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Decline in the us colllege enrollment

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This report focuses on the decreasing enrollment in the US higher education. The report discusses the latest higher education enrollment statistics by the US Census Bureau, along with statements by various higher educational institutions and organizations, mentioning decreasing enrollment trends.

The report further analyzes the reasons behind the decrease in college enrollment, followed by the steps that higher education institutions to are taking, to increase their enrollment.

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Decline in the us colllege enrollment

  1. 1. DECLINE IN THE US COLLEGE ENROLLMENT NOVEMBER 2013 © Indalytics Advisors Pvt. Ltd. l www.indalytics.com
  2. 2. Decline in the US College Enrollment T ABLE OF C ONTENTS About the report ........................................................................................................................................... 2 Decrease in college enrollment in the US ..................................................................................................... 3 Reasons behind decreasing college enrollment ........................................................................................... 5 Decrease in adult education enrollment .................................................................................................. 5 Improvement of economy ........................................................................................................................ 7 Falling number of high school graduates .................................................................................................. 8 High cost of financing................................................................................................................................ 9 How are colleges improving their enrollment? .......................................................................................... 11 Reducing Tuition Fees ............................................................................................................................. 11 Reaching out to school students............................................................................................................. 12 Communicating value proposition to students ...................................................................................... 13 Use of analytics and research ................................................................................................................. 15 © Indalytics Advisors Pvt. Ltd. www.indalytics.com Page | 1
  3. 3. Decline in the US College Enrollment A BOUT THE REPORT This report focuses on the decreasing enrollment in the US higher education. The report discusses the latest higher education enrollment statistics by the US Census Bureau, along with statements by various higher educational institutions and organizations, mentioning decreasing enrollment trends. The report further analyzes the reasons behind the decrease in college enrollment, followed by the steps that higher education institutions to are taking, to increase their enrollment. © Indalytics Advisors Pvt. Ltd. www.indalytics.com Page | 2
  4. 4. Decline in the US College Enrollment D ECREASE IN COLLEGE ENROLLMENT IN THE US As per the latest statistics by the US Census Bureau released in September 2013, country’s colleges have witnessed a decrease in their enrollment. The college enrollment in fall 2012 has decreased by 467,000, reducing from 20.40 million in fall 2011 to 19.93 million in fall 2012. F IGURE 1: C OLLEGE ENROLLMENT STATUS IN THE US — O CTOBER 2008–O CTOBER 2011 ( MILLIONS ) 20.28 20.40 19.93 19.76 18.63 2008 2009 2010 2011 2012 College Enrollment Source: US Census Bureau; Indalytics Advisors Though the published figures are of 2012, colleges and universities across the country are still facing decrease in enrollments. In Arkansas, the University of Arkansas at Pine Bluff has witnessed a 7.5% decline in enrollment in fall 2013, while University of Arkansas at Little Rock has witnessed a 3.6% decline. The trend is same at State University at Arkadelphia (5% decline), Arkansas State University at Jonesboro (2.4% decline), University of Arkansas at Fort Smith (2.4% decline), and University of Arkansas at Monticello (1.2% decline). © Indalytics Advisors Pvt. Ltd. www.indalytics.com Page | 3
  5. 5. Decline in the US College Enrollment Loyola University is expected to have a budget shortfall of US$9.5 million in its next fiscal year. The university was able to enroll approximately 30% less students, than expected, by July 2013. The shortfall accounts for approximately 6% of Loyola’s total budget. Credit rating business of Moody's Corporation, Moody’s Investors Services, has further stated in its January 2013 report that 18% of private and 15% of public universities across the US are anticipating a decline in their net tuition revenue for the fiscal year (FY) 2013 — because of decreased enrollment. Moody’s has also stated that a third of private and public universities anticipate a less than 2% growth or even a decline in their revenues in FY 2013. Since the growth rate will be less than the inflation, the universities might find it difficult to operate, and will have to go for cost cutting. The situation will be worse than the one before the global financial crisis in 2008 — when only 11% of private and 9% of public universities had a growth rate of less than 2%. © Indalytics Advisors Pvt. Ltd. www.indalytics.com Page | 4
