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April 26, 2023 | Cost containment strategies, Long-range financial planning

How to Survive the Enrollment Cliff in Higher Education

If you are a part of higher education, or have even been attuned to news of the industry over the past decade, you’ve undoubtedly heard calls of enrollment decline. While thought leaders and statistics have been pointing to this upcoming possibility for years, it’s important to explore what the enrollment cliff is, who will be most affected by it, and how to survive it. While the looming decline in enrollment is inevitable and, ultimately, outside an institution’s control, how an institution prepares and responds will play a pivotal role in its impact.

What Is the Enrollment Cliff in Higher Education?

The enrollment cliff in higher education is the prediction that enrollment will fall approximately 15% between the years of 2025-2029, according to statistical trends. This topic is frequently discussed by many thought leaders in higher education; however, Nathan Grawe, author and Professor of Economics at Carleton College, is often seen as a leading authority in this arena. He has been researching enrollment projections for years and has published two books which have helped define what the industry now refers to as the “enrollment cliff.”

What Is the Enrollment Cliff Cause in Higher Education?

There are a handful of important issues causing the enrollment cliff in higher education. Some of the most pressing aspects include:

Decrease in high school graduation rates

While high school graduation rates continue to trend upward currently, the rate of increase is predicted to decline. In fact, a significant drop in high school graduation rates is projected after 2025. A likely catalyst for this drop is the downward trend in birth rates since the 2008 recession.

Increase in diversity and population variation

In addition to the decline in birth rates as a result of the 2008 recession, Grawe also cites an increase in migration and immigration to the United States as another piece of the enrollment decline puzzle. Combining the patterns in fertility, migration, and immigration, the U.S. continues to trend toward an increasingly Hispanic southwest geography. With this geographic and population shift, Northeast and Midwest institutions are slated to lose five percent of their college-age population within the next five-to-six years.

Decline in students pursuing higher education

Not only have demographic shifts impacted the number of college-eligible prospects, behavioral and attitudinal changes have also played an important role. In fact, The Brookings Institute identified a “16% decline in immediate transitions to two-year colleges and a 6% decline in transition to four-year colleges” in 2022. Their conclusion of this trend was not, surprisingly, a lack of eligible students but, instead, the decline was an attitude shift of whether to pursue higher education. This shift was attributed to the potential delaying of the start of a degree program or the forgoing of higher education altogether.

The enrollment cliff will most impact regional four-year universities, according to Grawe’s research. These institutions will see a notable drop in their enrollment. The Northeast, where a large number of the nation’s colleges and universities are located, is expected to be the most impacted. On the other hand, it will least impact elite colleges and universities. Per Grawe’s studies, “elite colleges are less affected by the birth dearth because they’re a small, niche market of fewer than 200,000 students.” Additionally, the Southwest, due to migration and immigration trends, is less likely to be negatively impacted and, in fact, some institutions may even see enrollment increases.

Why Should Institutions Be Concerned About the Enrollment Cliff?

Institutions should be concerned about the potential fall of student enrollment rates because it will bring new problems and exacerbate current financial pressures.
One of the largest sources of revenue for many institutions is tuition. A drop in enrollment directly depletes this resource. Just one crucial example of how this loss of revenue negatively impacts an institution’s ability to uphold its mission and serve its students is competitive salaries for faculty. Without competitive salaries, programs suffer and layoffs become likely.
Additionally, demographic shifts will deliver an increase in nontraditional students who are disproportionately underserved and underrepresented. The shift in this demographic academically is welcomed for institutions; however, from a financial perspective, these populations are traditionally low-income students, often times with work and family obligations which hinder the completion of a degree program in a traditional manner (four-year, full-time). Instead, these students are often part-time, two-year program enrollees who fall outside the traditional age range of 18-24. Institutional funding is stretched thinner in attempts to cover the gap for these students financially, increasing fiscal pressures on colleges and universities.

Best Practices to Survive the Enrollment Cliff

Higher ed leaders have proposed many possible courses of action institutions can take when facing the higher education enrollment cliff to mitigate the impact of this impending event. Below are our recommendations for where to start:

Invest in your students

The demographics of your college or university are likely to shift in the coming years. Ensure that you are meeting the evolving needs of your continually diversified and non-traditional student populations. Optimize your student lifecycle, including recruitment, financial aid, and the admission process, making sure students have the resources necessary to matriculate and remain enrolled. 


Additionally, students are becoming increasingly interested in other accessible resources and facilities, such as support for child/dependent care. If your college or university has yet to invest in these areas, now is the time to consider doing so.

Don’t wait for the future to become the present

The goal of analytical trends isn’t just to create doomsday fears—the future isn’t set in stone. Using data to inform your institution’s decisions allows you to stave off or avoid certain consequences by taking immediate action now.
Financial modeling, for example, can help you predict potential outcomes for your institution based on different student enrollment and revenue scenarios. Analyzing the impact can allow your college or university to explore alternative sources of revenue. This is especially important for tuition-dependent institutions as lower tuition cost has become a deciding factor for many students regarding degree pursuit.

Provide students with clear return-on-investment (ROI)

A 2019 Strada-Gallup Education Report found that students are looking for a clear ROI on their degree in the form of guaranteed employment (job placement or wage increase). In addition, the National Student Clearinghouse reported that, as of Spring 2023, there has been high enrollment growth in certificate programs with a 5.5% increase for undergraduate programs and a 4.6% increase in graduate programs. It’s clear students are seeking out relevant courses which will train them on necessary skills sought out by employers.
A crucial way of exploring your institution’s capability of delivering on those needs is mining your own LMS data to measure and identify opportunities to improve programming and support. By empowering your faculty and staff with tools that track efficacy and student learning potential, you’re also enabling students to enter the workforce with demonstrable and coveted skills employers are looking for.

Observe the playing field

The entire higher education landscape is facing the challenge of student enrollment rates—not just your institution. With this in mind, benchmarking against your peers allows you to identify trends in their enrollment and staffing which you can compare against your own data—both current and historical. Accessing this level of knowledge not only informs your institution for strategic decision-making, it also allows you to bring your strategies in alignment with your overall goals, objectives, and mission statement.

If You Can’t Avoid the Cliff, Cushion the Fall

The higher education enrollment cliff is inevitable, and for many institutions it will mean a drop in
their primary source of income: tuition. On top of that, of those who do enroll at higher education institutions, there will be a greater percentage of non-traditional students. Higher ed leaders will have to pivot to meet a different set of needs if they’re going to ensure those students remain enrolled and, most importantly, are successful on their learning journey.

No one may be able to prevent the cliff, but armed with this knowledge and the right tools your institution has the opportunity–in advance–to prepare for this reality and dampen the impact. 

Speaking of the right tools, HelioCampus can help. Explore alternate sources of revenue besides tuition with our financial modeling tool, or join our Benchmarking Consortium to see how other institutions are handling these financial pressures.  Schedule a demo today to take action and turn potential financial jeopardy into opportunity.

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