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Enrollment declines highlight the fallacy of higher ed as a business

The National Student Clearinghouse Research Center released Fall enrollment data today. Undergraduate enrollment is down 3.5% over last year and 7.8% since fall 2019. Graduate enrollment showed a small increase (2.1%) over fall 2020 enrollment. Four-year, private, for-profit schools and two-year institutions showed the largest enrollment declines. Among for-profit schools, fall 2021 enrollment declined by 8.5%. Community college enrollment fell by 6%.

In the past couple of decades, there has been a misguided, yet persistent demand that publicly funded higher education institutions operate like businesses. Not surprisingly, college administrators are woefully unprepared to deal with the realities of the marketplace. The enrollment declines at community colleges neatly demonstrate this.

Operating like a business requires more than simple spending controls. Bigger is not always better. It’s not measuring a program’s success by how much money it makes. Nor is it about diversifying income streams, pivoting, or making the right investments. Businesses follow some unbreakable rules, two of which are:

  • Know your customers.
  • Know your competition.

Community colleges are seeing enrollment declines because their executives, who insist on operating the institution like a business, know neither their customers nor their competition.

Knowing the customers eliminates enrollment declines

Community colleges have always had a dual mission: educating students for the job market and educating transfer students. Unfortunately, vocational and occupational education programs are expensive to operate. (That’s why the public underwrites their costs.) Community college administrators who did not see the value in vocational and occupational education programs eliminated them because they were expensive.

But in doing so, community colleges guaranteed enrollment declines by reducing the number of students they could attract. Some students don’t want a four-year degree. Therefore, they have very little use for a community college that wants to focus on two-year transfers. So, when administrators eliminate occupational education programs, they also eliminate the students who would have enrolled in them.

For-profit schools moved in to fill the market space that community colleges largely abandoned. They acted like businesses by recognizing and filling an unmet need, and they reaped the rewards.

Knowing the competition also eliminates enrollment slides

Community colleges have seen enrollment declines for the past decade. Administrators attributed the decline to the exceptionally long positive economic cycle. So, they did what they always do; they waited for the next recession to drive students to their campuses. The long positive economic cycle made going to school less attractive for recent high school graduates, who could get jobs right out of high school. At the same time, legislation raised wages for the lowest-paid workers, but not for community college graduates.

Developing training programs for emerging fields would have increased the gap between entry-level wages and two-year graduates. Reworking existing programs to increase a graduate’s value in the market would also have accomplished the same thing. These strategies would have given students a reason to enroll in two-year programs. Instead, the job market consistently gave people a reason not to enroll.

Recruiting minorities and women into fields where they are underrepresented would have helped employers achieve their diversity goals. Instead of finding these students, community college administrators waited for the students to come to them.

Community colleges were never in competition with other educational institutions for students. They have always competed exclusively with the job market. Currently, there is no discernible difference between salaries available to high school graduates and community college graduates. A community college degree looks like a waste of time, a waste of money, or both.

Administrators who expected cyclical recessions to bring in students have no one to blame for their enrollment declines but themselves.

Photo Credit: Los Roches Global Hospitality Education , via Flickr