Is the Higher Education Industry Collapsing? A Deep Analysis in The Crisis
Nov 13, 2025
Nov 13, 2025
Summary
Higher education faces a severe crisis, with undergraduate enrollment down nearly 15% since 2010 and an impending "enrollment cliff" set to begin in 2025.
This downturn is driven by plummeting public trust, a mismatch with labor market needs that leaves 52% of recent graduates underemployed, and disruption from online learning.
To survive, institutions must innovate by aligning programs with employer demands, embracing new delivery models, and diversifying recruitment beyond traditional high school graduates.
AI-powered tools like Havana can help institutions scale outreach to new student populations, turning a demographic challenge into a growth opportunity.
You've spent your career in higher education, building programs, recruiting students, and guiding your institution through challenges. Yet lately, every headline seems to prophesy doom: plummeting enrollments, campus closures, eroding public trust, and technological disruptions threatening the very foundations of your industry.
The once-steady flow of applicants has slowed to a trickle. Parents and students increasingly question whether a degree is worth the investment. Tech companies are creating their own credentials, bypassing universities entirely. And demographic projections show fewer college-aged students in the pipeline each year.
Is higher education truly facing an existential crisis? Are we witnessing the beginning of a collapse, or simply a painful but necessary transformation?
This analysis examines the converging forces reshaping higher education to help institutional leaders understand the depth of the challenges, recognize the urgency of adaptation, and identify strategic opportunities amid the turmoil.
The Numbers Don't Lie: A Decade of Decline and the Looming Enrollment Cliff
For decades, American higher education enjoyed steady growth. Undergraduate enrollment climbed approximately 2.2% annually from 1985 to 2010, peaking at roughly 18 million students. This growth reflected a widely shared belief in the necessity of a college degree for economic success and upward mobility.
Then everything changed.
Between 2010 and 2022, undergraduate enrollment fell by nearly 15%, erasing years of gains and leaving total enrollment about 14.8% below the 2010 high. The COVID-19 pandemic accelerated this decline dramatically – between fall 2019 and fall 2022 alone, U.S. colleges lost over a million students, as many postponed or abandoned college plans amid the disruption.
The most alarming aspect of this trend? The worst may be yet to come.
Demographic data reveals that birth rates plummeted after the 2007-09 recession, creating what experts call an "enrollment cliff" beginning around 2025, when this smaller cohort reaches college age. In other words, the pool of traditional college-aged students is about to shrink even further, threatening to turn today's enrollment challenges into tomorrow's existential crisis for many institutions.
There is a glimmer of hope in recent data. In fall 2023, college enrollment inched up for the first time since the pandemic, growing by about 1.2% over the prior year. However, as Doug Shapiro of the National Student Clearinghouse Research Center noted, this "small uptick" must be viewed in context: "There are still over a million empty seats on campuses today that were filled five years ago."
Even more telling is where this modest growth occurred. Community colleges saw the strongest rebound (+2.6%), while four-year universities experienced smaller increases (~0.6%). The type of programs gaining the most traction reveals a significant shift in student preferences:
Associate degree program enrollment rose 2.2% in 2023 – the first growth for two-year programs since at least 2015
Undergraduate certificate programs have seen three consecutive years of growth
Community colleges with a strong vocational focus saw a stunning 16% enrollment jump
These patterns suggest students are increasingly seeking shorter, career-aligned pathways rather than traditional four-year degrees – a rational response to rising costs and uncertain returns on investment.
Meanwhile, graduate enrollment – which had been a bright spot earlier in the pandemic – has softened. After an initial surge during the 2020 economic slowdown, graduate student numbers slipped in 2022 and only edged up 0.6% in 2023. This stagnation indicates the enrollment challenges aren't confined to undergraduates; even advanced programs are feeling the strain as fewer students feed the pipeline.
The financial consequences of these enrollment trends have already been severe. Dozens of U.S. colleges have closed or merged in recent years due to financial troubles tied to declining enrollment. Those most at risk are small private colleges and regional public campuses in areas with falling youth populations. The industry is essentially in a race to adapt – by recruiting more nontraditional students, expanding online programs, and finding new revenue sources – before the demographic reality hits full force.
The Digital Disruption: Online Learning and the AI Revolution
While physical campuses struggle with empty seats, virtual classrooms are burgeoning. The pandemic accelerated a digital transformation that was already underway, permanently altering how education is delivered and consumed.
In 2022, more than half of U.S. college students (54%) took at least one class online, and over one in four students (26%) studied exclusively online, according to BestColleges' analysis of federal data. Before 2020, only a minority of college students had any online courses; now a majority do. This shift is not merely a temporary pandemic response – online enrollment remains far above pre-2020 levels, indicating a lasting change in student preferences.
Institutions recognize this reality. A recent survey found 47% of college administrators plan to increase investment in online programs in the coming year, with virtually none intending to cut online offerings. There's good reason for this strategic focus: online courses attract working adults, parents, and other nontraditional learners who might never enroll in a campus-based program. In one poll, 68% of online college students were employed while studying and 95% had children at home, underscoring the appeal of flexible formats.
However, traditional colleges now face intense competition in the online space from both established players and new entrants. Massive Open Online Courses (MOOCs) on platforms like Coursera and edX have exploded from 300,000 learners in 2011 to 220 million by 2021. These platforms, along with coding bootcamps and corporate certificate programs, offer targeted skills training that undercuts the monopoly universities once held on advanced learning.
