How a looming economic slump could upend higher ed’s playbook

A recession would likely further segregate higher ed but could also drive reform, expert says.

Recessions typically raise enrollment but the aftereffects of the pandemic are injecting yet more uncertainty into how hard the expected economic slowdown will hit higher education.

COVID has not only driven enrollment down for five semesters in a row, but it has also made high school graduates even more skeptical of the value of a college degree than they were prior to the pandemic when enrollment numbers were already beginning to drop, says Lynn Pasquerella, president of the American Association of Colleges and Universities.

“Since COVID, trends have been upended,” Pasquerella says.

What will remain typical if a recession hits is that states will surely cut higher ed funding, adds Thomas L. Harnisch, vice president for government relations at the State Higher Education Executive Officers Association. “Institutions will have fewer resources and there will be a lot of pressure to hold the line on tuition,” Harnisch says. “You want to do everything you can to make college affordable during challenging times.”

Preparing for recession

During the Great Recession, there were both steep funding cutbacks and tuition increases. Programs and campus services were eliminated and access was reduced as a substantial number of admitted students weren’t able to enroll, Harnisch points out. “Community colleges are highly sensitive to changes in the macroeconomy,” he says. “If we go into a deep recession with increased unemployment, we’ll see more people going to community colleges to upskill and pursue new opportunities in the workforce.”

Despite all the uncertainty, college and universities are girding for recession with some of the same strategies they’ve been pursuing to combat a host of financial pressures. Some institutions are developing fast-track master’s programs to make it easier for students to stay in school and add to their bachelor’s degrees. Others have partnered with businesses and industries to set up shorter-term programs that allow students to earn credentials for “immediate employability,” Pasquerella explains. 

In Connecticut, for example, Sacred Heart University has created a brewing science program with a local craft beer brewery. Nearby, Eastern Connecticut State University began offering a cannabis marketing and management minor shortly after the state legalized recreational marijuana in 2021. And residential colleges and universities are working to develop hybrid versions of the accelerated, low-cost—and heavily marketed—degree programs available from schools such as Southern New Hampshire University and Western Governor’s University.

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Colleges looking at alternative sources of revenue are leveraging their physical facilities to host outside training programs, community events and youth sports camps, among other activities. Administrators are also anticipating that international students—and the full-price tuition they typically pay—will return with the pandemic easing and certain Trump-era policies repealed.

“There’s a growing mistrust in higher education, and liberal education in particular, that colleges and universities exist within the ivory tower, willfully disconnected from the practical matters of everyday life,” Pasquerella says. “We need to make visible the transformative power of a college education, not only economically, but the ways in which it helps people to be engaged citizens and flourish as members of their communities.”

No recession relief?

And here’s another way the expected economic slowdown will look different from past recessions: Higher ed leaders may not be able to rely on relief from the federal government considering the multiple rounds of stimulus provided during the pandemic. “If there is a deep recession like we had in 2008, because of the spending that occurred during COVID and potential changes on Capitol Hill after the election,” Harnisch warns, “the chance of the federal government helping out states could be much lower.”

Selective colleges are most likely to weather an economic storm because the number of households in which both parents have bachelor’s degrees is growing, meaning those families can afford to enroll in those higher-priced institutions, says Anthony Carnevale, director of the Georgetown University Center on Education and the Workforce. And regardless of whether there is a federal relief package, public colleges and universities will enjoy a level of protection because legislators, regardless of their party affiliation, are unlikely to let a public school shut down.

Less selective four-year private schools will face the greatest risk, as they don’t offer high-prestige programs or the types of training and skill programs that become popular during times of economic turmoil, he adds. Further clouding the outlook is that the infrastructure bill passed by the Biden Administration will provide short-term jobs to adults who, in a more typical recession, would be more likely to enroll in college to gain new job skills.

These divergent forces may further segregate higher education between students who can afford the more traditional liberal education and students who will rely on post-secondary training programs to find gainful employment more quickly. Consequently, lawmakers from both aisles are likely to push for more transparency around employment and earnings outcomes for every degree program offered across higher ed, Carnevale says.

“This is probably going to be the most complicated decade that higher education has seen since the 1980s,” he concludes. “It will sort out institutions and it will drive a lot of reform.”

Matt Zalaznick
Matt Zalaznick
Matt Zalaznick is the managing editor of University Business and a life-long journalist. Prior to writing for University Business, he worked in daily news all over the country, from the NYC suburbs to the Rocky Mountains, Silicon Valley and the U.S. Virgin Islands. He's also in a band.

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