Trusteeship - November/December 2021 - 22

TAKEAWAYS
■ According to declining
birthrates, the applicant pool
for new freshmen will shrink
by 20 percent by 2025. This rate
of decline will persist for five
years, which could result in as
much as a 50 percent decline in
enrollment.
■ Experts believe the Midwest
will be hit the hardest by
these projected enrollment
declines. There are 57 private
colleges in the four-state
region surrounding Kansas
City alone. Sixty-five percent of
these institutions experienced
declining enrollment before
the pandemic hit. Colleges
have an outsized impact on
these smaller Midwestern
communities and these
enrollment declines coupled
with the COVID-19 pandemic
does not bode well.
■ Higher education leaders must
understand their institution's
relative health if they are going
to tackle their enrollment
crises. Balance Sheet Financial
Ratios, a tool used for
comparing performance across
a group of institutions, may
help with this challenge.
■ Through the Balance Sheet
Financial Ratios, researchers
studied seven ratios across
the 57 private colleges
surrounding Kansas City:
enrollment; revenue and
investments; instruction;
academic support; student
services; staffing; and
institutional support.
-30%
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
IN 2025, higher education will experience a shock that no
amount of money alone can ameliorate. That is the year the
applicant pool for new freshmen will shrink by 20 percent.1
This is not a guess since it is based on birth rates that declined
around the turn of the century. The shrunken applicant pool
will persist for five years, which could result in as much as a
50 percent decline in enrollment for many institutions.2
Michael Horn, a professor at Harvard University, projects
that 25 percent of colleges will fail within the next 20 years.3
Others project up to 50 percent closings. All agree that the
Midwest will be hit the hardest.
Position/Performance Total Enrollment
Private Colleges, Universities BA, MA Levels
CAGR 3Y F16-F19
-20%
-10%
0%
10%
20%
30%
191
181
201
221
231
JMA Inc. 221 2021
ENROLLMENT. The three years prior to the pandemic are displayed. Colleges to the left
of the line experienced declines in enrollment over that three year period. Our Example
191 saw a drop of 21 percent over just three years; obviously a troubling development.
Similarly, Example 201 declined 11 percent.
22 TRUSTEESHIP NOV.DEC.2021
222
Trusteeship - November/December 2021

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