The number of colleges that close each year is expected to increase significantly as schools deal with a deceleration of incoming students.
A working paper recently published by the Federal Reserve Bank of Philadelphia examines schools’ financial issues, enrollment, staffing patterns, sources of revenue, and liquidity data, according to a report by Bloomberg.
Researchers have reportedly developed simulations to determine the likelihood future closures, finding that the worst case scenario shows schools experiencing a one-time 15 percent drop in new students, which would result in 80 more colleges closing, affecting more than 100,000 students and 20,880 staff members. This significant drop in students seeking higher education is known as the “demographic cliff.”
“These simulations point to the precarious potential situation facing postsecondary education in the coming years, especially if the demographic cliff materializes in a moderate to severe fashion,” the report read.
The report — authored by University of Tennessee professor Robert Kelchen and Fed researchers Dubravka Ritter and Douglas Webber — added that if the expected student decline were to continue over the next five years, it would mean yearly closures go up by nearly five schools.
“While some of these estimated increases might seem small at the national level, they would be significant for the handful of localities predicted to experience college closures in a given year,” the report stated.
Notably, the value of a college or university degree — amid skyrocketing tuition prices — has larger number of prospective students questioning if taking on significant debt is worth it.
Meanwhile, the United States is facing a declining birth rate, along with higher than usual borrowing by students looking to cover the cost of tuition, with the number of students enrolled in institutions of higher learning falling by 15 percent in 2021 when compared to 2010.
Furthermore, the report noted that demographic problems are additionally inflated by low graduation rates and less high school students enrolling in college right after graduating.
Notably, a total of 1,660 colleges and universities have closed over the past 27 years.
As Breitbart News reported, some universities appear to be trying to incentivize students to enroll at their institutions, with MIT announcing last month that it will offer free tuition to undergraduate students from families earning less than $200,000 a year, starting in 2025.
Moreover, the University of Texas System recently approved a plan to provide undergraduates whose families earn $100,000 or less with tuition-free education at all of its nine institutions, starting in the fall of 2025.
Alana Mastrangelo is a reporter for Breitbart News. You can follow her on Facebook and X at @ARmastrangelo, and on Instagram.