The study, authored by Boston University economist Dr. Joshua Goodman and Harvard University researcher Joseph Winkelmann, challenges popular narratives that declining college enrollment represents a crisis of confidence in higher education.
"Declining college enrollments in the United States over the past 15 years have sparked widespread concern about the health of the postsecondary education sector," the researchers write. However, their analysis reveals that "the large declines in college enrollment sparking recent higher education discussions is driven not by the four-year sector but instead by the two-year community college sector."
Four-year institutions have actually maintained stable or growing enrollments. Both public and private not-for-profit four-year colleges enrolled more students in fall 2023 than in fall 2010, according to the paper.
In contrast, community college enrollment dropped 37 percent from its 2010 peak of 7.3 million students to 4.6 million in fall 2023, using official statistics. However, the researchers note that over one-third of this apparent decline stems from administrative reclassification rather than actual enrollment changes.
"Over one-third of the apparent decline in community college enrollments is an artifact of some community colleges being reclassified as four-year institutions," the authors explain. Many community colleges began offering limited bachelor's degree programs during this period, prompting the federal Integrated Postsecondary Education Data System (IPEDS) to reclassify them despite most students still pursuing associate degrees.
The study's central finding demonstrates a strong relationship between local unemployment rates and community college enrollment. Using county-level data from 1990 to 2007, the researchers found that "a one percentage point increase in the local unemployment rate increases first-time community college enrollment by approximately 2 percent."
For-profit colleges showed similar countercyclical patterns, while four-year public and private institutions appeared largely insensitive to labor market conditions.
"These patterns suggest that many students view community college and employment as substitute options, enrolling in college when job opportunities are scarce and entering the workforce when labor markets are strong," the authors write.
Applying these pre-recession estimates to subsequent economic conditions, Goodman and Winkelmann calculated that in fall 2019—the last year before the pandemic—over 60 percent of the decline in first-time community college enrollment relative to 2009 was "predictable given substantial improvements in the labor market over that time."
Even accounting for pandemic disruptions, nearly 50 percent of the fall 2023 decline compared to 2009 can be attributed to stronger labor market conditions.
The study also examined degree completion rates and found surprising patterns. Despite enrollment declines, the proportion of 25-year-olds holding associate degrees has remained stable at 8-9 percent since 2010, according to American Community Survey data.
Meanwhile, community college completion rates actually increased during the enrollment decline period, rising from 21 percent for students who started in 2009 to 34 percent for those beginning in 2020.
"Students whose enrollment decisions are sensitive to labor market conditions appear unlikely to complete their degrees," the researchers conclude. "The marginal enrollee here appears highly likely not to persist in college, consistent with their labor market sensitivity."
The researchers acknowledge that declining enrollments create fiscal challenges for community college institutions but argue the findings have important policy implications.
"While declining community college enrollments present challenges for institutional finances and capacity, they may not represent a clear welfare loss for the students on the margin between enrollment and employment, particularly given their low probability of degree completion," they write.
The study suggests that much of the decline "reflects potentially rational economic decision-making rather than institutional failure."
For-profit college enrollment also peaked in 2010 at 1.8 million students before dropping over 50 percent by fall 2023. Labor market conditions explained a smaller portion of this decline compared to community colleges, likely because increased regulatory scrutiny during the Obama administration also contributed to enrollment reductions.
The paper notes limitations, including that county-level unemployment rates may not perfectly capture labor market opportunities for specific demographic subgroups, and that the analysis does not address wages or longer-term career outcomes.
The COVID-19 pandemic added new complexity to enrollment trends, with particularly sharp community college declines in 2020-2021 that the authors note deserve continued study.
