Higher education has been in a fairly constant state of alarm for decades now. What is unique about this period is the convergence of many distinct challenges. Certainly all of these comments are interrelated, and I address many of them through my RELEVANCE model (https://www.woolstoninventive.com/methodology/relevance). One challenge in particular that collectively we have been watching warily for the past decade or so is the demographic cliff. The demographic cliff has been clearly defined for this community: It is the sudden drop of 18-year old students graduating from high school who will potentially enroll in college in the year 2025. Doing the math, 2025 minus 18 is the year 2008, the year of the Global Financial Crisis, widely recognized as the worst economic crisis since the Great Depression. One of the consequences was a precipitous drop in birth rates, or a “birth dearth” as so eloquently coined by Nathan Grawe in his seminal work Demographics and the Demand for Higher Education. In fact, we saw this coming even prior to that. I was part of many discussions in the years leading up to 2008 about a demographic drop; in 2008 it turned into a cliff. Still, it was always “far away,” even if it was constantly creeping up on us.
As noted, more recently we have faced new and escalating challenges for higher education. Notably but not exclusively, there has been the rising price tag of tuition and other costs, the amenities arms race on campuses, the questioning of the value of a college degree, and different specific—if auxiliary—parts of the traditional college model have been breaking down such as on-campus housing, and students not working while enrolled full-time. This was all before the pandemic and its long-lasting impacts. The changing demographics, meaning both the decline as well as the shifting of its makeup, have been just one part of the accruing concerns. Consequently, enrollment declines have occurred even earlier than expected and have been steeper than expected.
Now in 2024, we find ourselves on the eve of a morose holiday, the year 2025 which we have already established as the actual moment of this demographic cliff. However, one thing we have heard increasingly, especially in the aftermath of the pandemic, is this: The demographic cliff has come early! Strictly and objectively speaking, this is non-sensical. It does not make sense because it is not true. The demographic cliff by definition will occur in 2025.
So if that is the case, what accounts for the nationwide drop in enrollment? This has come about as a drop in demand, a result of the combination of all of the self-amplifying and self-reinforcing challenges in higher ed. Instead of the expected demographic cliff in 2025, we have been experiencing an unexpected demand cliff in the years leading up to it.
As if starting the decline early were not bad enough, we now know this challenge will persist longer than we had anticipated. Relatively new data from the Bureau of Labor Statistics indicate a second demographic cliff essentially on the heels of the one we have been anticipating (and dreading). This has profound implications for the business model of higher ed. Prior to 2000 the business model for higher ed was based on the idea of constant and predictable growth. At the turn of the century that idea became less reliable, but turning a moving ship is difficult so across the higher education community there was not a lot that changed in terms of operation or approach. Change was evident in cuts to stay viable, slight and marginal at first, sometimes painful, but always essentially manageable. As the inevitability of the quantitative limitation of students and the pursuit lack of growth became increasingly apparent, the business model became some operationalized version of “hang on until we can get past the demographic cliff!” In other words, if we can just make it that far, we’ll be okay! Now we have a problem: With a second demographic cliff and on the heels of the changes and cuts and alterations forced by the demand cliff even prior to the first demographic cliff, only a total recalibration of the business model is going to keep institutions of higher education viable in the decades that come.