  6. 6. Decline in the US College Enrollment R EASONS BEHIND DECREASING COLLEGE ENROLLMENT There are several reasons behind the decrease in college enrollment. The enrollment decrease in 2012, as depicted by the US Census Bureau statistics, was primarily due to decrease in adult education enrollment. However, the decrease that the colleges and universities are witnessing at present, is also due improvement in economy, decrease in number of high school graduates, and high cost of financing education through student loans. D ECREASE IN ADUL T EDUCA TION ENROLLMENT Primary reason behind decline in college enrollment is the decrease in adult education enrollment. As per the US Census Bureau statistics, 89.7% of the total decline was caused by decreased enrollment by the age group 25 years and above. Enrollment by the group has reduced by 419,000 from 2011 to 2012. F IGURE 2: D ECLINE IN COLLEGE ENROLLMENT — S TUDENTS ABOVE AND BELOW 25 YEARS OF AGE — 2011–2012 Below 25 Years, 10.3% 25 Years and above, 89.7% Source: US Census Bureau; Indalytics Advisors © Indalytics Advisors Pvt. Ltd. www.indalytics.com Page | 5
  7. 7. Decline in the US College Enrollment F IGURE 3: C OLLEGE ENROLLMENT GROWTH RATE 2011–2012 (%) 55 years old and over -11% 45 to 54 years old -1% 35 to 44 years old -17% 30 to 34 years old -7% 25 to 29 years old -53% 22 to 24 years old 2% 20 and 21 years old 22% 18 and 19 years old -49% 16 and 17 years old 9% 14 and 15 years old 4% -60% -50% -40% -30% -20% -10% 0% 10% 20% 30% Source: US Census Bureau; Indalytics Advisors Majority of the enrollment decline (53%) was caused by the age group 25 — 29. It was followed by 49% decline by the age group 18 — 19, which represents the undergraduate education. © Indalytics Advisors Pvt. Ltd. www.indalytics.com Page | 6
  8. 8. Decline in the US College Enrollment I MPROVEMENT OF ECONOMY Another reason behind the decline in college enrollment is the improvement in the US economic and employment conditions. With the improved job opportunities, the nontraditional students are choosing employment against higher education. As depicted in the figure below, college enrollment growth rate has a strong negative correlation with GDP (gross domestic product) growth rate, and employment growth rate. It implies that improvement in GDP and employment is associated with decline in college enrollment. F IGURE 4: R ELATIONSHIP BETWEEN COLLEGE ENROLLMENT , GDP, AND EMPLOYMENT IN THE US — 2008–2012 8% 6% 4% 2% 0% 2008 2009 2010 2011 2012 -2% -4% -6% College Enrollment Growth Rate (%) GDP Growth Rate (%) Employment Growth Rate (%) Source: US Census Bureau; International Monetary Fund; Indalytics Advisors © Indalytics Advisors Pvt. Ltd. www.indalytics.com Page | 7
  9. 9. Decline in the US College Enrollment T ABLE 1: C ORRELATION COEFFICIENT BETWEEN C OLLEGE E NROLLMENT G ROWTH R ATE (%), GDP G ROWTH R ATE (%), E MPLOYMENT G ROWTH R ATE (%) AND College Enrollment Growth Rate (%) GDP Growth Rate (%) -0.86 Employment Growth Rate (%) -0.94 Source: US Census Bureau; International Monetary Fund; Indalytics Advisors F ALLING NUMBER OF HIGH SCHOOL GRADUA TES US is witnessing decrease in number of high school graduates. As per the data by National Center for Education Statistics, number of high school graduates is expected to decrease by 0.3%, from 3.4 million in 2011 to 3.39 million in 2012. The number is further expected to reduce at a negative compound annual growth rate of 0.85% from 2012 to 2015, reaching 3.31 million. Decrease in high school graduates will in turn decrease the number of applicants and enrollment at colleges. © Indalytics Advisors Pvt. Ltd. www.indalytics.com Page | 8
  10. 10. Decline in the US College Enrollment F IGURE 5: H IGH S CHOOL GRADUATES IN THE US — 2008–2012 ( MILLIONS ) 3.40 3.39 3.38 3.38 3.35 3.31 3.31 2008 2009 2010 2011 (E) 2012 (E) 2013 (E) 2014 (F) 3.31 2015 (F) High School Graduates (millions) Source: National Center for Education Statistics; Indalytics Advisors H IGH COST OF FINANCING College enrollment is also decreasing, as high cost of financing is deterring students to enroll in higher education. US currently has more than US$1 trillion worth of student loans — which is facing an increase in default rate. As per the latest data by the US Department of Education, released on September 30, 2013, there have been more than 475,000 defaults, by the borrowers in two– year cohort — whose loan repayments started in the FY 2011, and they defaulted before September 30, 2012. Similarly, in the three–year cohort — where first payments began in the FY 2010 and defaults started before September 30, 2012 — out of more than 4 million borrowers, approximately 600,000 defaulted. © Indalytics Advisors Pvt. Ltd. www.indalytics.com Page | 9
  11. 11. Decline in the US College Enrollment Increasing cost of higher education, along with initiatives to check the defaults is making it difficult for students to enroll in colleges. The financing is expected to become tougher in future, as some federal laws have also raised the bar for students to qualify for educational loans. The federal Parent PLUS loan program, which allows parents, instead of students, to take on debt to pay for their children's education — has tightened the qualifications an instituted credit checks. However, there is some respite from the government to reduce the burden. President Barack Obama, in August 2013, has signed a new law, which will reduce interest rates on student loans. The law ties the loan’s interest rates to the market, and locks it for whole of the tenure. For the forthcoming academic year, the loans will be available for undergraduate studies at 3.86%, and for postgraduate studies at 5.41% President Obama is also stressing on college affordability since 2012. He has recommended a college rating system, which would help students analyze various colleges, in terms of return on their tuition dollars. © Indalytics Advisors Pvt. Ltd. www.indalytics.com Page | 10
