Understanding the IT Implications of the Enrollment Cliff

The enrollment cliff refers to the projected significant decrease in enrollment—particularly among traditional undergraduate students—at higher education institutions in the United States. The term "enrollment cliff" refers to a sudden drop-off in college-age individuals. It is expected to occur after 2025 or 2026.^Footnote1

Several factors contribute to this decline, including decreasing birth rates, increasing tuition costs, and a strong job market that may incentivize young people to enter the workforce instead of pursuing higher education.

The COVID-19 pandemic also contributed to the enrollment cliff, as it disrupted many traditional educational models and raised concerns about the value of higher education. This decline in enrollment poses a significant financial challenge for colleges and universities that rely on tuition revenue. The risk of closure and consolidation is very real.

A Growing Trend of Cuts and Consolidations

A decline in enrollment can impact academic quality if the reduction in revenue leads to cuts in programs, faculty, and student services. For example, the University of Kansas recently announced a plan to cut forty-two programs.^Footnote2 State support per student at colleges and universities has declined from $7,518 in 2000 to $6,671 in 2021 when adjusted for inflation.^Footnote3

Mergers and closures are trending upward. Since 2016, eighty-eight institutions in the United States have either closed or merged. Although the rate of mergers and closures slowed slightly during the pandemic, it began to speed up again in 2023. The rise is likely due to the end of pandemic relief funding, which supported struggling institutions. Small private universities are more likely to close because they are unlikely to meet the merger needs of colleges or universities looking to expand. Public colleges and universities are more likely to face mergers at the state level, such as in Connecticut, Maine, and New Hampshire.^Footnote4

Higher Education Strategic Responses to the Enrollment Cliff

Institutional responses include the following:

1. Increasing marketing and recruitment efforts

   This can include targeted advertising campaigns, social media outreach, and more personalized interactions with prospective students. Example IT implications include implementing a CRM to maximize recruitment efforts.

2. Expanding course offerings

   To attract more non-traditional students, institutions need to develop flexible academic programs and offer new credentials, including microcredentials and stackable credentials. Example IT implications include delivering a flexible student information system to meet the changing needs of students.

3. Investing in student support services

   Investing in student support services can help retain current students and attract new ones. These services include mental health services, academic advising, and career counseling. Example IT implications include building a student success platform to support advising.

4. Offering more financial aid and scholarships

   Making college more affordable requires fundraising and easy access to existing funds. Example IT implications include creating a student portal that integrates with the financial aid system.

5. Collaborating with other colleges and universities

   Joint degree programs and transfer agreements may attract more students. Example IT implications include creating strong data governance to support cooperation between institutions.

IT Organization Strategic Response

Beyond the examples mentioned above, IT organizations need to develop a strategic approach to support institutional responses to the enrollment cliff. Reducing vendor spending with strategic vendor management, developing greater centralization by decreasing duplication between central and distributed IT departments and creating shared services between institutions will help. Managing IT budgets and costs by focusing on IT projects as prioritized investments with a return on value to the institution will position IT professionals as strategic leaders.

Three approaches can aid in strategic prioritization. The first is completing an analysis to assess the effect of external political, economic, social, technological, legal, and environmental factors (PESTLE analysis). The second is conducting stakeholder interviews using the PESTLE outcomes to reveal the primary stakeholders' objectives with respect to IT priorities. Finally, the third approach is applying Porter's Five Forces model to determine the competitive forces in higher education and prioritize strategic objectives.

Complete a Higher Education PESTLE Analysis

The following questions can help higher education technology professionals direct their analysis for each key topic.

Political

• Will a change in government affect the institutional funding model?
• How do international relations affect the student pipeline?
• How do government policies impact institutional priorities?

Economic

• Are there changes to financial aid structures?
• Will the demand for certain programs change in response to the job outlook in the wider economy?
• What are the cost trends (salary requirements, requirements of digitally dependent generation, funding changes, etc.)?

Social

• Have student demographics changed? Have their attitudes toward technology and social media changed? Have students' requirements for information access changed?
• What are faculty and administrators' attitudes toward work and collaboration? What are their attitudes toward staffing availability, technology demands, and research priorities?

