Impact of a Recession on Education

Part
01
of four
Part
01

Higher Education Enrollment and Recessions

Education institutions in the United States rely on state funding and federal research grants, which have declined over the last ten years due to the 2008 recession. Between 2009 and 2015, the federal support for research decreased by 23%. State funding for public colleges is now 16% less per student, an equivalent of $9 billion below its 2008 level. The decrease in support from the government has resulted in increased tuition fees. Tuition fees in higher education public programs increased by 65% from the academic year 2007-08 to 2017-18, and by 49% in private colleges.

Overview

  • Before 2007, higher education institutions in the United States were experiencing a decline in student enrollment. During the economic recession, most of the institutions saw an increase in student enrollment, especially in public institutions, which had a 7% increase in enrollment in 2010 and a 5% increase in 2011.
  • In 2013, student enrollment in all institutions decreased by around 1.5% except for doctoral institutions. The 2008 economic recession caused an increase in tuition, which contributed to a decrease in enrollment, especially in public institutions.
  • According to previous research, college enrollment rates is directly proportional to the rate of unemployment, especially for people between 16 years old to 24 years old. College attendance levels in the United States increased during the 2008 recession. Part-time students' enrollment was higher than full-time students' enrollment, which declined.
  • According to a population survey from the year 1968 to 1988, covering four recessions in the United States, for every 1% increase in unemployment rates, there was a 2% increase in college enrollment.
  • According to the Department of Education, community college student enrollment increased by around 10% from 2000 to 2006 after the 2000 recession. The increase in student enrollment can be attributed to new academic programs, the economy, or better-recruiting strategies, according to Inside Higher Education (IHS).
  • The Department of Education and IHS reveals that over 6.2 million students enrolled for programs in the 1,045 community colleges in the United States in the academic year 2006-2007.
  • There was an increase in college enrollment in the United States, especially for two-year colleges after the 2008 recession, as people went back to school to acquire new skills with the changing weakened employment market. Institutions like Yale, Harvard, and Stanford are less likely to suffer from an economic recession because of the sizable endowment funds at their disposal.
  • According to Beth Akers, a senior at the Manhattan Institute, it is likely to see a drop in higher education enrollment in the wake of Coronavirus pandemic, especially for community colleges and for-profit higher learning institutions.
  • Elite institutions will continue to enroll more students as people's desire to attend prestigious colleges will not wane. Enrollment in open-access institutions is likely to reduce.
  • There will be increased enrollment in institutions that succeed in expanding online programs/courses over the next year. Online programs will serve more students and will increase revenue, says Akers.
  • According to John Sygielski, president and CEO of HACC, to increase student enrollment in the United States' higher education institutions will have to re-examine how it delivers education to its students to serve the growing business needs.
  • The number of traditional-age student enrollment to higher education programs is projected to decrease in the next ten years.

COVID-19 Effects on International Enrollment

  • A third of international students in the United States originated from China in the academic year 2018-2019. About 36% of students are reluctant to study abroad as a result of the Coronavirus outbreak, according to a study conducted by the Beijing Overseas Study Service Association (BOSSA) in February 2020. This will directly affect higher education enrollment in the United States.
  • The United States will lose up to $40 billion if transcontinental student enrollment slows down or is stopped in the United States. Higher education institutions in Texas, New York, Massachusetts, and Pennsylvania will be most affected because these states host international students.
  • Between 2015 and 2018, the number of new international student enrollment in the United States reduced by 10%, according to the Institute of International Education (IIE).
  • According to enrollment officials, at least three dozen higher education institutions in the United States had pushed back their student enrollment application deadlines as of March 15.

Research Strategy

Your research team scoured through credible databases and websites like Forbes, Inside Higher Ed, ResearchGate, and NBER to find information on the impact of an economic recession on enrollment in higher education programs. We have provided information from the effects observed after the 2000 and 2008 recession periods. We have also provided insights into the potential effect that COVID-19 could have on international enrollments in the United States. Overall, institutions offering face-to-face education are bound to experience a decline in student enrollments as the ones offering online programs will observe an increase in student enrollment.
Part
02
of four
Part
02

Technology Programs Enrollment and Recessions

Assuming the previous patterns of educational enrollment increase in America are sustained as in previous recessions since the 1960s. There would be an expected increase in STEM enrollment in America, which could represent a 48% increase in intake in the next few years. This figure also represents technology enrollment increase in institutions since technology is also part of STEM.