Tech giants have further disrupted the landscape by creating their own credentials. Companies like Google and IBM now offer career certificates and hire based on skills rather than degrees, challenging the notion that a college diploma is the only ticket to a good job. This "unbundling" of education – where students can pick up credentials à la carte online – pressures colleges to prove the added value of a multi-year degree.
The newest disruptive force is artificial intelligence. The rise of generative AI tools like ChatGPT is transforming how students learn and how educators teach. AI can now tutor students one-on-one, generate practice problems, and even grade essays. Some universities are cautiously piloting AI teaching assistants, while students increasingly use AI tools for help with assignments.
The impact of AI is twofold:
It enables more personalized, self-paced learning outside the traditional classroom
It forces educators to rethink curricula and assessment methods that AI can easily circumvent
Simultaneously, demand for AI-related knowledge is booming. Business schools report that enrollment in courses on generative AI surged by over 500% in just one year. Colleges are racing to create new programs in data science, machine learning, and AI ethics to meet student and industry interest.
This digital revolution raises existential questions for traditional institutions: If cutting-edge job skills can be learned through an online course or interactive AI tutor at a fraction of college tuition, how will brick-and-mortar universities justify their costs? The competitive advantage of geographic proximity has evaporated as students can now enroll in programs from anywhere in the world. A student in rural America can take courses from prestigious universities without leaving home – or choose alternatives that don't involve traditional higher education at all.
The Crisis of Confidence: Declining Public Trust in the Value of a Degree
Perhaps the most troubling trend for university leaders is the precipitous decline in public trust. Americans have grown increasingly skeptical that a college education is worth the cost or aligned with societal needs.
According to a Gallup poll released in 2023, only 36% of U.S. adults say they have "a great deal" or "quite a lot" of confidence in higher education – an all-time low, plummeting from 57% just eight years earlier. This erosion of trust spans all demographics – young and old, college graduates and non-graduates, Democrats and Republicans – though it is most pronounced among Republicans, where confidence fell to a scant 19%.
"Higher education has really been losing ground with every major constituency," observed Zach Hrynowski, a Gallup education researcher. "It would follow that folks would stop engaging with that institution and enrolling... And we've seen that."
Public opinion on the importance of a degree for success has likewise turned ambivalent. A Pew Research Center survey found only 25% of Americans now believe a four-year college degree is "extremely or very important" to get a well-paying job. A plurality – 40% – said a degree is "not too important" or "not at all important" for economic success today.
This marks a sea change from past decades: as recently as 2013, 70% of Americans called college very important. By 2019 that had slipped to just over half, and now it's down to roughly a third. Those saying college is "not too important" jumped from only 4% in 2010 to 24% now.
The skepticism largely stems from concerns about return on investment. With student debt exceeding $1.7 trillion nationally and tuition outpacing inflation for years, many Americans aren't convinced that the payoff justifies the price tag. In the Pew survey:
Only 22% of adults agreed that the cost of a four-year degree is worth it "even if someone has to take out loans"
Nearly half (47%) said college is worth the money only if no loans are needed
29% flatly said the cost is not worth it in today's economy
Even among college graduates themselves, barely one-third believe that taking on debt for college was a worthwhile investment. These findings reflect real anxieties about graduates burdened with tens of thousands in loans, struggling to find high-paying jobs in their field.
Another factor eroding trust is the perception that universities are disconnected from practical reality or mired in ideological battles. Some Americans – particularly conservatives – view campuses as promoting political agendas or lacking intellectual diversity. Simultaneously, a growing chorus across the political spectrum questions whether colleges are teaching the skills needed in today's job market.
It's not all bad news – other surveys indicate Americans still acknowledge certain positives. Majorities agree that higher education contributes to scientific advances and the public good, and most support public funding for colleges. But those abstract positives aren't alleviating individual worries about cost and career payoffs. Trust in the institution of higher education is now markedly lower than trust in the military, small business, or even the police.
This reputational damage poses a serious challenge: colleges depend on public goodwill for student enrollment, government funding, and philanthropy. If faith in the enterprise continues to falter, the entire financing model of U.S. higher education – which relies on people believing in the long-term value of a degree – could be at risk.
The Great Misalignment: Degrees Offered vs. Labor Market Needs
One of the most damaging criticisms levied at universities is that they aren't keeping pace with the changing job market. Employers increasingly report a "skills gap" where they struggle to find workers with specific abilities needed, even as millions of degree-holders work in jobs that don't require their education.
Consider the sobering outcomes for recent graduates: According to a report by the Strada and Burning Glass Institutes, 52% of bachelor's degree graduates are "underemployed" in jobs that typically do not require a four-year degree within a year of finishing school. Even a decade later, 45% remain underemployed. Most striking, fully 88% of those underemployed graduates are in jobs that require only a high school diploma or less.
These figures paint a stark picture: universities are graduating large numbers of people into an economy that does not have college-level positions for them, or perhaps into roles where their specific degrees didn't align with available opportunities. As the report's authors noted, "The large number of underemployed individuals demonstrates a mismatch between the graduates coming out of college and the skills and experience employers seek."
