The College Admissions Wave: Will the Number of Students Keep Rising Forever?
It is no shock to anyone with college-aged children that college campuses are a lot more crowded these days. Much of the focus in the media has been that a higher percentage of American youths were attending college. We conceded that this was true, but we insisted that the primary diver of the increased demand was not the higher percentage of kids going to school but the shear number of kids in the Echo Boom. (It's not a bigger piece of the pie, so to speak, but a much bigger pie itself.) We now have some numbers to test this.
Between 1967 and 2008, the number of 18-24-year old enrolled in college more than doubled from 5.1 million to 11.5 million. This is an increase of 6.4 million students, or 125%.
Taking a look at the numbers,
In 1967: 23.4M college aged * 21.7% attendance rate = 5.1M students
In 2008: 23.4M (assuming zero population growth) * 42.4% attendance rate = 9.9M students
So, as it would turn out, 4.8 million of the 6.4 million increase since 1967 was due to increased attendance rates, not demographics. That works out to 75%, with the remaining 25% of the increase due to demographics changes and foreign born students.
The facts speak for themselves; a higher percentage of Americans is going to college than ever before. But can we expect this trend to continue? Let's consider the facts.Over 1967-2008 time period, the percentage of 18-24-year olds enrolled in college increased from 25.5% to 39.6%. So, roughly 4 in 10 Americans now goes to college. But at what point will this level off? A quick look at the chart above indicates that it already is leveling off; the steepest section of the graph is from 1973 to 1992. Increases since 1992 have been much less impressive.
We will never have a country in which 100% of the population goes to college, or even 70-80% for that matter. That is unrealistic. But what is realistic? 50%? 60%?
It's hard to say, but we cannot imagine the number rising to more than half in our lifetime. Many of the factors that led to the increase from 25.5% to 39.6% have already come and gone:
- The process of "deindustrialization" has been in play since the 1970s. You cannot earn a comfortable wage as a factory worker anymore, so many young men who might have been content to follow their fathers to the GM plant have been forced to pursue other options, which generally involve college education.
- Meanwhile, women long ago entered the workforce en masse and have become very highly represented in the educated professions. A majority of law school students are now women, for example. Much of the increase in the percentage of Americans who attend college from 1967 until the late 1980s was simply women "catching up" to men in this respect (See Pew's Appendix, which breaks it down between men and women).
So, with the decline of the male blue collar career path and the mass entry of women into professions that require higher education already baked into the numbers...what would cause a significant increase in college admissions from this point forward?
The transformation of the United States from an industrial economy into a services and information based economy is largely done, and with this transformation complete we believe that demographic trends will become the most important determinant of future college admissions. The numbers point to roughly seven years of declining demand ahead. College administrators, take note.
Charles Lewis Sizemore, CFA
Chief Investment Officer, Sizemore Capital Management LLC
Sizemore Capital Management LLC is a registered investment advisor specializing in money management and financial planning for individuals. Please visit us on the web for more information: www.sizemorecapital.com
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Charles Lewis Sizemore, CFA
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