Impact Of Recession On Education In America And Relationship With STEM Courses/Technology Enrollments

  • According to a Stanford expert, the great recession of 2008 spurred student's interest in higher education in America, and since the 1960s, every recession witnessed a higher enrollment in college intake.
  • Science, technology, engineering, and mathematics(STEM) majors witnessed an increase in growth from 388,000 graduates in 2009/2010 to 550,000 graduates in 2015/2016, representing a 43% growth. In general, "recession-proof STEM" subjects enhances its appeal in trying times of an economy.
  • Since the beginning of the recession, undergraduate enrollments have gone up significantly, especially in engineering and biology, and according to statistics by UCLA, from 1997 to 2005, the number of first-year students with the intention to enroll for STEM fields declined to reach 20.7% in 2005. The real increase in first-year students planning to study STEM fields began in 2008. In 2007, 21.1% of first-year students planned on studying STEM courses, and this increased to 28.2% in 2011.
  • The recession made families to "focus on the job potential of various fields of study," which represents a 48% increase in a few years. Engineering had a 57.1% increase, and biology had 28.2%, physical sciences had 11.1%, and mathematics 12.6% growth. By implication, technology would also witness a 48% increase in technology enrollment because technology is part of STEM.

Research Methodology

While there was no data specific to an increase in only enrollment in higher education technology in America, the team looked at a general pattern in America education enrollment during economic downtimes, and STEM enrollments in a bid to unearth the relationship with technology enrollments in America.

Generally, a strong economy makes Americans postpone college and look for jobs. Still, in times of recession, the unemployment rates increase, and people are forced to consider going back to school. And during this recession period, students choose majors carefully, especially majors that make money. From the graphical analysis, it can be seen that STEM courses such as engineering, computer-related fields witnessed an increase in time past.

The United States Census Bureau has confirmed that the great recession of 2007 to 2009 had a significant influence on changes in American postsecondary education. The number of enrollment in colleges increased, and the number of enrollment in STEM courses also increased.

Assuming America experiences another economic recession, with the last pattern of the economic downturn is followed in STEM courses, there would be an increase in enrollment in STEM courses, and this could also represent a minimum of 48% increase over the next few years.

It is safe to assume that the technology enrollment will also have a minimum of 48% enrollment since this was the figure allocated to STEM in few years, and the technology sector is also part of STEM.
Part
03
of four
Part
03

Continuing Education Programs Enrollment and Recessions

Overall, experts agree that enrollment in continuing education programs is likely to increase as a result of an economic recession.

Key Findings

  • Generally speaking, experts agree that recessions cause a countercyclical effect in adult education across the board, including continuing education. To summarize, this effect refers to the fact that the opportunity cost of enrolling in education is less with the job market is bad; therefore, enrollment generally increases during a recession.
  • What makes this recession unique is that many colleges and educational institutions have had to pivot to online learning as students and faculty observe social distancing and quarantine. This may encourage enrollment in continuing education programs as they become even more accessible to working adults, parents, those living in rural areas, etc. According to one expert source, "The sudden pivot to online could expedite what was going to happen anyway to higher education, Sygielski added...Akers believes those who succeed at expanding online programs are more likely to be successful over the next year. Online programs also can expand access for colleges to serve more students, adding revenue, she said."
  • Some experts believe that enrollment will increase, particularly in online learning and community colleges, after the threat of the virus passes. "At this point, students won't be warier about enrolling or continuing their education, he said, and the recession will increase the importance of a college degree." Other experts note that "community colleges offer the best hope for workers who have no or some college credits to return to get skills to re-enter the workforce."
  • A study from 2009, conducted by the Campus Computing Project and the League for Innovation in the Comunity College, found that out of 120 community colleges 28 percent saw an enrollment increase of 10 percent or more between January 2008 and 2009. Plus, "anecdotal evidence from four-year schools reveals similar trends." Although community colleges don't correlate directly with continuing education, they are a primary resource for continuing education courses and opportunities.
  • "In general, higher- and continuing-education enrollments skyrocket during a sagging economy," according to Vice President Mitch Weisburgh from Academic Business Advisors, a higher-education consulting firm.
  • One case study demonstrating that continuing education enrollment spikes during a recession is from Linfield College, which saw increased enrollment in continuing education after the 2008 recession: "Linfield, which has about 1,650 students on its main campus, has long-established adult education programs that served the college well with increased enrollment during the recession. As the job market has improved, though, there has been a decline in the number of adult students while enrollment of undergraduates, which dipped one year, has returned to normal, Hellie says."
Part
04
of four
Part
04

Masters Programs Enrollment and Recessions

There is a counter-cyclical effect on enrollment in masters programs in the event of a recession. This means an increase in enrollments of masters programs during a recession as explained below.

