Decline in university enrollment; Student loan relief may not offer enough
- College enrollment has fallen in recent years, part of a larger trend over the past decade.
- High tuition fees and the wide availability of jobs that don’t require degrees keep students out.
- President Joe Biden’s student debt reforms could make college more attractive to some, but not all.
While millions of graduates feel better about their decision to go to college after President Joe Biden announced student debt reforms, many young Americans are deciding the experience isn’t for them. And Biden’s
plans might not be enough to change their minds.
College enrollment has fallen more than 1% since last fall, according to a recent report from the National Student Clearinghouse. Since the start of the pandemic, registrations have decreased by 6.5%. That’s about 1.5 million fewer students to graduate.
“After two consecutive years of historically significant losses, it is particularly troubling that the numbers continue to decline, particularly among freshmen,” Doug Shapiro, the organization’s executive director, said in the report. “While the decline has slowed and there are some bright spots, a return to pre-pandemic enrollment levels is becoming increasingly out of reach.”
Declining enrollment isn’t a new trend either — or a trend driven solely by the pandemic. About 3 million fewer Americans are enrolled in college than a decade ago for reasons including changing age demographics, the availability of jobs that don’t require degrees, and greater scrutiny for whether the high cost is worth it.
This decline could very well continue. In an ECMC Group survey of more than 1,000 students conducted earlier this year, only 51% of Gen Z teens said they planned to complete a degree in four years. This marked a decline of 20 percentage points since May 2020.
While the title of Biden’s announcement in August may have been the cancellation of student loans of up to $20,000 for millions of borrowers, it also laid the groundwork for making student loans less burdensome for students. But that might not be enough to offset the factors pushing students away from college campuses.
Even with student debt relief, concerns over education affordability loom
Along with Biden’s announcement of broad debt relief, he released details of a new income-focused repayment plan, which aims to provide borrowers with affordable monthly payments based on their income, with the promise of a discount after at least 20 years. The plan would allow some borrowers to have their payments limited to 5% of their monthly income, which would be significantly lower than what borrowers currently pay on income-based plans.
Additionally, students can enroll in the Public Service Loan Forgiveness Program after graduation, which forgives their student debt if they work in the public or nonprofit sector and make 10 years of payments. eligible. The Department of Education recently announced permanent enhancements to the program to make it easier to join by relaxing eligibility requirements and allowing one-time account adjustments to correct past payment errors.
But unless declining enrollment starts translating into a substantial drop in tuition, the cost of a college education may prove too big a barrier for prospective students.
Adjusted for inflation in 2020 dollars, the annual price to attend a four-year college was about $10,000 in 1980. In 2020, it was nearly $30,000 in that year’s dollars.
While Democratic lawmakers pushed back on the idea that Biden’s student debt relief would lead to higher tuition fees, GOP lawmakers clung to that criticism. Senator Tom Cotton of Arkansas said in August that debt cancellation was “just going to encourage college administrators to raise tuition and spend more money on wasteful jobs like schools with 160 coordinators. of different diversity”.
Although there are few signs of a significant tuition cut on the horizon, Mark Perry of the American Enterprise Institute previously told Insider there has been a glimmer of relief.
Tuition and university fees rose just 0.9% last year, the lowest increase since at least 1978 and well below the average 7% increase of the past 42 years, according to the Perry’s analysis of Bureau of Labor Statistics data.
It remains unclear if “the higher education bubble is finally starting to show signs of deflating,” Perry said in a blog post. Until that happens, young Americans are likely to remain wary of the cost.
High-paying jobs that don’t require a degree are increasingly common
In recent years, near-record job openings amid labor shortages have produced wage gains for many workers without a degree. It has also led some employers to relax their requirements, with a wider variety of careers available to people without a college degree. Others have explored alternative forms of education such as trade schools, certifications and apprenticeships.
Jasey Tragesser, 27, previously told Insider that she dropped out of college in 2014. Today, she earns $135,000 a year as a marketing manager for a software-as-a-service company. In her dozens of interviews over the past few years, she said her lack of a degree “never really came up.”
After leaving a job as a medical receptionist last year, Chyan Smith, 29, has become a freelance locksmith despite her lack of experience in the field, she previously told Insider. She said someone could “definitely” earn a minimum of $35,000 to $50,000 a year as a freelance locksmith.
While job postings fell by more than one million in August, according to a Bureau of Labor Statistics survey, they remain high, suggesting that there are still plenty of opportunities for those without a degree.
The impending recession, however, could change that, especially as the Federal Reserve aims to weaken the labor market as part of its efforts to calm inflation. And given that low-wage workers are often disproportionately affected when a recession hits, it could be those without a degree – who earn less on average – who bear the brunt.