John Lynch is Education Industry Manager and Lauren Marting is Education Industry Analyst for Truist.

Of all the priorities that leaders of private colleges need to juggle, enrollment—along with the students and revenue it represents—heads the list. The enrollment peak of 2010 has long since passed, pandemic Higher Education Emergency Relief Fund grants and Employee Retention tax credits are exhausted, and the “cliff” that’s been coming for years may lead to a more precipitous fall than many had hoped. It’s unlikely to affect every institution equally, with small and mid-sized colleges enduring most of the drop off.

Enrollment trends are likely to be the primary driver of a strategic rethink for smaller and mid-sized private colleges. With prospective students questioning the affordability and value of a college education, escaping the impact of the estimated 15% drop in college-age students between now and 2029—the results of the birthrate decline during the Great Recession1 and ongoing projections of a shrinking college-age population—will require a transformation in offerings and the value that a college delivers.

College-age population (18 year-olds)2

Line graph showing forecasted decline in 18-year-old U.S. population from 2025 through 2040.

The “enrollment cliff” looms.

Over many years, enrollment has generally followed the size of the college-aged population. As that demographic group has gotten smaller, enrollment has dropped and is expected to shrink further, leading to the “enrollment cliff” that has been projected for some time.Disclosure 2

While it was a main topic for many of our conversations with higher education leaders just a few years ago, the pandemic, the scramble to adjust to remote operations, and the financial relief provided by temporary government programs kept the looming enrollment issue at bay.

The enrollment cliff is front and center again. According to the latest U.S. Census Bureau projections, the shrinkage in number of college-aged students is expected to be greater than previous estimates, even after considering immigration effects.Disclosure 2 Additionally, downward pressure on college demand arises from a strong job market that encourages high school graduates to delay college or forgo it altogether, reducing the supply of potential applicants. Inflation and higher interest rates combined with college tuition and fees have risen much faster than CPI for years, dragging college demand and enrollment down even further.

Questioning the value of a college education

The factors pressuring enrollment point to concerns about the value of college—the bundle of economic, career preparation, and networking benefits that graduates derive from higher education. While these benefits can be significant—the College Board reports that the increase in lifetime earnings net of cost from bachelor’s degree over a high school diploma is more than $400,000, potential students and their families are questioning the presumptive value of a college education.3

Of all the factors, the burden of debt on individual students (and shared by the federal government when debts are deferred or forgiven) has meant handwringing around the kitchen tables of prospective students. That’s brought the value question to the forefront.

As students and their parents consider future career and income opportunities, they’re weighing return on investment (ROI) more heavily. Many students today want their education to train them for specific, well-paying jobs rather than following a more broad-based liberal arts education, which is causing some debate over the traditional credit-based education model. Whether it’s students using loans to pay for college or families stretching their finances, a path to be able to pay that money back is a priority.

Students are placing a higher priority on deriving direct career and income benefits from their college education.

Viewed through this payoff lens, engineering and computer science programs provide more financially rewarding careers, with education, humanities, and arts majors providing a lower return.4 No longer is providing the “college experience” enough for discerning students and their families.

Small to mid-sized private institutions bear the brunt.

Shrinking enrollment and value proposition pressures aren’t impacting every college equally—it’s small and mid-sized institutions that are feeling the effects.

Lately, highly selective private institutions have become even more selective, driven by ever greater salaries, career options, and prestige conferred to their graduates. That puts smaller, less selective colleges and universities at a disadvantage and may result in potential applicants and their parents viewing these institutions as less attractive. Flagship public schools, with relatively low tuition, are also drawing candidates from some smaller private colleges.

Highly selective private and flagship public schools are continuing to see applications increase—that leaves the shrinking demand to be borne by small and mid-sized colleges. As they grapple with reduced revenue from enrollment contraction and tuition yield management, funding to support staff and scholarship dries up. Continued program expansion and mounting administrative and oversight demands with less scale than larger institutions add to the pressure. Without the named buildings and endowment gifts that provide additional funding at prestige colleges, small and mid-sized schools can see their ability to compete for future students slipping away.

While they can invest in more aggressive development efforts or rework their plans to squeeze returns from modest endowments, small to mid-sized colleges are facing strategic choices as they rework their value proposition and look for sources to fund their mission.

That leads to questions such as: 

  • Can we restructure our academic programs for greater appeal to the targeted students?
  • Can we identify new student segments to pursue—academic fields enjoying increasing demand, close-by regions, or adult learners?
  • What about partnering with businesses that need ongoing skill building and leadership development for their staff?
  • Can we share functions with other institutions and achieve better economies of scale?

While there aren’t easy answers to any of these questions, the colleges that start asking them now and wrestling with the options afforded them will have an advantage as they need to compete more keenly for a fewer number of students.

The pressure is on in higher education. Truist can help.

Small and mid-sized institutions are working to strengthen their organizations and constantly seek out operational efficiencies within their financial services platform. Talk to your Truist relationship manager about how we can help. Truist’s education industry consultants can work with you to assemble the resources you need. Visit us at Truist.com/Education.

Purple PaperSM Digital Transformation

Learn how you can put advanced technology to work for your business.

Related resources

Industry expertise

7 considerations for rethinking your higher education capital structure

Industry expertise

Risk management needs grow for higher education and private K-12 schools

Industry expertise

Looking beyond asset allocation to enhance educational endowment returns

Stay informed and get connected

Looking for fresh thinking and new insights to help uncover opportunities for your business needs?

Connect with a Relationship Manager

Work with a partner who sees your vision and has the resources to help you achieve it. We’re ready to focus on the specific needs of your company—and where you are in your business lifecycle.

*This form is for prospects. Truist clients should contact their relationship manager with inquiries related to commercial products and services.

Helpful links



Sign up for the Truist Education Market Update

Sign up to receive our quarterly Education Industry Market Update - straight to your inbox and stay up to date on industry news and trends.

Please enter a first name
Please enter a last name
Please enter a valid email address
Please enter a company name
I'm also interested in: Please select a campaign option