In the past month or so, I’ve had the good fortune to speak with the Chancellors to the respective boards of two vastly different universities. In the same time period, I’ve spoken to roughly a dozen university presidents and deans — again from the entire spectrum of higher education institutions, small private to large public and everything in between. Nothing remotely in common among these schools, and the conversations have ranged from funding to rankings to social mobility and everything in between. Except there has been one phrase that has been significantly propped up and discussed every single time. Because universities, colleges and law schools are rightfully freaked out about its looming presence. In 2026, applications to colleges will nose-dive and everything admissions- (and thus fiscal-) related is going to change. We will dig into what this all means in the below with some "demographic cliff" notes (we think we are more clever thsan we really are at times).
Distinct from Harry Dent's "demographic cliff," which predicted economic downturn between 2014 and 2019 as boomers retire (which obviously did not happen), the college demographic cliff (written about extensively by scholars such as Clayton Christensen of Harvard Business School and Nathan D. Grawe of Carleton College) predicts that institutions of higher education will experience severe problems attracting students over the next ten years as the population of college-age potential enrollees declines in the mid-2020s.
This decline is due in large part to the great recession, which led many to delay or decide against starting families. This smaller population of babies born during the recession will reach traditional college age starting in 2026, at which point colleges will start to have much greater difficulties attracting new students.
Additionally, Grawe developed the "Higher Education Demand Index" (or HEDI), which analyzes the rates of college attendance for different socioeconomic groups and predicts how future shifting demographics will affect college attendance overall. According to the HEDI, the demographics that traditionally attend college are shrinking faster than the demographics that traditionally do not, which will cause an even greater decline in college attendance than strict population numbers would predict.
Christensen foresees the implications of these shifts being dire for non-elite institutions, going so far as to predict that half of all colleges and universities will close or go bankrupt in the next decade. The above discussed difficulties enrolling students, Christensen says, will require colleges to go to great lengths to attract enrollees — hiring new faculty and administrative positions and building new facilities, which will be expensive, and simultaneously increasing financial aid thus decreasing their revenue. This arms race is an existential threat — especially for institutions that have small endowments and rely on tuition for revenue (hence why both Christensen and Grawe agree that elite institutions are actually likely to see increased demand despite the cliff).
What does this mean for admissions? If you (doubtfully you will be reading this if you fall into this category) or your child is in the 6th grade or under, the power equation is about to flip greatly in your favor. This will be very similar to what we have seen in law school admissions from 2011 to 2016, when a significant decrease in applications led to much higher admission rates and a scholarship arms race.
Many of our predictions below are because we have seen this all before. Applicants will inevitably be a scarce resource. That is in direct contrast to this current undergraduate cycle, which has been competitive to a noteworthy level. Danielle Early, a partner of mine at Spivey Consulting Group and former undergraduate and law school admissions officer for Harvard University, says that this demographic cliff will "likely result in a significantly less competitive admissions process for undergraduate admissions — although at elite institutions the impact will be less severe than at most colleges."
I'm even more optimistic from an applicant standpoint. Even the top colleges will likely have fewer quality applicants applying and thus those applying to the elite schools may be less rigorous, although there is mixed data here. I am basing this more on seeing what happened to all law schools during the aforementioned 5-year applicant downturn. Either way, college enrollment and applications again are going to fall off that veritable cliff, and this is all good news for applicants (not good news for colleges, which will elicit an entirely separate blog article from us as we have increasingly been consulting for universities).
Additionally, and the good news just keeps coming, tuitions will likely be frozen, as again the power equation will have shifted to applicants. Applicants will have more choices, and schools will have to compete for limited seats. They will likely do so by either freezing tuition or price discounting (read: more scholarships) to an even greater extent. It is all but inevitable, particularly for American applicants where the birthrate data is a huge driver for all of this.
At the law school level, of course, that means 2030 will experience similar applicant benefits. That's a ways off – but it will change how law schools strategically plan well before then. Law schools may raise class sizes soon, to develop a financial cushion for 2030. That too will mean less competitive admissions. They may push for non required standardized tests, less application fees, etc. We already have some evidence that changes are being discussed, which all would be helpful to law school applicants – perhaps as soon as next admissions cycle. Expect a slow creep of fewer fees and larger classes.
As an endnote, many colleges are trying to respond to these forecasts by offering online programs and otherwise trying to attract demographics that may not have historically attended college or may not have attended college in the United States (such as lower-income students, students from traditionally lower-performing high schools, first-generation students, older non-traditional students, and growing numbers of international students). However, these innovations will take time to take hold, and many believe it will be too little too late. Ultimately, not all scholars agree with Grawe's exact model or Christensen's timeline, but most do agree that over time, many institutions of higher education will be forced to close or significantly restructure (e.g. merge with another institution).
-Mike
If you are new to our blog, we also have a motivational article section that many college and high school aged students have told us has been very helpful and calming to them. An example of that, and link to those articles, can be found here.