How Student Housing Players Can Survive the Impending Enrollment Cliff

It’s not pretty, but it’s coming. And whether it’s called an enrollment cliff or a demographic storm, the world of higher education is going to see significant change in the next seven years.

Something we’ve already mentioned in our Student Housing Megatrends article, colleges, universities, and the players who support them are in for a whirlwind of change as the fallout from the Great Recession turns 18.

But how big is it, how will it change recruiting, and what should key players in the student housing world know before they break ground? We hope to answer this and more below.
 

“A Demographic Storm”

Nathan D. Grawe, Professor of Economics at Carleton College highlights this in his 2018 book, Demographics and The Demand for Higher Education. In the abstract, he notes,

“Decades-long patterns in fertility, migration, and immigration persistently nudge the country toward the Hispanic Southwest. As a result, the Northeast and Midwest—traditional higher education strongholds—expect to lose 5 percent of their college-aged populations between [2018] and the mid-2020s.

Furthermore, and in response to the Great Recession, child-bearing has plummeted. In 2026, when the front edge of this birth dearth reaches college campuses, the number of college-aged students will drop almost 15 percent in just 5 years.”

Expecting a significant drop through the late 2020s, Grawe’s research predicts big wins for the South and West as populations boomed throughout the past two decades.

Historic Precedent to Unprecedented Shifts

But it’s not simply a demographic storm set to hit colleges, universities, and others who serve this market. After all, Grawe’s book was based strictly on the birth rates and movement patterns—before 2020.

2020 was, in the words of economists, a black swan event. Predictions normally based in economic and demographic reality don’t exactly work. Why? His predictions don’t account for the significant movement that occurred in the past two years.

Unpredictable Migration

Remote work policies allowed parents to move into bigger and more family-friendly homes. Questionable school policies drove parents to seek alternatives. Pandemic mismanagement drove migration. Skyrocketing crime made raising a family unsafe.

So, instead of a consistent population drain in certain states, 2020 and 2021 caused an exodus—especially among families.

Some Trends Shifted, Others Reversed

What does this mean? For some states, the trends are exacerbated. Illinois (-30%) and New York (-23.8%) are already losing enrollees. Before residents left en masse. Texas (4.5%) and Utah (9.0%) expected enrollment growth. But between July 2020 and 2021, those states took on significant population.

But for others, the pandemic could have reversed course. Grawe predicted a slight decline in enrollees in Florida at 3.2%. But this was before the state became a safe haven for parents seeking quality, in-person education throughout the pandemic. Now, it seems like one of the hottest markets for development.

And for other states, the numbers could be even more vague. California has always been a destination for in-state and out-of-state students, and Grawe expected a 10.1% increase in enrollment by 2029. But will this continue in the wake of accelerating outmigration? It’s certainly something to watch.

Looking Forward: Making the Most of the Enrollment Cliff

Whether the pandemic upended Grawe’s predictions, slightly changed the trajectory, or ultimately turns out to be a nothingburger, those in the bigger higher education sector need to watch closely. Especially for developers who need to break ground now to account for future residents, picking the right spot will be a challenge. This leaves a few options—ramp up in hot markets or outcompete in others.

Follow the Population

This makes for two key questions: where did families go and where will students enroll? As mentioned in an article on Volt, nearly all students enroll at a college within 500 miles of home. Could this change for students wanting to return to the state they grew up in? Maybe. But with in-state tuition rates, many of the biggest population gainers in 2020-22 will probably have the biggest enrollment boosts in 2025-29.

Added to this, early data can help make the second question easier to answer. And this can be found in the top application destinations today. Looking at National Center for Education Statistics data on applications between 2015 and 2020, you’ll see some marked differences. Some of the most popular destinations with 10,000+ students are as follows:

• Nova Southeastern University (Fort Lauderdale, FL): +216.8%, 6^th
• North Carolina A&T State University (Greensboro, NC): +172.3%, 12^th
• Central Washington University (Ellensburg, WA): +168.8%, 13^th
• Regent University (Virginia Beach, VA): +142.5%, 19^th
• Long Island University (Brookville, NY) +125.1%, 28^th
• Florida State University (Tallahassee, FL) +113.5%, 36th overall.
  • Note: Received 63,691 applications in 2020.
• Arizona State University Campus Immersion (Tempe, AZ): +88.4%, 39^th

Create the Destination

Of course, there are alternatives to simply pinning a multimillion project to population and preference. Even if you’re not building for the hottest campus, you can still outmaneuver the competition. After all, many students want to make their college experience special—and will apply their housing dollars to get it.

For a student housing developer, one of the best ways to outcompete others is to do something special. For example, Core Spaces’ upcoming project at Clemson University looks to be something incredible.

Already known for its rooftop pools and amenities, the 1,400 bed, 140-acre development in Seneca, South Carolina looks to create the key destination for students. Pair this with astounding work at campuses like University of Illinois Urbana-Champaign, University of Southern California, and more, and this developer has created the go-to space for students.

Or Both?

However, the best option combines statistics with art to dominate the market. If a college or university expects growth, it’s best to strike while the iron is hot. The biggest wins come from developers who can get in before the bidding wars start—and then use the savings to create an unforgettable experience.

Again, looking toward Core Spaces, the developer’s Tampa location opened in 2022 and will cater to the needs of students for years or decades to come.

You Build It, We Make It Special—Morgan Li: More Than Made

When it’s gotta be done the right way, on-time and on-budget, look no further than the team at Morgan Li. With 80 years of experience transforming spaces for clients, we know what it takes to get the job done. Domestic or international, our custom furniture manufacturing capabilities transform ideas into reality.

Pair this custom manufacturing expertise with our extensive distribution skills, inventory management, and installation partnerships, and you can rest easy knowing that your hospitality-grade furniture is ready for move-in.

Get to know more about us, our work in the student living world, and our process, and when you’re ready to learn more, contact us or fill out the form below to learn more.