From the employer side, there's a movement toward skills-based hiring as a response to this mismatch. Many companies, especially in tech, have realized that a diploma is not the only proxy for ability. A Harvard Business School study termed it a "degree reset": between 2017 and 2019, 46% of middle-skill jobs and 31% of high-skill jobs dropped or relaxed their degree requirements in job postings.
Major firms like Google, IBM, and Apple have publicly shifted to valuing demonstrated skills and portfolios over formal education in certain roles. Analysts predict that if this trajectory persists, as many as 1.4 million jobs in the next five years could open up to non-degree holders that previously would have required college. The implication is profound: employers are saying a degree alone isn't enough – or even necessary – for many careers.
Part of the disconnect lies in what students study versus where jobs are growing. Universities continue to mint large numbers of graduates in fields like communications, general liberal arts, or psychology, where the direct job pipelines are limited. Meanwhile, there are shortages in areas like nursing, software development, and skilled trades.
A Georgetown University Center on Education and the Workforce analysis highlighted this "great misalignment" at the sub-baccalaureate level: in fully half of U.S. labor markets, at least 50% of the certificates and associate degrees awarded would need to shift fields of study to match actual job openings projected. More than one-quarter of all middle-skill credentials (associate degrees/certificates) granted in the U.S. have no direct occupational match in the job market (e.g., liberal arts programs).
Among those graduates in non-occupational fields, only 42% successfully transfer to complete a bachelor's, leaving a huge number with a credential that doesn't slot into a career path. These individuals often struggle to find good-paying work, even as industries complain they can't find workers with relevant training.
Universities are beginning to respond by realigning curricula and enhancing career services. There's greater emphasis on internships (notably, students who complete internships have a 48.5% lower chance of post-college underemployment), co-ops, and experiential learning to ensure graduates have applicable skills. Some institutions are pruning low-demand majors and investing in programs aligned with high-demand fields like cybersecurity, data analytics, and healthcare.
The rise of alternative credential programs also speaks to this gap. Non-degree programs such as coding bootcamps, tech sales certificates, or digital marketing courses have proliferated precisely because traditional degrees weren't supplying job-ready skills fast enough. In one survey, nearly 1 in 3 Americans said that nondegree credential programs (like professional certificates or trade apprenticeships) provided more value than a college degree.
The job market is sending a clear signal: the focus is shifting from "What credential do you have?" to "What can you do?" Universities that adapt by ensuring their degrees impart in-demand skills (and by better signaling those skills to employers) will fare best. Those that don't may see their graduates and reputations suffer in the employment arena.
A Global Perspective: Is the Crisis Universal?
While the challenges facing U.S. higher education are severe, a global perspective reveals a more nuanced picture. Around the world, universities are contending with many of the same forces – demographic change, technological disruption, and questions of value – albeit in varying ways.
Surprisingly, global enrollment has actually been rising, driven by developing regions. UNESCO data shows that the number of students in higher education worldwide hit a record 264 million in recent years, up 25 million from 2020. This growth comes primarily from Asia and Africa, where expanding populations and increasing access to education are sending more young people to college. Women now outnumber men in tertiary education worldwide (113 women enrolled per 100 men).
However, this growth is uneven. Europe presents a mixed tableau:
Western and Northern European nations have generally maintained or grown enrollments modestly
Eastern and Southern European countries face declines due to aging populations
More than one-third of European countries saw a decrease in tertiary enrollments from 2016 to 2021
The UK just recorded its first enrollment dip in a decade in 2023, a 1.1% drop partly due to fewer EU students post-Brexit
East Asian education powerhouses are confronting the demographic cliff head-on. In Japan, a government task force warned that by 2040 the number of college freshmen could fall to just 510,000, down from 630,000 in 2023. Already over half of Japan's private universities are struggling to meet enrollment targets, especially in rural areas. The Japanese government is urging universities to broaden recruitment beyond traditional 18-year-olds or face an "unprecedented crisis" where whole regions might end up with no local universities at all.
China and India present contrasting challenges. China has massively expanded its higher education system and now graduates over 11 million university students annually – expected to rise to 12.2 million in 2024. This flood of graduates has raised concerns about underemployment, with youth unemployment hitting 21.3% in mid-2023. China's dilemma is almost the mirror image of America's – rather than too few students, China has so many college graduates that the economy can't absorb them all in high-skilled jobs.
India, conversely, is in expansion mode. With a growing young population, India aims to increase its gross enrollment ratio from around 27% to 50% by 2035. This involves creating new universities and colleges, embracing online education, and allowing foreign universities to operate in India. However, like in many countries, quality and graduate employability remain major challenges.
Latin America experienced a vast expansion of higher education in the 2000s but now faces a period of reckoning. Countries like Brazil, Mexico, and Chile dramatically grew college enrollment with new public universities and a boom in private institutions. A notable feature is the prominence of private providers: about 54% of higher education students in Latin America are enrolled in private institutions, the highest share for any world region. With economic stagnation and tighter government budgets, growth has tapered off, and the focus has shifted to improving completion rates and ensuring graduates have skills aligned with labor market needs.
Africa represents perhaps the starkest contrast to the U.S. situation. Sub-Saharan Africa still has the lowest higher education enrollment rate (around 9% gross enrollment), but demand is skyrocketing due to a booming youth population. Universities there face overcrowding and limited funding – essentially the inverse of Japan's problem: too many prospective students and not enough seats or resources.
