Higher education is approaching a moment 18 years in the making. According to the latest estimates, 2025 will be the peak year for high school graduates. The long-anticipated "demographic cliff" stemming from declining birth rates since 2007 is approaching.

However, the decline in the number of traditional college-age students may not be a strict "cliff," nor does it necessarily spell disaster for colleges nationwide. In its latest projections, the Western Interstate Commission for Higher Education (WICHE) describes a decline over the next 15 years that is more gradual than the "cliff" metaphor suggests, although the overall drop is slightly larger than previously expected.

"The decline is coming," said Patrick Lane, co-author of the report and vice president for policy analysis and research at WICHE, at an American Council on Education event in Washington, D.C., in February. "Whether it looks like a cliff or a slow slide... that's the real big question."

A more gradual decline would give colleges and policymakers time to prepare and manage the changes. After all, a decrease in high school graduates does not necessarily translate into a drop in college enrollment—although it may for some institutions. College participation rates, student composition, and retention rates all play a role in strategies to mitigate the decline.

Regardless of how colleges and policymakers respond, now is the time to prepare. As Lane emphasized, the decline will be real—and imminent. "The reason we're fairly confident about this is you can't just conjure up 18-year-olds," he said. "There just aren't that many people left."

Fewer students, more closures

Demographic shifts have already put financial pressure on many institutions, and some states have seen their enrollment pools shrink. In the Northeast—home to a large concentration of private liberal arts colleges—the number of high school graduates fell from 637,000 in 2012 to 612,000 in 2024, a decline of nearly 4%. Last year, Wells College in New York and Goddard College in Vermont closed, both citing demographic challenges.

These recent closures highlight the difficulty of adapting to industry changes. Nathan Grawe, an economics professor at Carleton College and author of "Demographics and the Demand for Higher Education," said such closures "may represent institutions that were not decisive or timely enough in their actions, or were simply overwhelmed by forces they couldn't overcome."

As the traditional college-age population shrinks more broadly and deeply, the pace of closures could accelerate. A study released in December used machine learning techniques to predict changes in college closure rates related to the demographic cliff. The model developed by researchers at the Federal Reserve Bank of Philadelphia projects that if enrollment suddenly drops 15% between 2025 and 2029 (using 2019 as a baseline to avoid pandemic disruptions), as many as 80 additional institutions could close.

That would more than double the current annual college closure rate. Although this is a worst-case scenario, even a more moderate decline could cause serious damage to some institutions. The researchers found that a more gradual decline in enrollment over five years would increase the annual closure rate by 8.1%, or about five additional college closures per year.

An institution's size and reputation may determine how it weathers the coming demographic changes. "Especially full-time traditional-age students, if possible, tend to go to more prestigious universities, which further exacerbates the pressure on smaller institutions already facing enrollment declines," said Robert Kelchen, a visiting scholar at the Philadelphia Fed's Consumer Finance Institute and one of the paper's authors.

Geography also matters. WICHE's projection that high school graduates will peak this year at about 3.8 million represents a national average. But outcomes vary widely by state, with some expected to see increases instead. Meanwhile, certain regions and areas will experience above-average declines. For example, WICHE researchers estimate that between 2023 and 2041, New York State will see a 27% decline in graduates, and Illinois a 32% decline. In contrast, some states like Tennessee, South Carolina, and Florida are projected to see double-digit growth.

Kelchen said many struggling institutions "are located in the Northeast and Midwest, which are at the higher end of expected enrollment declines," making those institutions potentially more vulnerable.

'Proactive' push to boost enrollment

Not every high school graduate chooses to attend college, and the proportion doing so has declined in recent years. Between 2016 and 2022, the college enrollment rate fell by about 8 percentage points to 62%. Raising this rate could significantly offset enrollment losses. WICHE found that increasing the college enrollment rate by just 0.5 percentage points per year would be enough to offset the enrollment gap caused by demographic changes. But boosting college enrollment is not simple, nor is it entirely within anyone's control.

Much depends on the economy and the job market. Wage growth over the past decade may help explain lower enrollment rates. "This is what reducing inequality looks like, but it does mean that students wavering between the job market and higher education are more likely to choose the job market until that trend reverses," Grawe said.

Growing skepticism about the value of a college education may also play a role. Kelchen pointed to the "perception" that "college is unaffordable." In fact, research shows that net tuition and fees at both public and private institutions have declined over the past decade. "This is different from the previous four decades, but the perception persists," he added. "Students have some fairly inexpensive options, especially with the growth of free community college programs. But these won't save small private colleges that struggle to compete on price."

While the rise in net college prices has slowed, attending college remains costly for many. "College costs too much and takes too long," said Chuck Ambrose, senior higher education advisor at Husch Blackwell law firm, who has served as CEO of several colleges. "At the end of the day, you have to borrow to pay for it, which leverages all potential over a longer period."

So, not only does the economy affect college enrollment, but college enrollment also affects the broader economy. "This is a game we can't afford to lose, because our demand for postsecondary skills will continue to be high," said Jeff Strohl, director and professor at Georgetown University's Center on Education and the Workforce, during an ACE panel discussion. The higher education sector "really needs to be proactive," he said, focusing on the skills graduates need in the job market and recognizing that "education is really about combining skill packages that match careers and demands, without giving up the commitment to liberal education."

