Has college enrollment peaked?

Growing up in Sioux City, Iowa I worked part-time at a local Rexall drug store during high school. I enjoyed it a lot and stocked the shelves, rung up sales and helped the pharmacist count pills for prescription orders. I even earned the incredible wage of $1.50 an hour. This was in the early to mid-1960s.

Because of that, I thought I wanted to become a pharmacist. It seemed like that would be a pretty good job. After graduating from high school in 1966, I enrolled in the Pharmacy College at South Dakota State University for what was to be a five-year degree program. That’s when reality hit.

It never fully occurred to me that you had to actually understand the make-up of all those medicines. To make a long story short, a year of advanced biology and organic chemistry cured all those thoughts. I hated it.

In those days, if you were not in college, you were likely going to get drafted into the military. I didn’t have the money to continue, so I joined the Army. At least that way, I went in on my terms. I eventually spent 9 ½ years as a Counterintelligence Agent, which I really loved.

Along the way, I became interested in finance and economics and took college courses whenever and wherever I could. While stationed in San Francisco, I eventually completed my last two years by going to night classes four nights a week at the University of San Francisco. USF was a highly respected Jesuit university. I had found my calling, and that eventually led to a 46-year career in the investment business. The bonus was that veteran benefits were paid for my education.

One day while talking to my counselor I was complaining about why I had to take a course in philosophy and ethics. The short version of what he told me was that while I was just in my 20’s, the Jesuits had spent more than 450 years perfecting a curriculum, including philosophy, that would mold me into a young man in the service of others. He was right and I shut up and took the course. 

I know without a doubt that it made me a better person. But that was almost 50 years ago. As I look at the classes and degrees they and other universities offer and the tuition they charge now, it’s hard to make the same blanket statement. 

In a Wall Street Journal survey earlier last year, 42% of people between the ages of 18 and 34 said that college wasn’t worth it. I don’t personally feel that way, but I can see why some people do. That’s up ten percentage points compared with two previous surveys over the last decade. While many college graduates make more than those who just earned a high school diploma, they also likely took on debt to do it and deferred their earnings by four years or more. As for what now passes for college courses and majors, I’ll leave it to you to peruse your alma mater’s website or that of your state’s flagship institution.

The problem is that we’re bending to the tastes of the 18 to 22-year-olds instead of requiring students to complete core courses. We allow some of them to graduate still unequipped to join the workforce but definitely carrying debt.

 And it’s not just younger Americans. Among older Americans, the percentage of those who think college isn’t worth it jumped from 44% in 2017 to 56% last year. They didn’t report the reason for the rise in an unfavorable light, but questionable classes and high tuition prices have to be in the mix. 

It’s true that the vast majority of college graduates make more over their working lives than those who don’t go to college, but that comes with a few huge caveats. A number of very-well-paying jobs require degrees and specific advanced education. Many of the strivers in a generation choose to go to college, and some kids choose not to go to college because they are bored or unmotivated. To be sure, college graduates also can be unmotivated. Likewise, many people who stopped pursuing higher education after high school graduation are motivated, exceptional people. But numerically, there are more people just hanging out after high school than there are plowing through college.

The problem is that more students and parents are questioning the value of a college education just as we’re about to reach the peak of potential students. After a long climb, the annual number of babies born in the U.S. peaked in 2007 at just over 4.1 million. Since then, the number of babies has fallen to 3.6 million. In 2025, we will be at the top of the wave of potential college freshmen, just as many are deciding it isn’t worth it. In 2010, 41% of high school graduates enrolled in college. Today, that number has fallen to 38%, although the pool is larger. Starting in 2026, both the percentage and the pool will be smaller, and that trend will continue for at least 16 years. Universities are going to have serious business problems with major fixed costs, declining income, and an inefficient education system relative to the needs of modern society.

I’m not suggesting that I am an expert on education by any means, but I do know a lot about supply and demand. And that equation is turning upside down for many institutions. I’m also not suggesting that Harvard, MIT, Stanford, or other prestigious universities will go wanting for students, but other institutions should be developing a game plan for declining enrollment. The peak in enrollment is a mere two years away, and their clientele has expressed discontent with their product (education). The rising number of 18-year-olds gave colleges a false sense of security and the ability to raise tuition regularly. Inflation and a falling number of 18-year-olds will give colleges a big dose of reality.

Things like advances in remote learning and AI (Artificial Intelligence) for many subjects will create new ways to teach and learn efficiently. I recall sitting in giant lecture halls with hundreds of students sitting there. Why would that be necessary today with so much available in the way of modern technology? How will that affect many institutions with campuses full of buildings and facilities they can’t fill and can no longer afford to deal with? That’s when they will really start to experience the practical application of business and economics 101. Thanks for reading.