This global perspective reveals that the phrase "higher education industry collapse" is too sweeping. Many countries are still expanding their collegiate systems. But virtually everywhere, the traditional model of higher education is under pressure to change. Whether it's the U.S. grappling with fewer students and skeptical publics, Europe adjusting to an aging society, Asia recalibrating an overproduction of graduates, or Latin America balancing expansion with quality, the common thread is that old equilibriums have been disrupted.
Conclusion: Crisis or Transformation?
So, is the higher education industry collapsing? In the United States, it is undeniably in a moment of crisis: enrollments fell for a decade, finances at many institutions are shaky, and the public's faith in college is waning. The traditional college paradigm – a residential four-year journey for recent high school graduates – is shrinking and evolving. Some smaller colleges will likely close; others will reinvent themselves to survive.
What we are witnessing is less a sudden collapse than a gradual reckoning and restructuring. Higher education is being forced to prove its value in concrete terms – to students, families, and employers. That means controlling costs, updating curricula, embracing technology, and focusing on outcomes. Institutions that can do so stand a better chance of thriving in the new landscape. Those that cling to old models may not survive the coming decades. As one Gallup analyst advised college leaders, there's "no silver bullet" to regain public confidence, but ignoring the warning signs is not an option.
The industry itself is not disappearing, but rather splintering into a new form. Education is still highly valued, but it's being sought in more varied ways: through online platforms, bite-sized credentials, employer-based training, and AI-powered tools – not just through brick-and-mortar universities.
Crucially, the societal need for educated citizens and skilled workers has not diminished. In fact, as the world becomes more complex – with AI, global competition, and urgent issues like climate change – one could argue we need more and better education than ever. The question is whether existing colleges will lead in providing it, or whether new models will overtake them.
The next few years will be pivotal. The enrollment cliff around 2025 will test which institutions have adapted by broadening their reach to adult learners, online students, and other non-traditional populations. Public policy will also play a role: decisions on funding, student debt relief, and workforce training programs could alleviate or exacerbate the pressures on colleges.
For institutional leaders, the implications are clear:
Embrace innovation in delivery models: The future is hybrid, combining the best of online and in-person experiences. Rigid adherence to traditional models is increasingly untenable.
Align programs with market needs: The disconnect between degrees offered and employer demands must be addressed. This means developing stronger industry partnerships, emphasizing experiential learning, and creating clearer pathways from education to employment.
Rethink the value proposition: As alternatives proliferate and public skepticism grows, institutions must articulate their unique value more clearly. What does your institution offer that a self-paced online course or corporate training program cannot?
Diversify student recruitment: The demographic cliff demands looking beyond traditional 18-year-old high school graduates. Adult learners, international students, and career-changers represent critical growth opportunities. Leveraging AI-powered tools like Havana can help institutions scale their outreach, engage these diverse student populations 24/7, and ensure no potential applicant is missed, turning a demographic challenge into a growth opportunity.
Control costs while improving outcomes: The challenge is not merely to cut expenses but to enhance value. This may require difficult decisions about program prioritization, administrative efficiency, and resource allocation.
Casting the situation as a "collapse" misses the full picture. Yes, the old models are failing under the weight of new realities. But like a phoenix, higher education may be reborn in a form better suited to the 21st century – more accessible, more responsive to labor market needs, more technologically sophisticated, and perhaps more diverse in its institutional forms.
The headlines of falling enrollments, rising tuitions, and eroding trust serve as a clarion call: adapt or perish. The colleges and universities that heed this call will shape the future of learning – if they can survive the present tumult. The question is not whether higher education will continue to exist, but what form it will take, who will lead the transformation, and which institutions will thrive in the new reality.
For those in leadership positions, this is a moment that demands courage, creativity, and a willingness to challenge long-held assumptions about how higher education should operate. The institutions that emerge strongest will be those that view the current crisis not as a collapse, but as an opportunity for reinvention.
Frequently Asked Questions
What is the 'enrollment cliff' in higher education?
The "enrollment cliff" refers to the significant drop in the number of traditional college-aged students expected to begin around 2025. This demographic shift is a direct result of lower birth rates following the 2007-09 recession. With a smaller pool of high school graduates, colleges will face intensified competition for fewer students, threatening the financial stability of many institutions.
Why is public trust in higher education declining?
Public trust in higher education is declining primarily due to concerns about high costs, student debt, and a low return on investment. According to a 2023 Gallup poll, only 36% of U.S. adults have high confidence in higher education. This skepticism is fueled by findings that nearly half of Americans believe a college degree is only worth the cost if no loans are needed, alongside a perception that universities are disconnected from the job market.
How is AI changing higher education?
Artificial intelligence (AI) is changing higher education by transforming how students learn and educators teach, while also creating new demands for AI-related skills. AI tools can act as personalized tutors and help with assignments, forcing institutions to rethink curriculum and assessment. Simultaneously, there is a surge in demand for courses in AI and data science to meet both student interest and industry needs.
Is a college degree still worth it in today's economy?
Whether a college degree is worth it is increasingly debated, as its value depends on the field of study, the institution, and the debt incurred. Public skepticism is growing, with a Pew Research survey finding only 22% of adults believe a four-year degree is worth the cost if it involves loans. The rise of skills-based hiring means a traditional degree is no longer the only path to a successful career, pressuring universities to prove their tangible return on investment.
What is the 'skills gap' and how does it affect college graduates?
