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Two major 21st-century events have impacted college enrollment trends and will continue to do so for the foreseeable future. The Great Recession of 2008–09 and its aftermath saw the number of births in this country fall by more than 500,000. Then enter 2020 and the COVID-19 era. Birth rates declined again during the early part of the pandemic, only to partially rebound before falling again to below-2019 levels. What impact a next “big event” might have on birth rates and college-going rates is unknown, but experience tells us that there are choppy waters ahead.
With the value of a college degree being questioned nationally, further complicating the supply of college-ready students, colleges and universities must double down on strategy to sustain their enrollments at levels that enable them to deliver on their missions. Here are four areas that presidents, provosts, chief financial officers and chief enrollment management officers must pay attention to in order to successfully address enrollment pressures in the next ten years.
Brand Management
It wasn’t that long ago that talk of a college’s “brand” sent shivers up the spines of faculty members and other campus stakeholders. In fact, in many cases, it still does. But brand matters. What image comes to mind when your college’s name is mentioned? What would you like that image to be? Thomas J. Hayes, in his seminal book, Marketing Colleges and Universities: A Services Approach (CASE, 2008), tells us that the essentials of a brand are found in the mission, vision and values of the institution. Research is critical to understand how your brand is perceived by prospects and what is important to them.
A brand typically comes with a “promise.” For a college or university, that promise might be a strong alumni network for internships and careers, or devoted faculty, or research experiences for all, or global opportunities, or a combination of all of these and others. The question to answer, then, is: “Is the brand promise credible and valuable, and do prospective students care about it?” Further, is your promise at all distinctive, setting you apart from similar institutions? Again, research, whether conducted internally or by a market research firm, is necessary to answer these questions accurately. Too much is at stake to simply guess.
In her well-regarded 2021 book, How to Market a University: Building Value in a Competitive Environment (Johns Hopkins University Press), Teresa M. Flannery says that an effective brand must be:
- Relevant, in that it must be meaningful and motivating to all stakeholders;
- Authentic, because it accurately represents the institution;
- Differentiating, in order to distinguish the institution from competitors; and
- Simple, so that it is easy to remember and understand.
Successful marketing must engage the student on an emotional level and brand identification and management seeks to do just that.
Align Enrollment and Academic Offerings With Market Demand
A majority of colleges continue to fall short of enrollment deposit goals, even by July 1. Many believe that a tweak here, a tweak there in their recruitment tactics would have made the difference. But now, and well into the 2030s, high school graduation numbers (particularly in the Northeast and Midwest) will decrease significantly. Setting a realistic target for first-year enrollment is critical.
We posit that if a college is already north of a 60 percent tuition and fee discount rate and a 70 percent admit rate and still not hitting the net tuition revenue goal, it has long been time to face reality: There are more seats/beds than the demand warrants. Contracting enrollment for long-term stability can certainly be painful as current campus facilities become underutilized, staffing levels are decreased and, as discussed below, academic offerings are trimmed. The objective should be to increase the per-student net tuition, while maintaining a commitment to access. Setting a lower, realistic enrollment target also takes pressure off admitting students who are at high risk for attrition for the sake of meeting a numerical goal of new students.
What are prospective students looking for in a college? There are as many answers as there are students. However, one thing is for sure: This pragmatic generation of traditional college-aged students want a major that will lead to a career in an “in-demand” field. Majors such as computer science and data analytics have exploded in recent years, as have the job opportunities in these fields.
Again, whether you do the leg work in-house or hire market research experts to do it, it is important to understand both the demand in your regional (or national) marketplace for certain careers and the supply of majors at peer or competitor institutions. The Bureau of Labor Statistics data can provide you with information on the former, while data from the National Center for Education Statistics can show the change over time in degrees awarded in major fields. See the Burning Glass Institute for a thorough discussion of this topic.
As you conduct this analysis to determine which (if any) new programs you should offer (and which to perhaps discontinue), look for three things:
- External demand—demand for such programs in the marketplace and the competitive environment;
- Organizational fit—fit with current capabilities and strengths, and fit with internal values;
- Financial implications—estimated net tuition revenue compared to start-up and sustaining resources.
This analysis will help you identify programs that are most in demand and where regional competitors are less active. It can also help you avoid potential new programs that are less in demand, or where increasing demand is so small that the programs would not be a worthwhile investment. Then, of the potential new majors/programs that seem to be in demand, identify those that require minimal additional resources to implement (because you have faculty and perhaps the facilities), followed by those that would need expanded capacity and those that would need significant new resources. The key: Work with faculty and with data to decide on your approach and then phase it in over time.
Pricing, Aid and Net Revenue: What is the Optimal Mix?
According to a recent report from Georgetown University’s Center on Education and the Workforce, a lack of transparency regarding the difference between “sticker price” and “net price” (after financial aid) is a major reason why lower-income students chose not to apply to college. Further, an April 2024 Brookings Institution report by Phillip Levine shows that for a family with an income in the $130,000 range, the sticker price at private nonprofit institutions increased an average of 79 percent in 2020 dollars between 1995 and 2020, while net price for those families increased only 14 percent. (A slider in the table allows the reader to map this for other income levels and also for public universities.)
