Dive Brief:
- Colleges’ ability to adapt their academic programs based on student interests and labor market demands will become increasingly important to counter enrollment challenges, suggests a new analysis from Moody’s Investors Service.
- Institutions equipped to closely track shifting student interests and adjust their offerings accordingly stand to benefit when trying to recruit enrollees, the analysis said.
- For instance, computer and information sciences programs’ undergraduate enrollment has grown across public colleges, even though the number of undergraduates broadly has declined. Focusing on these degrees could help boost enrollment and avoid financial distress, Moody's said.
Dive Insight:
College enrollment has yet to recover to pre-pandemic levels, with undergraduate numbers falling 7.7% between spring 2019 and spring 2023, Moody's said.
Institutions are also preparing for the 2025 demographic cliff — an expected dropoff in high school graduates due to declining birth rates during the Great Recession.
To adapt programs to student and labor market demands, colleges could create new credentials or eliminate existing ones that no longer attract students.
"To be sure, the connection between student interest in degree programs and labor market dynamics is imperfect," the analysis said. "But data that takes into account mid-career wages and underemployment by bachelor's degree program shows a handful of programs that offer universities a significant opportunity to grow or stabilize enrollment, including computer science and engineering."
But pivoting to in-demand technology fields isn't a panacea for colleges.
Improving computer science programs can be expensive, as qualified faculty may receive competing compensation offers, Moody’s said.
"There is also no guarantee the job market won't cool for graduates in the field as technology becomes more advanced," the analysis said. "The rapid rise of artificial intelligence will create workforce demand, but AI could also drive productivity gains in the workplace that could soften demand and enrollment over time."
In the for-profit sector, institutions focused on healthcare will likely see increased enrollment and revenue due to a shortage of healthcare professionals and strong market demand.
Some colleges may consider cutting back in certain areas, Moody's said. The credit ratings agency cited disproportionately declining interest in the liberal arts and humanities as a sign more colleges may weigh scaling back those programs.
Two-year colleges and baccalaureate institutions that primarily grant associate degrees have the most flexibility when downsizing, as their workforce relies heavily on adjunct and part-time professors. A tenured labor force can make consolidation a significant challenge, the analysis said.
Some colleges have already begun paring down.
Last month, West Virginia University's governing board voted to eliminate 28 degree programs in subjects like foreign languages and music as a means of reducing a $45 million deficit. The state flagship's plan, which is also cutting about 140 faculty positions, garnered significant student and employee backlash.
Moody's noted that WVU directed its cuts at underenrolled programs.
"While the majors represent 8% of the total number of majors at the school, the programs accounted for just 1.4% of enrollment," the analysis said.