The "skills gap" refers to the mismatch between the skills employers need and the skills that job applicants, including college graduates, possess. This misalignment leads to high rates of underemployment, with 52% of recent bachelor's degree holders taking jobs that do not require a college degree. This happens when academic programs don't keep pace with industry demands, leaving graduates unprepared for available high-skilled jobs.
What can universities do to survive the current challenges?
To survive, universities must innovate delivery models, align programs with labor market needs, diversify student recruitment, and control costs while proving their value. Key strategies include embracing hybrid learning, building industry partnerships to ensure curricula are relevant, and focusing recruitment on non-traditional students like adult learners. Institutions must become more responsive and accessible to thrive.
How has online learning impacted traditional universities?
Online learning has fundamentally impacted traditional universities by increasing competition and shifting student expectations toward more flexible and accessible education. With over half of U.S. college students now taking at least one online class, physical location is no longer a primary competitive advantage. Traditional universities must now compete with online institutions and corporate credential programs, forcing them to invest in their own online offerings and prove the unique value of a campus experience.
Sources
National Student Clearinghouse Research Center – "Undergraduate Enrollment Grew in the Fall of 2023"
BestColleges – "U.S. College Enrollment Decline Statistics" and "Online Learning Statistics"
Gallup Poll – "Americans' Confidence in Higher Education Down Sharply"
Pew Research Center – "Is College Worth It?"
Strada and Burning Glass Institute – "Underemployment and Its Long-Term Effects for College Graduates"
Harvard Business School – "The Degree Reset: Skills-Based Hiring"
Georgetown University Center on Education and the Workforce – "The Great Misalignment"
UNESCO – Global Education Monitoring Report
UK House of Commons Library – "Higher education student numbers"
Newsweek – "Japan's Declining Birth Rate Could Spark University Closures" and "China's Record-High College Graduates Face Economic Uncertainty"
Summary
Higher education faces a severe crisis, with undergraduate enrollment down nearly 15% since 2010 and an impending "enrollment cliff" set to begin in 2025.
This downturn is driven by plummeting public trust, a mismatch with labor market needs that leaves 52% of recent graduates underemployed, and disruption from online learning.
To survive, institutions must innovate by aligning programs with employer demands, embracing new delivery models, and diversifying recruitment beyond traditional high school graduates.
AI-powered tools like Havana can help institutions scale outreach to new student populations, turning a demographic challenge into a growth opportunity.
You've spent your career in higher education, building programs, recruiting students, and guiding your institution through challenges. Yet lately, every headline seems to prophesy doom: plummeting enrollments, campus closures, eroding public trust, and technological disruptions threatening the very foundations of your industry.
The once-steady flow of applicants has slowed to a trickle. Parents and students increasingly question whether a degree is worth the investment. Tech companies are creating their own credentials, bypassing universities entirely. And demographic projections show fewer college-aged students in the pipeline each year.
Is higher education truly facing an existential crisis? Are we witnessing the beginning of a collapse, or simply a painful but necessary transformation?
This analysis examines the converging forces reshaping higher education to help institutional leaders understand the depth of the challenges, recognize the urgency of adaptation, and identify strategic opportunities amid the turmoil.
The Numbers Don't Lie: A Decade of Decline and the Looming Enrollment Cliff
For decades, American higher education enjoyed steady growth. Undergraduate enrollment climbed approximately 2.2% annually from 1985 to 2010, peaking at roughly 18 million students. This growth reflected a widely shared belief in the necessity of a college degree for economic success and upward mobility.
Then everything changed.
Between 2010 and 2022, undergraduate enrollment fell by nearly 15%, erasing years of gains and leaving total enrollment about 14.8% below the 2010 high. The COVID-19 pandemic accelerated this decline dramatically – between fall 2019 and fall 2022 alone, U.S. colleges lost over a million students, as many postponed or abandoned college plans amid the disruption.
The most alarming aspect of this trend? The worst may be yet to come.
Demographic data reveals that birth rates plummeted after the 2007-09 recession, creating what experts call an "enrollment cliff" beginning around 2025, when this smaller cohort reaches college age. In other words, the pool of traditional college-aged students is about to shrink even further, threatening to turn today's enrollment challenges into tomorrow's existential crisis for many institutions.
There is a glimmer of hope in recent data. In fall 2023, college enrollment inched up for the first time since the pandemic, growing by about 1.2% over the prior year. However, as Doug Shapiro of the National Student Clearinghouse Research Center noted, this "small uptick" must be viewed in context: "There are still over a million empty seats on campuses today that were filled five years ago."
Even more telling is where this modest growth occurred. Community colleges saw the strongest rebound (+2.6%), while four-year universities experienced smaller increases (~0.6%). The type of programs gaining the most traction reveals a significant shift in student preferences:
Associate degree program enrollment rose 2.2% in 2023 – the first growth for two-year programs since at least 2015
Undergraduate certificate programs have seen three consecutive years of growth
Community colleges with a strong vocational focus saw a stunning 16% enrollment jump
These patterns suggest students are increasingly seeking shorter, career-aligned pathways rather than traditional four-year degrees – a rational response to rising costs and uncertain returns on investment.
