minds of 916 college
administrators and consultants attending a recent strategic
enrollment management conference hosted in Chicago by the
American Association of Collegiate Registrars and Admissions
"Everybody - two-year, four-year, private, public, Christian
schools - they all raised concerns about meeting their
enrollment goals," said Michael Reilly, the association's
The lower enrollments mostly reflect a better economy, which
lured students into the workforce and away from two-year and
for-profit schools, said Jennifer Ma, a policy research
scientist for the College Board. In coming years, though, there
is a more worrisome trend for schools: a smaller pool of high
The number of high school graduates peaked in 2011 at 3.4
million, according to a report by the Western Interstate
Commission on Higher Education.
The group expects that number to drop to between 3.2 million
and 3.3 million and not start to grow again until 2020, the
report said. Even then, the growth rate will not match the boom
experienced between 1990 and 2011.
But although people aged 18 to 24, those known as
"traditional age" college students, are an important part of
enrollment, they are not the whole story. In fact, they are not
even most of the story.
Older learners now make up the majority of the 21 million
U.S. college students, said Terry Hartle, senior vice president
of the American Council on Education.
"Traditional age students are now the distinct minority,"
In addition, the trend of fewer high school graduates could
be ameliorated if a larger percentage decides to attend college
in the future, said the College Board's Ma. The rising number of
jobs that require higher education, and economists' dire
predictions that those without degrees will not stay in the
middle class, may persuade more to extend their education beyond
The economy plays a significant but complex role in college
enrollment and costs. Improved economies tend to bring increased
spending on public education, as legislators restore the funding
they slashed during bad times, Hartle said. That should moderate
future price increases for the public schools that 80 percent of
college students attend, he said.
Private schools, particularly mid- and lower-tier
institutions, face different challenges. Most spend more on
educating students than they collect in tuition, making up the
gap with gifts, endowments and alumni contributions, Reilly
said. Lower revenue may result in a bigger gap with no obvious
way to fill it.
In the past, high demand has allowed these schools to raise
tuition at faster rates than inflation even as family incomes
dropped. But less demand, more competition and families'
increased reluctance to borrow for education may imperil that
approach, Reilly said.
"Small institutions without strong endowments ... will
struggle," Reilly said.
Some say the competitive pressures will be too much for many
One quarter of today's colleges and universities will either
merge or disappear in the next 15 years, predicted Michael Horn,
co-founder and executive director for education programs at the
Clayton Christensen Institute for Disruptive Innovation, a San
Mateo think tank.
"The financial model is breaking down and pricing out the
middle class," Horn said. "There are fewer high school students
coming up the ranks, plus there's the pressure of online
innovations in education. It's a perfect storm of forces that
will hurt a number of institutions quite severely."
Hartle, on the other hand, thinks most colleges and
universities will adapt and survive. He points to a book from
the early 1970s that predicted a "Great Depression" in higher
education and to business guru Peter Drucker's forecasts in the
1990s of widespread college closures.
"We've been here before," Hartle said. "Private colleges and
universities are very hardy in the U.S. They don't close very