  12. 12. Decline in the US College Enrollment H OW ARE COLLEGES IMPROVING THEIR ENROLLMENT ? Colleges and universities across the US are adopting several approaches to improve their enrollment. The approaches range from reducing tuition fee to using analytics and research, and communicating their value proposition to students in unique and innovative ways. Some of the approaches being followed by colleges and universities in improving their enrollment are as follows: R EDUCING T UITION F EES In order to attract students, several colleges are reducing their tuition fee. Illinois–based private liberal arts college, Lincoln College has reduced its tuition fee to attract more students. Similarly, Minnesota–based Concordia University has reduced its tuition fee by US$10,000, and South Carolina–based Converse College is planning to reduce its tuition fee by 43%. University of Iowa College of Law is also reducing its tuition for nonresident Juris Doctor applicants in the fall of 2014, from US$47,252 to US$39,500. In order to compensate for the reduction, the college is also planning to undertake several cost cutting measures, which can improve its bottom–line. However, the exact correlation between reduction in tuition fee and improvement in enrollment cannot be determined. As per Moody’s some private colleges have witnessed an increase in applications when they increased tuition fee — as students and their parents’ equated higher prices with quality. Though reducing tuition fee might help colleges and universities to increase their enrollment rate, it might also lead to the problem of maintaining intake quality. The institutions will have to keep a check on their cut–off point in applications, which might reduce the average ACT and SAT scores. © Indalytics Advisors Pvt. Ltd. www.indalytics.com Page | 11
  13. 13. Decline in the US College Enrollment R EACHING OUT TO SCHOOL STUDENTS Another effective enrollment method being followed by the higher education institutions is reaching out to prospective students, while they are still in schools. It helps the higher education institution to create an image and brand among the students, and interact with them while they are in college. The process helps through brand recall, when students apply for undergraduate courses. Texas A&M University’s College of Geosciences runs its Fall Weekend Program — iGeo — to bring its prospective students closer to the college, and create an interest for geology among them. The three–day program invites high school juniors and seniors from under–represented communities to explore educational opportunities in the field of geosciences. Under the program, participants live on Texas A&M campus, attend classes, and group activities, and tour the College of Geosciences. They are also mentored by university professors on various career choices. The program is sponsored by Texas A&M University’s College of Geosciences, and Minority Recruitment and Retention Leadership Team — and is effectively helping the college increase the enrollment and retention levels of highly qualified black and Hispanic students. The University of Texas at Tyler is planning to reach out to school students and connect with them, before they are ready for college. The University agreed to a memorandum with Waxahachie Independent School District in Texas, to provide dual credit courses — also known as advance–credit programs (ACP) — to Waxahachie Global High School students in science, math, engineering and technology. The courses help students to obtain both high school and college credit at the same time, thereby saving their time. The University is further collaborating with several community colleges to enroll their students. It has partnerships with Houston Community College and San Jacinto Community College — wherein students, after earning an associate degree, can join the UT Tyler Houston Engineering Center or the Tyler campus, and earn a Bachelor of Science degree. © Indalytics Advisors Pvt. Ltd. www.indalytics.com Page | 12
  14. 14. Decline in the US College Enrollment University of Missouri–St. Louis (UMSL) is also running similar advance–credit programs. The dual–credit courses, which are taken by high–school students, helps the university in connecting with them, and further attracting them to the university. Besides the courses, UMSL also provides a US$12,000 scholarship to ACP students, who enroll in UMSL full–time after high school graduation. The university’s Advanced Credit Program has helped in approximately 25% increase in enrollment since 2008. Several universities, such as Brown University, Duke University, Georgetown University, Ouachita Baptist University, and the University of Pennsylvania have partnered with KIPP (Knowledge Is Power Program) — a network of openenrollment, college-preparatory public charter schools — to interact with students at school level, and enroll them into full–time courses. The universities connect with students at school level, and provide them the required mentoring, support, and financial assistance, long with an opportunity to enroll for higher education. C OMMUNICA TING VALUE PROPOS ITION TO S TUDEN TS Universities and colleges are reaching out to students with customized solutions and propositions, to enroll them. There are also several service providers that help colleges in communicating their messages in a better way. Student Aid Services, Inc. — a subsidiary of Rezolve Group, Inc. — is one such company that provides customized information booklets, fee calculators and planners, enrollment prospectus, and other solutions to prospective student, on behalf of its clients. The customized solutions help prospective students in assessing the college and enrolling in it. The company caters to more than 700 campuses, which use its products and services. Besides customized prospectus, colleges are also finding text messages as an effective enrollment tool. Research scholars at Harvard University — Benjamin L. Castleman and Lindsay C. Page — have conducted experiments to use text messages for increasing enrollment. © Indalytics Advisors Pvt. Ltd. www.indalytics.com Page | 13
