Key Points:
- U.S. college enrollment decline is driving financial strain.
- Smaller colleges are most vulnerable.
- Adaptation through mergers or cost cuts is key.
As the fall semester begins, many U.S. colleges and universities are confronting a growing financial crisis, driven by declining enrollment and rising operating costs. Experts warn that closures and mergers could accelerate “at a pace we haven’t seen since the Great Recession,” according to Ted Mitchell, president of the American Council on Education.
Enrollment Pressures Mount
The higher education sector has been dealing with shrinking numbers of college-age students, a phenomenon often referred to as the “demographic cliff.” With fewer high school graduates entering college, institutions are seeing reductions in tuition revenue. This has intensified the ongoing U.S. college enrollment decline, creating serious financial strain for schools across the country.
International students, who historically contribute billions of dollars in tuition and living expenses, have also seen declining enrollment. Preliminary projections suggest that the U.S. may see as many as 150,000 fewer international students for the 2025–26 academic year, representing a 30%–40% drop in new enrollments from abroad and a 15% decline in total international student enrollment. NAFSA: Association of International Educators estimates this could result in nearly $7 billion in lost economic impact.
At Drew University in Madison, N.J., approximately one-third of new international students either deferred or withdrew this semester, highlighting the effects on smaller institutions where such enrollments form a significant portion of total students. Hilary Link, Drew’s president, noted that international students account for 14% of the university’s 2,200 students.
Financial Impact on Colleges
Although international students make up less than 6% of the total U.S. higher education population, their tuition often supports scholarships and financial aid for domestic students. Ted Mitchell explained that full-paying international students fund aid for other students, making their enrollment critical to maintaining educational programs and support services.
In the 2024–25 academic year, international students contributed $46.1 billion to the U.S. economy through tuition and living expenses, underscoring the broader financial implications of the U.S. college enrollment decline. For institutions, fewer students and lower revenue translate to constrained resources for faculty, academic programs, and student services.
Which Institutions Are Most Vulnerable?
Experts suggest that financial pressures affect institutions differently. Top-tier colleges, with large endowments and strong applicant pipelines, remain largely insulated from enrollment shocks. Harvard University, for example, recently secured $2.2 billion in grant funds, reinforcing its financial stability. Elite universities can consistently fill their classes and maintain revenue streams despite fluctuations in student populations, insulating them from the worst effects of the U.S. college enrollment decline.
Conversely, smaller and financially vulnerable institutions face greater risk. With limited endowments and lower overall enrollment, any decline in student numbers can quickly threaten sustainability. Jamie Beaton, CEO of Crimson Education, described this disparity as “a tale of two worlds,” emphasizing that mid-sized and smaller colleges are far more exposed to financial instability.
The Road Ahead
The combination of declining domestic and international enrollments, rising operating costs, and restrictions on tuition growth creates a challenging environment for higher education. Colleges are under pressure to adapt their financial strategies, optimize resources, and explore partnerships or mergers to remain viable.
As U.S. college enrollment decline trends continue to shift, institutions must carefully balance costs with revenue while ensuring quality education and student support. For many schools, the current climate represents a critical inflection point that could shape the landscape of U.S. higher education for years to come.