What dropping undergraduate enrollment means for colleges

Should colleges expect fewer undergrads in the future?
Should colleges expect fewer undergrads in the future?
Image: REUTERS/Lucy Nicholson
We may earn a commission from links on this page.

For American universities, the pandemic has disrupted everything from classes to dorm life to the bottom line.

Undergraduate enrollment continued to fall in 2021, according to a report by education nonprofit National Student Clearinghouse Research Center (NSCRC.) The research, published in November, showed the number of undergrads has fallen by nearly 8% since 2019.

Most colleges make money from some combination of tuition, donations, athletics, and government funding. In recent years, tuition and fees have made up a larger proportion of colleges’ revenue, accounting for an average of 20% of the budget for public institutions to 91% for for-profit institutions in 2018. Fewer undergraduates, then, could shrink that pot of money, tipping colleges’ already strained budgets into the red.

The exorbitant cost of a college education, which seemed even less worthwhile during the pandemic, is one of the main reasons why students aren’t enrolling. Many colleges didn’t increase tuition for the 2021-2022 school year as some classes continued online and universities acknowledged the financial insecurity the pandemic has caused. But as costs for facilities and staff continue to rise and government funding continues to drop, that freeze is unlikely to continue.

However, the NSCRC report also showed some promising news for budget-conscious institutes of higher learning: Graduate enrollment increased by about 2% between 2019 and 2021. Though that may not be enough to make up for the shortfall caused by a lack of undergrads, grad students’ tuition is an increasingly important part of colleges’ revenue—possibly to the students’ detriment. Some pricey graduate degrees don’t improve students’ prospects for high-paying jobs.