Meanwhile, graduate enrollment – which had been a bright spot earlier in the pandemic – has softened. After an initial surge during the 2020 economic slowdown, graduate student numbers slipped in 2022 and only edged up 0.6% in 2023. This stagnation indicates the enrollment challenges aren't confined to undergraduates; even advanced programs are feeling the strain as fewer students feed the pipeline.
The financial consequences of these enrollment trends have already been severe. Dozens of U.S. colleges have closed or merged in recent years due to financial troubles tied to declining enrollment. Those most at risk are small private colleges and regional public campuses in areas with falling youth populations. The industry is essentially in a race to adapt – by recruiting more nontraditional students, expanding online programs, and finding new revenue sources – before the demographic reality hits full force.
The Digital Disruption: Online Learning and the AI Revolution
While physical campuses struggle with empty seats, virtual classrooms are burgeoning. The pandemic accelerated a digital transformation that was already underway, permanently altering how education is delivered and consumed.
In 2022, more than half of U.S. college students (54%) took at least one class online, and over one in four students (26%) studied exclusively online, according to BestColleges' analysis of federal data. Before 2020, only a minority of college students had any online courses; now a majority do. This shift is not merely a temporary pandemic response – online enrollment remains far above pre-2020 levels, indicating a lasting change in student preferences.
Institutions recognize this reality. A recent survey found 47% of college administrators plan to increase investment in online programs in the coming year, with virtually none intending to cut online offerings. There's good reason for this strategic focus: online courses attract working adults, parents, and other nontraditional learners who might never enroll in a campus-based program. In one poll, 68% of online college students were employed while studying and 95% had children at home, underscoring the appeal of flexible formats.
However, traditional colleges now face intense competition in the online space from both established players and new entrants. Massive Open Online Courses (MOOCs) on platforms like Coursera and edX have exploded from 300,000 learners in 2011 to 220 million by 2021. These platforms, along with coding bootcamps and corporate certificate programs, offer targeted skills training that undercuts the monopoly universities once held on advanced learning.
Tech giants have further disrupted the landscape by creating their own credentials. Companies like Google and IBM now offer career certificates and hire based on skills rather than degrees, challenging the notion that a college diploma is the only ticket to a good job. This "unbundling" of education – where students can pick up credentials à la carte online – pressures colleges to prove the added value of a multi-year degree.
The newest disruptive force is artificial intelligence. The rise of generative AI tools like ChatGPT is transforming how students learn and how educators teach. AI can now tutor students one-on-one, generate practice problems, and even grade essays. Some universities are cautiously piloting AI teaching assistants, while students increasingly use AI tools for help with assignments.
The impact of AI is twofold:
It enables more personalized, self-paced learning outside the traditional classroom
It forces educators to rethink curricula and assessment methods that AI can easily circumvent
Simultaneously, demand for AI-related knowledge is booming. Business schools report that enrollment in courses on generative AI surged by over 500% in just one year. Colleges are racing to create new programs in data science, machine learning, and AI ethics to meet student and industry interest.
This digital revolution raises existential questions for traditional institutions: If cutting-edge job skills can be learned through an online course or interactive AI tutor at a fraction of college tuition, how will brick-and-mortar universities justify their costs? The competitive advantage of geographic proximity has evaporated as students can now enroll in programs from anywhere in the world. A student in rural America can take courses from prestigious universities without leaving home – or choose alternatives that don't involve traditional higher education at all.
The Crisis of Confidence: Declining Public Trust in the Value of a Degree
Perhaps the most troubling trend for university leaders is the precipitous decline in public trust. Americans have grown increasingly skeptical that a college education is worth the cost or aligned with societal needs.
According to a Gallup poll released in 2023, only 36% of U.S. adults say they have "a great deal" or "quite a lot" of confidence in higher education – an all-time low, plummeting from 57% just eight years earlier. This erosion of trust spans all demographics – young and old, college graduates and non-graduates, Democrats and Republicans – though it is most pronounced among Republicans, where confidence fell to a scant 19%.
"Higher education has really been losing ground with every major constituency," observed Zach Hrynowski, a Gallup education researcher. "It would follow that folks would stop engaging with that institution and enrolling... And we've seen that."
Public opinion on the importance of a degree for success has likewise turned ambivalent. A Pew Research Center survey found only 25% of Americans now believe a four-year college degree is "extremely or very important" to get a well-paying job. A plurality – 40% – said a degree is "not too important" or "not at all important" for economic success today.
This marks a sea change from past decades: as recently as 2013, 70% of Americans called college very important. By 2019 that had slipped to just over half, and now it's down to roughly a third. Those saying college is "not too important" jumped from only 4% in 2010 to 24% now.
The skepticism largely stems from concerns about return on investment. With student debt exceeding $1.7 trillion nationally and tuition outpacing inflation for years, many Americans aren't convinced that the payoff justifies the price tag. In the Pew survey:
Only 22% of adults agreed that the cost of a four-year degree is worth it "even if someone has to take out loans"
Nearly half (47%) said college is worth the money only if no loans are needed
29% flatly said the cost is not worth it in today's economy
Even among college graduates themselves, barely one-third believe that taking on debt for college was a worthwhile investment. These findings reflect real anxieties about graduates burdened with tens of thousands in loans, struggling to find high-paying jobs in their field.
Another factor eroding trust is the perception that universities are disconnected from practical reality or mired in ideological battles. Some Americans – particularly conservatives – view campuses as promoting political agendas or lacking intellectual diversity. Simultaneously, a growing chorus across the political spectrum questions whether colleges are teaching the skills needed in today's job market.