  15. 15. Decline in the US College Enrollment The scholars selected students who have applied for colleges, and communicated with them through text messages. The messages included information on tasks that students had to complete, such as required paperwork, details about colleges, meetings with counsellors, and introduction to peer–mentor groups. The cost–effective trials helped scholars increase student enrollment rates. As per the paper submitted by the scholars in April 2013, students in the experiment group — who received the messages — were found to be 7.1 percentage points more likely to attend college, than the ones in the control group. Another effective way of approaching students is use of recruiting companies. The University of Texas at Tyler is investing in student recruitment activities to enroll more students. The university, which has witnessed a 9.6% increase in enrollment from fall 2012 to fall 2013, is using student recruitment to attract national, as well as international students. The recruitment activity has helped the university attract students from Houston, the fourth most populated city in the US. Rather than going the traditional ways, some higher education institutions are creating their own unique selling propositions. Louisiana State University at Alexandria (LSUA) and Louisiana College (LC) are using athletics to attract new students. Both the university and college have sports teams, and are encouraging more participation through sports scholarships. This attracts students — who want to continue their sports and athletic career beyond schools — to enroll for higher education courses at LSUA and LC. © Indalytics Advisors Pvt. Ltd. www.indalytics.com Page | 14
  16. 16. Decline in the US College Enrollment U SE OF ANALYTICS AN D RESEARCH Educational institutions are doing analytics and research to understand decision making among students, and predict enrollment. The processes involve defining and studying patterns in the process of course and college selection by the students. The University of Maine is using data–mining software — that tracks visitor activities on the university’s websites. The data helps the university to follow–up with leads, and send them personalized letters that reflect their interests. This is followed by university’s recruiters that promote it in college fairs. Economists are also promoting use of data and research in the enrollment process. Stanford University economist — Caroline M. Hoxby — has proposed a national plan, aimed at encouraging deserving, low-income students to apply to and attend selective colleges. The plan, proposed in June 2013, recommends providing targeted and customized information about the college application and selection processes to low–income students, and help them attend an institution, which they are qualified for. The plan also calls for various other initiatives, such as partnerships with the College Board and ACT, and providing researchers with better access to data. The proposed plan is based on the Expanding College Opportunities (ECO) Project, and also has inputs from Dr. Sarah Turner of the University of Virginia. © Indalytics Advisors Pvt. Ltd. www.indalytics.com Page | 15
  17. 17. Decline in the US College Enrollment L IST OF ORGANIZATIONS MENTIONED IN THE REPORT ACT Rezolve Group, Inc. Arkansas State University at Jonesboro San Jacinto Community College Brown University Stanford University College Board State University at Arkadelphia College of Geosciences - Texas A&M Student Aid Services, Inc. Concordia University Texas A&M University Duke University University of Arkansas at Fort Smith Georgetown University University of Arkansas at Little Rock Harvard University University of Arkansas at Monticello Houston Community College University of Arkansas at Pine Bluff Knowledge Is Power Program University of Iowa College of Law Lincoln College University of Maine Louisiana College University of Missouri–St. Louis Louisiana State University at Alexandria University of Pennsylvania Loyola University University of Texas at Tyler Moody’s Investors Services University of Virginia Moody's Corporation UT Tyler Houston Engineering Center Ouachita Baptist University Waxahachie Global High School © Indalytics Advisors Pvt. Ltd. www.indalytics.com Page | 16
  18. 18. Decline in the US College Enrollment D ISCLAIMER No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, Indalytics Advisors Private Limited. The information contained in this report is of a general nature and is not intended to address any particular individual or entity’s circumstances. Although proper care has been taken to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. The publisher should not be held liable for any discrepancy in the information. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. Publication Volume: GCIX-13-US–03 Publication Date – November 2013 © 2013 Indalytics Advisors Private Limited For further information, please contact info@indalytics.com © Indalytics Advisors Pvt. Ltd. www.indalytics.com Page | 17
  19. 19. Decline in the US College Enrollment N OTES © Indalytics Advisors Pvt. Ltd. www.indalytics.com Page | 18

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