'If we retain the students we have, we'll be healthy'

Grawe said at the ACE event that the idea that demographic decline will bring an "apocalypse" to higher education institutions is "unhelpful." "If it's an 'apocalypse,' we might as well go home and give up," he said. Experts made clear that while adjustment is difficult, institutions still have some autonomy. But such adjustment may require investment in services and infrastructure—and breaking old institutional habits.

"It's very important to stay realistic," Grawe said in an interview. "If you say 'we're going to enroll our way out of this,' but then don't—then you're now facing a very, very large budget shortfall."

It's also important to remember that the potential student pool extends beyond just annual high school graduates. First, there are all currently enrolled college students—statistically, many of whom won't persist to graduation. According to the latest statistics from the National Student Clearinghouse Research Center, the national completion rate for students who entered college in fall 2018 was 61.1%. Lane said in a December interview that WICHE's thought experiment on boosting college enrollment rates could also be applied to retention rates, adding that retention is "definitely part of the puzzle in responding to demographic decline."

With a shrinking pipeline of new students, better retention rates could have a huge positive financial impact on many institutions. "If we just retain the students we have, we'll be healthy," Ambrose said of the industry. "Students hire us to do three things: recruit them, retain them, and ensure their experience is valuable."

But just like college enrollment, if improving retention were easy, it would have been done already. "We don't know how many hundreds of millions of dollars have been spent on interventions, personnel, analytics, and various tools," Ambrose said. When it comes to retention, a comprehensive approach may be needed to succeed. Ambrose listed a range of strategies that can help institutions retain students, including expanding on-campus jobs, internships, and apprenticeships; incentivizing completion through scholarships and other means; and providing personalized, holistic student support.

In short, improving retention requires investment. In an interview, Grawe mentioned the City University of New York's (CUNY) ASAP program for associate degree students (CUNY also has a similar program for bachelor's degree students). ASAP provides financial aid for tuition, transportation, and textbooks, plus intensive advising and what Grawe called "support that may foster a sense of belonging." CUNY found that ASAP participants had a graduation rate of 53%, more than double historical levels. "They've been hugely successful, nearly doubling associate degree completion rates," Grawe said. "The downside is that the program is full-service, meaning it's very expensive. But if you look at it per degree produced, it doesn't seem so expensive."

However, not every effort requires substantial funding or such comprehensiveness to make an impact. Grawe also cited the University of Southern Maine, which last year saw the most significant improvement in student retention within the University of Maine System, reaching 77.3%, up from a low of 70% four years earlier. The university reversed its retention decline "by focusing on the basic details of student advising," Grawe said. The entire University of Maine System set a record for student return rates last fall. The system partly attributed the increase to "proactive advising," including sending text reminders to students who miss classes or fall behind on assignments, and inviting them to advising or tutoring appointments.

Equity as an 'imperative'

Equity and inclusion play an increasingly important role in retention. The future student population is expected to be more diverse, with WICHE projecting increases in Hispanic and multiracial students. Colleges "were built for privilege," Ambrose said. "If you provide support to reverse these trends, you know what we call it? Equity." He also noted, "Dismantling DEI also dismantles our greatest potential for survival."

Strohl echoed this during the ACE panel discussion, which took place amid the Trump administration's sweeping attacks on diversity, equity, and inclusion programs in higher education. "We've been afraid of the word 'equity,' or scared away from mentioning it," Strohl said. "Now, equity will become an economic imperative for healthy growth in this country, and we need to bring everyone along as we move forward." He went on to explain that educational institutions must find ways to "embrace those who have been left behind"—including minority groups and low-income whites—to meet the skills gap.

Turning to adult students: 'a multi-year process'

Recruiting non-traditional students is another promising possibility, but like improving retention, it requires investment and significant cultural and operational changes in higher education. In Ambrose's view, colleges have historically been "a four-year holding tank that assimilates young people into the workforce." "Our campuses, infrastructure, facilities, schedules, and expected outcomes are still designed to serve 17-to-24-year-olds," he noted.

Reaching older students is not easy, and there's no ready-made playbook. "You can't become an adult-serving institution overnight," Lane said at the ACE event. "This is a multi-year process." Understanding what effectively attracts and retains adult learners is an under-researched topic—making action even more difficult. "We really don't know what works because we don't have really good data," Lane said. "We don't know at the intervention level" what improves adult credit attainment, retention, and college completion.

Grawe expressed the same caution during the panel discussion. "I hear too many institutions respond to the decline in traditional-age students by saying, 'Well, let's pivot to adults'—as if it's a switch." Shifting to attract more non-traditional students means "fundamentally rethinking how we do almost everything," Grawe added. "We need to think about what it means to go to college with children. What does it mean to go to school with a job? These are very different learning environments," he said. "So simply saying 'we're going to go out and tell adults that you're welcome here now, and of course they'll want to be with us,' I think that's very misguided."