It's not all bad news – other surveys indicate Americans still acknowledge certain positives. Majorities agree that higher education contributes to scientific advances and the public good, and most support public funding for colleges. But those abstract positives aren't alleviating individual worries about cost and career payoffs. Trust in the institution of higher education is now markedly lower than trust in the military, small business, or even the police.
This reputational damage poses a serious challenge: colleges depend on public goodwill for student enrollment, government funding, and philanthropy. If faith in the enterprise continues to falter, the entire financing model of U.S. higher education – which relies on people believing in the long-term value of a degree – could be at risk.
The Great Misalignment: Degrees Offered vs. Labor Market Needs
One of the most damaging criticisms levied at universities is that they aren't keeping pace with the changing job market. Employers increasingly report a "skills gap" where they struggle to find workers with specific abilities needed, even as millions of degree-holders work in jobs that don't require their education.
Consider the sobering outcomes for recent graduates: According to a report by the Strada and Burning Glass Institutes, 52% of bachelor's degree graduates are "underemployed" in jobs that typically do not require a four-year degree within a year of finishing school. Even a decade later, 45% remain underemployed. Most striking, fully 88% of those underemployed graduates are in jobs that require only a high school diploma or less.
These figures paint a stark picture: universities are graduating large numbers of people into an economy that does not have college-level positions for them, or perhaps into roles where their specific degrees didn't align with available opportunities. As the report's authors noted, "The large number of underemployed individuals demonstrates a mismatch between the graduates coming out of college and the skills and experience employers seek."
From the employer side, there's a movement toward skills-based hiring as a response to this mismatch. Many companies, especially in tech, have realized that a diploma is not the only proxy for ability. A Harvard Business School study termed it a "degree reset": between 2017 and 2019, 46% of middle-skill jobs and 31% of high-skill jobs dropped or relaxed their degree requirements in job postings.
Major firms like Google, IBM, and Apple have publicly shifted to valuing demonstrated skills and portfolios over formal education in certain roles. Analysts predict that if this trajectory persists, as many as 1.4 million jobs in the next five years could open up to non-degree holders that previously would have required college. The implication is profound: employers are saying a degree alone isn't enough – or even necessary – for many careers.
Part of the disconnect lies in what students study versus where jobs are growing. Universities continue to mint large numbers of graduates in fields like communications, general liberal arts, or psychology, where the direct job pipelines are limited. Meanwhile, there are shortages in areas like nursing, software development, and skilled trades.
A Georgetown University Center on Education and the Workforce analysis highlighted this "great misalignment" at the sub-baccalaureate level: in fully half of U.S. labor markets, at least 50% of the certificates and associate degrees awarded would need to shift fields of study to match actual job openings projected. More than one-quarter of all middle-skill credentials (associate degrees/certificates) granted in the U.S. have no direct occupational match in the job market (e.g., liberal arts programs).
Among those graduates in non-occupational fields, only 42% successfully transfer to complete a bachelor's, leaving a huge number with a credential that doesn't slot into a career path. These individuals often struggle to find good-paying work, even as industries complain they can't find workers with relevant training.
Universities are beginning to respond by realigning curricula and enhancing career services. There's greater emphasis on internships (notably, students who complete internships have a 48.5% lower chance of post-college underemployment), co-ops, and experiential learning to ensure graduates have applicable skills. Some institutions are pruning low-demand majors and investing in programs aligned with high-demand fields like cybersecurity, data analytics, and healthcare.
The rise of alternative credential programs also speaks to this gap. Non-degree programs such as coding bootcamps, tech sales certificates, or digital marketing courses have proliferated precisely because traditional degrees weren't supplying job-ready skills fast enough. In one survey, nearly 1 in 3 Americans said that nondegree credential programs (like professional certificates or trade apprenticeships) provided more value than a college degree.
The job market is sending a clear signal: the focus is shifting from "What credential do you have?" to "What can you do?" Universities that adapt by ensuring their degrees impart in-demand skills (and by better signaling those skills to employers) will fare best. Those that don't may see their graduates and reputations suffer in the employment arena.
A Global Perspective: Is the Crisis Universal?
While the challenges facing U.S. higher education are severe, a global perspective reveals a more nuanced picture. Around the world, universities are contending with many of the same forces – demographic change, technological disruption, and questions of value – albeit in varying ways.
Surprisingly, global enrollment has actually been rising, driven by developing regions. UNESCO data shows that the number of students in higher education worldwide hit a record 264 million in recent years, up 25 million from 2020. This growth comes primarily from Asia and Africa, where expanding populations and increasing access to education are sending more young people to college. Women now outnumber men in tertiary education worldwide (113 women enrolled per 100 men).
However, this growth is uneven. Europe presents a mixed tableau:
Western and Northern European nations have generally maintained or grown enrollments modestly
Eastern and Southern European countries face declines due to aging populations
More than one-third of European countries saw a decrease in tertiary enrollments from 2016 to 2021
The UK just recorded its first enrollment dip in a decade in 2023, a 1.1% drop partly due to fewer EU students post-Brexit
East Asian education powerhouses are confronting the demographic cliff head-on. In Japan, a government task force warned that by 2040 the number of college freshmen could fall to just 510,000, down from 630,000 in 2023. Already over half of Japan's private universities are struggling to meet enrollment targets, especially in rural areas. The Japanese government is urging universities to broaden recruitment beyond traditional 18-year-olds or face an "unprecedented crisis" where whole regions might end up with no local universities at all.