Impact of Recessions on Masters Programs Enrollment

  • The managing director of Tyton Partners, Trace Urdan, suggests that the master’s degree market growth is fueled by a downward turn of the economy. He explains that master's degree growth is also accelerated by 'basically unlimited funding' provided by the Grad PLUS loans. He concludes that the master’s degree bubble has not burst as yet.
  • The founder and CEO of Gray Associates, Bob Atkins, also seconds that the bubble burst has not occurred yet. He states that the masters market is still growing and not declining. However, the growth rate may slow down relative to the recession; the number of master’s degree conferrals was seen to rise after a pause in 2015.
  • The master's degree five-year completion growth for 2018 versus 2013 was registered at 9%, while the one-year completion growth for 2018 versus 2017 was 2%. Moreover, in 2018 there were an estimated 827,000 completions.
  • Applications to MBA programs in the United States have declined for five continuous years. For example, Dartmouth College's Tuck School of Business saw a 22.5% plunge in applications leading to a more than 11% points school acceptance rate; applications at the University of North Carolina’s Kenan-Flagler Business School plummeted 24.7%; while Indiana University’s Kelley School of Business recorded a 40.6% loss in applications in 2018 and 2017.
  • However, due to the counter-cyclical nature of the higher education industry, MBA applications are expected to increase with the next economic recession. Caroline Hoxby, a Stanford economist, explains that since the 1960s, college students have increased during every recession.
  • During an economic recession, the opportunity cost of acquiring a master's degree decreases since it becomes harder to get a job, keep one, or get a promotion. Therefore, young professionals tend to enroll for master’s degrees during the recession as they await economic expansion which better places them for upward mobility in their careers.
  • According to the dean of Duke University's Fuqua School of Business, Bill Boulding, with a recession, there exists a counter-cyclical effect on the volume of MBA applications. This means that applications increase as the economy worsens, and applications decrease as the economy improves.
  • The Graduate Management Admission Council explains that during the 2009 Great recession, approximately two-thirds of MBA programs on full time received more applications compared to the previous year; which was also their best application numbers for five years.
  • However, according to Ted Snyder, retired dean of Yale University’s School of Management, a recession may not result in a double-digit in application volumes due to the high cost of MBA degrees.
  • According to eab.com, the recession has resulted in an increased number of master's degrees conferrals across all disciplines. This has represented an accelerated growth in the master's degree market since the 1990s when master's programs started gaining popularity. However, since 2014 when the impact of recession subsided, the National Center for Education Statistics (NCES) projected lower growth rates in the master's programs market.
  • In 2014, it was projected that there will be over a million master's degree conferrals annually by 2024. This projection has since then decreased to approximately 840,000 conferrals of master's degrees per year by 2029.
Sources
Sources

From Part 01
Quotes
  • "Decline in government support contributed to increased tuition over the past decade. From the 2007-08 academic year to 2017-18, tuition and fees rose by 65% at four-year public colleges and by 49% at private colleges."
Quotes
  • "Previous research has found that college enrollment rates often increase as the unemployment rate grows (Long 2004b), especially among sixteen- to twenty-four-year-olds due to lack of employment opportunities (Bell and Blanchflower 2011)."
Quotes
  • "While a struggling economy certainly forces extra pressures on young students seeking funds for loans and tuition costs, the enrollment rates for colleges continues to soar. In fact, according to data from the Department of Education, community college enrolment increased by ten percent in the course of just six years, from 2000 to 2006. "
Quotes
  • "After the last recession, there was a boom in college enrollment, particularly for two-year colleges, as people return back to school to gain new skills in the face of a weakened employment market. Though projections suggest enrollment will increase in the long-term through 2025, the National Student Clearinghouse Research Center reports a general decline among all institutions receiving federal financial aid and a 1.7 percent decrease in the last year. "
Quotes
  • "The spread of the coronavirus has led many institutions to close and pivot to online. S&P Global just announced that the world is in a recession. Moody's Investors Service moved higher education's outlook rating from stable to negative."
Quotes
  • "While enrollments often increase during recession periods, the number of traditional-age students is projected to drop over the next decade, and recently many full-tuition-paying international students are passing on American higher education. Also, recessions put pressure on particular student populations that were barely able to afford staying in school in the first place."
Quotes
  • "One third of international students in the U.S. came from China as reported in the academic year 2018-2019. However, according to a February 2020 study conducted by the Beijing Overseas Study Service Association (BOSSA), approximately 36% of students are changing their plans to study abroad because of the COVID-19 outbreak."
Quotes
  • "The country has already seen a downturn in new international enrollments in the last several years. The number of new international students fell around 10% between its peak in the fall of 2015 and the fall of 2018, according to data gathered by the Institute of International Education (IIE)."
Quotes
  • "At many colleges, the calendar has long revolved around May 1, the national deposit deadline for applicants. But that won’t work this year, some enrollment officials said. As of March 15, at least three dozen colleges had pushed back their deposit deadlines by a month, and several more were expected to do so soon."