Nevertheless, the value of a college degree is increasingly being questioned. In a recent survey commissioned by the American Council on Education, 38 percent of adults thought the economic value of a college degree decreased over the past 20 years while 19 percent thought it remained the same and 8 percent didn’t know. Thirty-six percent thought the value of the degree had increased.
What does this all mean? For us, it screams—BE TRANSPARENT and publicize net price after aid at various income levels. Hesitancy to do this stems from the fear that averages will be misunderstood: Some students will pay more, and some less, than the average. But to lose students before the application based on list price makes little sense. It is important to get in the game.
The College Board’s “Trends in College Pricing” 2023 report made clear that while list prices have grown significantly in this century, net prices have actually decreased in recent years as more colleges are discounting heavily through so-called “merit” scholarships and need-based grants. Thus, colleges are deriving less revenue in tuition than they once were, impacting their ability to provide the programs and services that align with mission. The message that college actually costs students less today in current dollars than it did ten years ago needs to get out.
To state the obvious, with average private college tuition and fee discount rates for new students at a high of 56 percent, ratcheting up discounts and deriving less revenue is unsustainable. We believe that the answer to rampant discounting lies in the ability of colleges to reach agreements on how to determine financial need, how to fund needy students and how to discount those with low or no need. Rather than pointing fingers at college leaders, Congress needs to grant colleges an exemption from anti-trust laws (as it has for major-league sports) and allow institutions to work together to make college affordable for low-income students without excessive borrowing. We must also stop the bidding wars that have resulted in financial stress for many and the closure of a record number of institutions.
Lastly, we understand why some colleges provide generous scholarships to those with very low or no financial need (to enhance revenue, since many would not enroll without the discounts). However, the degree to which this stimulates the practice of “gapping” needy students—not providing the aid they need to attend and forcing them to borrow heavily if they chose to attend—it sets those students and the institution up for failure. Retention and graduation rates suffer, but more importantly, those low-income students are cheated out of an education that could contribute to their upward mobility.
Retention and Completion
If colleges fail to scale down to match demand, the pressure to meet unrealistic student enrollment targets will tempt some enrollment managers to admit students who are under-prepared to succeed academically and socially at a particular institution. Obviously, this is short-sighted and, if the student leaves, it creates more issues down the road for the institution and of course for the student. Keeping students enrolled, progressing and graduating them in no more than six years should be a major enrollment management objective. It requires an assessment of risk at the time of admission and a structure in place to provide intentional support for students who are judged to be at risk of failing and/or dropping out.
A recent report from the Lumina Foundation and Gallup—“The State of Higher Education 2024”—found that about a third of currently enrolled students have considered “stopping out” within the past six months and almost two-thirds of those said that emotional stress or mental health were “significant” reasons why. It is critical, therefore, that institutions provide not only academic support, but also personal counseling services, and that an early warning system is in place to identify students who are having difficulties.
Not surprisingly, the Lumina/Gallup report also points to the importance of adequate financial aid in retention. All too often, when colleges fail to meet their students’ full financial need, individuals and families borrow excessively to close the gap. This surely contributes to student stress and ultimately to a decision to drop out. Of the currently enrolled students surveyed for this study, 31 percent said that cost was a major reason they’d considered stopping out.
To further underscore the cost and aid issue in retention, the Pew Research Center found that only 22 percent of U.S. adults surveyed in 2023 said that college was worth the price even if a student had to borrow, while 47 percent said college was worth it only if students didn’t have to borrow. These prevalent attitudes will undoubtedly influence student perception and, most likely, student behavior.
Using data from 2020, the National Center for Education Statistics reports that the first-to-second–year retention rate for all four-year colleges is 82 percent, but there is a huge difference in the retention of students at highly selective colleges (i.e., admission rate less than 25 percent) versus open admission institutions—93 percent versus 59 percent. And since the number of less selective colleges in the U.S. far exceeds the number of selective institutions, losing 40 percent of your entering class by the end of the first year is a major problem.
Meanwhile, six-year graduation rates for all institutions come in at about 64 percent, with women consistently out-performing men by several points. Losing an average of 36 percent of students over the course of six years can only be addressed by providing sufficient financial aid, “just in time” academic support and mental health counseling.
Many institutions have a “retention task force” with representation from finance, financial aid, admissions, student life and academic affairs that meets regularly to review student issues brought up by the members. If your institution does not have such a group, we suggest you form one and explore the various software packages available to assist in identifying students in need of help.
A Final Word
It is easy to get stuck in the weeds of immediate student recruitment efforts when the stakes are high to meet enrollment and net revenue goals. But paying attention, at the same time, to these four strategic areas—managing the brand; understanding market demand for your programs; being transparent about price and aid; and increasing retention and graduation rates—will yield major dividends for your institution. Moving beyond an admissions focus, these critical elements of enrollment management will help you achieve your financial and enrollment objectives.