Technological

• How does online learning affect IT staff, especially considering the changes brought about by COVID-19?
• What is the state of students' records (security, storage, structure, etc.)?
• What hardware upgrades and discontinuations are planned (removing student labs, upgrades to labs, etc.)?

Legal

• Are there increased regulations concerning data privacy or auditability?
• Are there changes to specific education-related regulations (Higher Education Act, Pell Grant, etc.)?

Environmental

• Are there paper records that must be transferred?
• Are there sustainable campuses?
• Does the institution plan to "go lean"?

Conduct Stakeholder Interviews to Discover Priorities

After completing the PESTLE analysis, identify the stakeholders responsible for the strategic direction of the institution (e.g., president, provost, registrar, VP of finance, VP of enrollment, or VP of student affairs) and interview them to understand their priorities. The list of questions below can be modified and expanded based on the specific institutional context and the results of the PESTLE analysis. In addition to the questions above, think of any other relevant questions, conduct the interviews, and document the key findings.

Here are some example questions for stakeholder interviews:

• What are the broad business goals of the institution (e.g., expanding to new demographics, new programs, or increased collaboration between departments)?
• Who is the target market for enrollment? What are their needs?
• What is the academic program portfolio of the institution? Why is it constructed this way? Is it changing?
• What is the institution's competitive advantage? What does each part of the institution do to reinforce or protect this competitive advantage?
• What capabilities is the institution trying to enable to compete effectively compete?
• What are the strategies of each major function in the institution (e.g., marketing, sales)? What are the data and communication implications of these strategies?
• What key projects is the institution working on?
• Are there relationships between various institutional projects, capabilities, and goals (e.g., project X enables capability Y, which supports goal Z)?
• What are the implications of institutional policies on IT decision-making?
• What are the decision-making bodies of the institution and the types of decisions they make?
• Is there documentation for critical institutional business processes?
• What is happening in terms of mergers and acquisitions activity? Why are these activities occurring?

Apply Porter's Five Forces to Assess Competitive Position

Michael Porter's seminal research on competitive industry analysis can be applied to higher education. The following five forces can be used as a framework to align IT initiatives with the competitive strategy of the institution.^Footnote5

Power of students: From a strategic enrollment perspective, what are the student demographics (domestic, international, ethnicity, age, population)?

Power of suppliers: From a faculty and facilities perspective, what faculty does the institution want to attract and how should IT professionals support them? What infrastructure is required to support the institution's strategy?

Threat of new entrants: How is the institution competing with Big Tech in terms of offering work-to-train positions? How does the institution compete with massive online universities?

Threat of substitution: What degree alternatives exist? How is the institution addressing alternatives to the certifications it offers? Associate degrees? Technical certifications? Employer-sponsored education pathways?

Competitive rivalry: Too many have with declining enrollments, and flagship schools are attracting students.^Footnote6 How is the institution developing its brand to distinguish itself from other institutions?

Stakeholder interview responses can be used to inform the discussion of the Five Forces framework. First, identify the initiatives the institution is undertaking to address each factor and review the implications for IT support. Then, update the IT strategy using the abovementioned initiatives and use the input to reassess project priorities as needed.

Recommendations

The enrollment cliff is bringing dramatic changes to higher education. New competitive realities will inevitably change the collegial nature of higher education.

Notes

1. Missy Cline, "The Looming Higher Ed Enrollment Cliff," CUPA-HR, fall 2019. Jump back to footnote 1 in the text.↩
2. Josh Moody, "University of Kansas Looks to Cut 42 Academic Programs," Inside Higher Ed, February 17, 2022. Jump back to footnote 2 in the text.↩
3. National Science Board, "State Support for Higher Education per Full-Time Equivalent Student," Science and Engineering Indicators: State Indicators," National Science Foundation (website), accessed November 28, 2023. Jump back to footnote 3 in the text.↩
4. Lee Gardner, "More States Turn to Public-College Mergers, but Easy Fixes May Remain Elusive," The Chronicle of Higher Education, February 24, 2021. Jump back to footnote 4 in the text.↩
5. "The Five Forces," Institute for Strategy & Competitiveness, Harvard Business School, accessed November 21, 2023. Jump back to footnote 5 in the text.↩
6. Lee Gardner, "Flagships Prosper While Regionals Suffer," The Chronicle of Higher Education, February 23, 2023. Jump back to footnote 6 in the text.↩