As someone who loves skiing, I know and appreciate a good cliff. And as someone who works in higher education consulting, I hear about and discuss the demographic cliff – the fact that the number of high school graduates in the United States is peaking in 2025 – often. In fact, it’s hard to get away from it, considering how many headlines and conference session titles it appears in.
Here are a few samples from the past few months:
Source: The Chronicle of Higher Education
Source: Inside Higher Education
From the look of those visuals, the industry we love is in real trouble, folks; hope we all have our parachutes on! And the coverage it’s getting has an impact – in a recent survey of business school deans, it was voted the #1 threat to the education they deliver.
From my view, however, the “cliff” is exaggerated, and much more of a shallow slope down to where we were than anything else. More importantly, while the decline in U.S. high school graduates is by no means good for higher education, a broader look at various factors suggests that tomorrow’s institutions need not face a worse outlook than those of the past based on this issue alone.
I promise I’ll explain why, but first, let’s talk further about that cliff.
The Demographic Cliff
When there is mention of the demographic cliff, it is often accompanied by a very cliff-like graph. Usually something like this:
Source: Western Interstate Commission for Higher Education
Or if someone is really trying to sell the point hard, they may cut off edges to make it look like this:
You definitely do not want to head down that cliff – you’ll end up way past where you started!
These are accurate representations of the data, to be sure, but they also serve a particular interest by choosing specific start/end dates and axis bounds. It’s the demographic cliff we hear so much about, but it’s only part of the story.
Other Views of the Demographic Cliff
Let’s look at a few other ways to visualize this same data set, to get a different perspective on what is happening here.
First, let’s go back a little bit farther in time to see what that looks like:
Okay then, now we understand that the Class of 2041 – 16 years from now – is about the same size as the Class of 2009, which was 16 years ago. I don’t recall there being significant enrollment concerns across higher education institutions 16 years ago, do you? It actually seemed like a pretty good time to be in the business of higher education.
And one final view, just for fun, now putting the lower axis bound at 0.
Where did that cliff go? The decline is still there, to be sure, but it’s definitely more “slope-like”, and certainly not a black diamond.
Focusing on Supply
So, yes, there will be fewer U.S. high school graduates going forward. That is the demand side of the equation.
Let’s look now at the supply side of the equation to see what has been happening there. Specifically, we want to see how many institutions are even out there today relative to 2009, as options for domestic high school graduates. To eliminate some noise from the data, we looked at only non-profit institutions (public and private, 2-year and 4-year) that average at least 200 enrollments per year.
Source: IPEDS
That is a 5.3% decrease from 2009 to 2023 (yes, I zoomed in for effect – it does help to advance a narrative!). And in case you’re at all worried that we left out for-profits because they don’t support the case, the number of for-profit institutions is down 41% during this period (yikes).
So demand has increased, and supply has decreased over the last 16 years – put that together, and there are way more U.S. high school graduates per higher education institution today than there used to be – over 200 more (+16%).
And importantly for this discussion, in 2041 if there are the same number of higher education institutions as there are today (unlikely; as I’d expect there will be fewer institutions, but that’s a subject for another post), even though the number of high school grads will be similar to 2009, every university would have 5%+ more domestic first-year enrollees relative to 2009 due to the smaller number of competitors. When demand is the same but supply decreases, that’s good news for the suppliers.
Behavioral Factors
So far, we’ve been doing simple counting of things we don’t have much control over – the number of graduates, the number of institutions, and how they are changing. There is a much richer story, however, around consumer behavior that I believe is crucial to understanding why the concern level is so high about the future economics of the industry, and much of it is more influenceable by those in the industry.
I’ll start with where progress has been made within higher education, and that is with six-year college completion rates:
Source: National Student Clearinghouse Research Center
When focusing on driving additional revenue, the first place to look is almost always at college graduation rates, as not only is it bad for the student if they do not complete their degree, but it’s also revenue lost for the institution. There has been progress made here nationally, which is good – no matter how you slice it, six-year graduation rates are up – but there is also clearly more room for growth that would help greatly as high school graduates decline.
Where there hasn’t been as much progress is with convincing domestic high school graduates to go to college at all:
Source: US Bureau of Labor Statistics
This is, I believe, the most concerning number of all. We’re doing a worse and worse job of demonstrating the value of higher education to our high school graduates. And this is not new to 2025 – confidence in higher education has been trending downward for several years, to the point that more high school graduates are opting out than at any time in recent history.
Now I’m going to bring back the demographic “cliff” data through 2023, but add to it the number of domestic high school graduates who have actually matriculated into a non-profit institution upon graduation:
Bullseye. Even while the demographics have been in our favor the past 15 years, domestic high school graduate enrollment growth has not followed. In 2009, there were just over 1 million high school graduates who did not go on to a non-profit higher education institution. In 2024, there were over 1.4 million. That is a lot of lost revenue.
At the ACE Experience Conference earlier this year, a panel was discussing the demographic cliff, and one statement really caught my ear: “If we can increase the matriculation rate from high school graduates to college enrollment by 0.5% each year, that in and of itself would counteract the demographic headwinds.”
And the speaker was right – here’s a look at what would happen if we increased the % of high school graduates enrolling in college after graduation by 0.5% per year until 2041 – it makes us flat-to-up in these enrollments each year relative to the past few. And this is no pipe dream, we ultimately cap at just over 70%, which is where we were not long ago!
So, instead of feeling downtrodden about the forecast and conditions for higher education demographics over the next 10+ years, I suggest:
- We remember that even at the demographic high school graduate nadir 16 years from now, we will STILL have more high school graduates to work with than we had 16 years ago, and less competition (at least among higher education institutions) vying for their enrollment.
- In general, we should be continuously right-sizing our institutions for the future; enrollment and financial growth are not an inevitability, nor do they necessarily need to be the goals we aim for (non-profit higher education is not publicly traded, with stockholders to answer to). Each institution needs sustainability, not growth.
- Instead of investing in adding more student capacity (dorms, classrooms, etc.), let’s make sure we are investing in serving the needs of our current students (to increase graduation rates), as well as our future students (to increase matriculation rates).
- Not expecting international enrollments to save us because if you want to see what a real cliff looks like, look no farther than the 130,000+ fewer international students in the U.S. in March 2025, relative to March 2024 (the actual data has been removed from the government website as far as I can tell, so here is a link to a Chronicle article about it).
These are critical times to be realistic about what the future holds for higher education. No longer can we blindly plug growth numbers in for our institutions, presuming we’ll all get a piece of a growing pie.
That pie is about to start shrinking, but it is not falling off a cliff. Instead, it is rolling slowly but surely down a slope. And not a black diamond, but a green. It still requires a helmet, but with foresight and strategy, we can focus on the right things to make our industry more attractive to its target market, and all emerge safely to see what the next 16 years have in store for us.
I welcome your comments and questions about this analysis and thesis, as well as its implications for your institution, which is how Eduvantis helps its clients. Please feel free to contact me at [email protected].