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A Second Demographic Cliff Adds to Urgency for Change

The demographic cliff we have been anticipating since the drop in births with the 2008 recession now has a younger sibling -- the COVID-19 cliff is coming with another deep drop in recent births.

May 19, 2021
 

One of the most common annual refrains I have heard in my decades on the faculty and in administration in higher education has been “Let’s increase the freshman class by 10 percent next fall!”

Motivated by the need to generate more tuition and housing money, universities have looked to increasing the on-campus undergraduate student base. The prospects of such increases are looking dimmer as the “demographic cliff” anticipated by up to a 15 percent drop in freshman prospects approaches, beginning in 2025 due to the decline in birth rate in the 2008 recession and lasting for years after. Those missing babies in 2008 would have begun entering college 17 years later, in 2025.

Now, we see another major drop in births during 2020, with births down 4 percent over the year, but notably accelerating to 8 percent by December as the impact of COVID took hold earlier in the year, reducing births nine months later. It remains to be seen just how long and how significant the decline will be through this year. This new birth drop echo will begin to reach colleges by 2037.

These drops come in the context of a half a dozen years of annual declines in births in the United States. Yet the birth rate is not the only trend threatening higher education as we know it today. There are mounting factors that dissuade prospective students from making a large investment in degrees and instead choosing to go with online alternatives to traditional higher education:

Speaking with The Financial Times, Kirill Pyshkin, senior portfolio manager at Credit Suisse, likened the disruption to what happened in the film industry a few years ago: “This is education’s Netflix moment.” Sean Gallagher, an executive professor of education policy at Northeastern University and founder of Northeastern’s Center for the Future of Higher Education and Talent Strategy, agrees: “This looks to be a catalytic moment. Like what’s happened with the rapid digitization of so many other areas of our daily lives, we’ve probably gained in a few months a level of interest and participation in online education that would have steadily played out over years.”

Meanwhile, Coursera -- the large-scale for-profit online degree, certificate and course provider -- has posted its earnings from the first quarter. Last year, Coursera reported 70 million learners with more than 200 partners. This year, profits are up more than 70 percent over the first quarter last year, to some $50 million. Meanwhile, Google has announced its massive new Career Certificates in an array of fields, with costs starting at as little as $39 per month. Microsoft and, of course, LinkedIn also are leading providers of professional certifications.

A Strada Education Network COVID-19 Work and Education Survey found that one in four Americans plan to enroll in an education program in the next six months, and they also expressed a preference for nondegree programs, skills training and online options. One wonders if these will be hosted by universities.

Workers are not the only ones expressing little interest in four-year degree programs. Increasing numbers of CEOs are dropping the baccalaureate from a requirement for hiring, as you can find described in this interesting LinkedIn news discussion.

In sum, competition is rapidly growing; the pool of “traditional” students is evaporating; employers are dropping degree requirements; and, with student debt now surpassing $1.7 trillion, we all know that families are looking for more cost-effective paths to the knowledge and skills they seek. "The fundamental business model for delivering education is broken," said Rick Beyer, a senior fellow and practice area lead for mergers and affiliations at the Association of Governing Boards of Universities and Colleges. "The consolidation era started a few years ago. It will continue. We will see more closures."

What, then, are the bright spots for postsecondary learning?

Online learning tops the list despite some bad press for the hastily put-together remote learning of last year. Adult students, in particular, prefer the flexibility and mobility of online. Enrollment in online programs has continued to increase while overall higher ed enrollments have declined each of the past dozen years.

Institutional course sharing is picking up steam. Increasingly, colleges are seeing enrollments dropping in selected disciplines such as foreign languages and some of the humanities. Sharing faculty and courses with other institutions in similar circumstances can save money while continuing to serve students and potentially preserve an institution.

Certification and credentialing are two areas that offer opportunities for expansion. These shorter-track online opportunities provide career rewards in less time at a lower cost than a degree. There is hope that these programs will attract larger numbers of student desiring reskilling, upskilling and credentialing to enter new fields.

Millions of former students have completed some work toward a degree, but without the diploma, they have nothing of substance to mark their learning accomplishments. A Lumina Foundation grant has funded an initiative to create a “Credentials as You Go” method to provide incremental credentials for progress toward a baccalaureate degree.

Is your institution impervious to these changes? How are your demographics shifting, in the near term and long term based on these trends? What are you doing to meet the learning needs of new groups of adult learners?

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