Many college towns with post-secondary schools at their economic heart are feeling pressure from falling enrollments. The effect is somewhat akin to the largest employer in such a town seeing revenues shrink and laying off people.
Except that the people who go missing are revenue sources, not people who need to be paid.
The Wall Street Journal wrote about the phenomenon, giving Western Illinois University as a leading example. The school has seen multiple still dorms taken down. Another pair will close this summer. An additional one has become a police training location for active-shooter drills.
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“It’s almost like you’re watching the town die,” Kalib McGruder, a lifelong resident, told the Journal.
For many decades, growing enrollments meant more student consumers. More money for colleges to hire and spend without a focus on inefficiencies and cost-cutting.
Numbers from the National Center for Education Statistics indicate a decline that has been ongoing since at least 2010, when the total number of full-time and part-time students was 18.1 million. By 2019, the total was 16.5 million. The low point occurred in 2021, when there were 15.4 million students.
The birth rate has been declining almost every year since 2007, and the number of high school graduates is expected to start falling after reaching a record high in 2025, according to the Journal.
It hasn’t just been students disappearing, but entire schools. In late 2024, The Hechinger Report, which focuses on education, analyzed federal school closure data. In 2008, seven degree-granting U.S. institutions closed. By 2012, it was 15 and the number peaked at 34 in 2016. That dropped to 14 a year in 202, then back up to 28 in 2024, at least through the first nine months. That was more than three schools a month.
At least 17 of the closed schools in 2024 were public universities and colleges. According to a separate story from The Hechinger Report, states are cutting higher education budgets, with state schools facing mergers and campus shutdowns. Many of the closures happen in areas with little access to higher education, meaning that the towns aren’t like Boston, New York, Chicago, or similar large cities with multiple universities.
There has also been a shift among types of schools. The Journal analyzed 748 public four-year colleges and universities in the U.S. Full- and part-time enrollment at the big state institutions was up 9% in 2023 over 2015. But the smaller regional state universities saw a 2% drop.
As economies drop, so do the value of all sorts of CRE: retail, residential, offices, healthcare — anything where success requires the presence of more people.
The Journal pointed to a Brookings Metro study showing that out of metro areas “especially reliant on higher education,” three quarters showed weaker economic growth from 2011 through 2023 than the country as a whole. In the previous decade, they grew faster than the U.S.
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