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FAFSA, student debt, birth rate

FAFSA, student debt, birth rate
  • A college enrollment crisis will likely occur this fall.
  • This is the result of complications with the FAFSA form, as well as a decrease in the number of high school students.
  • The impact of declining enrollment could be long-lasting for both students and colleges.

High school graduates no longer go to university like they used to.

Katharine Meyer, a fellow at the Brown Center on Education Policy at the nonprofit Brookings Institution, told Business Insider that universities are “very concerned.”

Over the past decade, a range of challenges have hit higher education: In recent years, as more jobs that don’t require a college degree have become available, members of Generation Z have begun to wonder whether degree was worth the student debt and, of course. Of course, the pandemic has prompted some students to take a break from college, or even drop out.

The overall enrollment rate for 18- to 24-year-olds fell from 41% in 2010 to 38% in 2021, according to the National Center for Education Statistics. While enrollment has seen a resurgence after the pandemic, according to the National Student Clearinghouse – undergraduate enrollment increased 1.2% in fall 2023 and first-year enrollment increased 0.8% – Problems could once again appear on the horizon.

Of immediate concern to colleges and students is the Free Application for Federal Student Aid, or FAFSA, form. The Department of Education announced last year that it was redesigning the form to make it easier for parents and students to access, but initially the rollout of the form was delayed. Errors were made in some aid calculations, forcing some schools to push back their commitment deadlines to give students more time to evaluate their scholarships.

Delays and errors mean fewer students are filling out their FAFSA forms. According to the National College Attainment Network, 32.9% of high school students completed the FAFSA through April 19, a 29% decrease from the previous school year.

Based on the impact of a drop in FAFSA submissions during Covid on fall 2020 enrollment, that’s a pretty good indicator that college enrollment will be much lower this fall, MorraLee Keller, senior director of strategic programming at NCAN, told BI.

“At the rate that FAFSAs are being submitted this year, we can anticipate, unless something significant happens, perhaps a 10 to 15 percent drop in FAFSAs,” Keller said, while noting that there is still time for students to apply for financial aid. if they haven’t done so yet.

But it’s not just the FAFSA. There are also currently a limited number of high school students due to declining birth rates during the Great Recession. As a growing number of young people question the value of a college degree, institutions that rely on enrollment could suffer financial setbacks or even close their doors.

“I think all colleges are worried,” Meyer said. “They’re worried on different levels. Even big institutions, well-resourced institutions with big endowments, they’re still worried about getting their students through the door.”

Students could face lasting setbacks

Most FAFSA issues will likely be resolved by this time next year. But certain delays occurring at the start of 2024 could have lasting consequences. For example, enrollment is still down from pre-pandemic levels, indicating that if students do not enroll this year due to issues accessing financial aid, they may choose to never register afterwards.

This would mean that not only will colleges miss some high school graduates, but they could also lose currently enrolled students who are forced to drop out because they can’t navigate the financial aid system.

Meyer said this especially applies to “students at less well-resourced community colleges or four-year institutions where they are not able to connect with someone for financial aid.”

“The institution does not have the capacity to implement some of the workarounds that other institutions do, and we will also see the retention rate decline,” Meyer said.

FAFSA issues hit low-income families hardest because they don’t have the resources to help them through the process, and they could lose out on higher education altogether.

“This year we are having a widespread impact,” Keller said. “There are so many fewer FAFSAs to the extent that it obviously affects everyone. But families who absolutely need this help to pay for college must be the group most affected.”

Colleges will be forced to adapt – or close their doors

The fact that there is also a lower supply of 18-year-olds does not help matters. The national birth rate declined by nearly 23% between 2007 and 2022, declining at a faster rate just after the Great Recession.

Meyer said colleges have been aware of this decline in enrollment for some time and that colleges have two options: convince more high school graduates to enroll or encourage seniors to return to school.

“Universities are looking at this more as a business model and thinking about how to maintain enrollment so they can stay open,” Meyer said. “And so, those are kind of the numbers games around the enrollment efforts.”

However, declining enrollment has already hampered the financial growth of some schools. Hodges University – a private school in Florida – announced in August 2023 that it would close its doors in 2024 due to declining enrollment “despite continued efforts to adapt to changing educational landscapes and offer innovative programs.”

Cazenovia College, a private school in New York, closed in fall 2023, citing financial challenges related to the pandemic and the fact that “the population of college-aged individuals had declined “.

Meyer said she expects “there will be more closures than usual this year, particularly among these small, private liberal arts colleges.”

Beyond that, as BI previously reported, 46% of Gen Zers don’t think college is worth the cost, according to a July BI/YouGov survey — meaning colleges will have to strive to show that their institution’s degrees will pay off. disabled. Some schools, like the Texas Community College System, are already doing this by working to implement a school structure with funding based on student achievement.

But the immediate enrollment shock will likely come this fall — and students and colleges will feel the impact.

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