China and India present contrasting challenges. China has massively expanded its higher education system and now graduates over 11 million university students annually – expected to rise to 12.2 million in 2024. This flood of graduates has raised concerns about underemployment, with youth unemployment hitting 21.3% in mid-2023. China's dilemma is almost the mirror image of America's – rather than too few students, China has so many college graduates that the economy can't absorb them all in high-skilled jobs.
India, conversely, is in expansion mode. With a growing young population, India aims to increase its gross enrollment ratio from around 27% to 50% by 2035. This involves creating new universities and colleges, embracing online education, and allowing foreign universities to operate in India. However, like in many countries, quality and graduate employability remain major challenges.
Latin America experienced a vast expansion of higher education in the 2000s but now faces a period of reckoning. Countries like Brazil, Mexico, and Chile dramatically grew college enrollment with new public universities and a boom in private institutions. A notable feature is the prominence of private providers: about 54% of higher education students in Latin America are enrolled in private institutions, the highest share for any world region. With economic stagnation and tighter government budgets, growth has tapered off, and the focus has shifted to improving completion rates and ensuring graduates have skills aligned with labor market needs.
Africa represents perhaps the starkest contrast to the U.S. situation. Sub-Saharan Africa still has the lowest higher education enrollment rate (around 9% gross enrollment), but demand is skyrocketing due to a booming youth population. Universities there face overcrowding and limited funding – essentially the inverse of Japan's problem: too many prospective students and not enough seats or resources.
This global perspective reveals that the phrase "higher education industry collapse" is too sweeping. Many countries are still expanding their collegiate systems. But virtually everywhere, the traditional model of higher education is under pressure to change. Whether it's the U.S. grappling with fewer students and skeptical publics, Europe adjusting to an aging society, Asia recalibrating an overproduction of graduates, or Latin America balancing expansion with quality, the common thread is that old equilibriums have been disrupted.
Conclusion: Crisis or Transformation?
So, is the higher education industry collapsing? In the United States, it is undeniably in a moment of crisis: enrollments fell for a decade, finances at many institutions are shaky, and the public's faith in college is waning. The traditional college paradigm – a residential four-year journey for recent high school graduates – is shrinking and evolving. Some smaller colleges will likely close; others will reinvent themselves to survive.
What we are witnessing is less a sudden collapse than a gradual reckoning and restructuring. Higher education is being forced to prove its value in concrete terms – to students, families, and employers. That means controlling costs, updating curricula, embracing technology, and focusing on outcomes. Institutions that can do so stand a better chance of thriving in the new landscape. Those that cling to old models may not survive the coming decades. As one Gallup analyst advised college leaders, there's "no silver bullet" to regain public confidence, but ignoring the warning signs is not an option.
The industry itself is not disappearing, but rather splintering into a new form. Education is still highly valued, but it's being sought in more varied ways: through online platforms, bite-sized credentials, employer-based training, and AI-powered tools – not just through brick-and-mortar universities.
Crucially, the societal need for educated citizens and skilled workers has not diminished. In fact, as the world becomes more complex – with AI, global competition, and urgent issues like climate change – one could argue we need more and better education than ever. The question is whether existing colleges will lead in providing it, or whether new models will overtake them.
The next few years will be pivotal. The enrollment cliff around 2025 will test which institutions have adapted by broadening their reach to adult learners, online students, and other non-traditional populations. Public policy will also play a role: decisions on funding, student debt relief, and workforce training programs could alleviate or exacerbate the pressures on colleges.
For institutional leaders, the implications are clear:
Embrace innovation in delivery models: The future is hybrid, combining the best of online and in-person experiences. Rigid adherence to traditional models is increasingly untenable.
Align programs with market needs: The disconnect between degrees offered and employer demands must be addressed. This means developing stronger industry partnerships, emphasizing experiential learning, and creating clearer pathways from education to employment.
Rethink the value proposition: As alternatives proliferate and public skepticism grows, institutions must articulate their unique value more clearly. What does your institution offer that a self-paced online course or corporate training program cannot?
Diversify student recruitment: The demographic cliff demands looking beyond traditional 18-year-old high school graduates. Adult learners, international students, and career-changers represent critical growth opportunities. Leveraging AI-powered tools like Havana can help institutions scale their outreach, engage these diverse student populations 24/7, and ensure no potential applicant is missed, turning a demographic challenge into a growth opportunity.
Control costs while improving outcomes: The challenge is not merely to cut expenses but to enhance value. This may require difficult decisions about program prioritization, administrative efficiency, and resource allocation.
Casting the situation as a "collapse" misses the full picture. Yes, the old models are failing under the weight of new realities. But like a phoenix, higher education may be reborn in a form better suited to the 21st century – more accessible, more responsive to labor market needs, more technologically sophisticated, and perhaps more diverse in its institutional forms.
The headlines of falling enrollments, rising tuitions, and eroding trust serve as a clarion call: adapt or perish. The colleges and universities that heed this call will shape the future of learning – if they can survive the present tumult. The question is not whether higher education will continue to exist, but what form it will take, who will lead the transformation, and which institutions will thrive in the new reality.
For those in leadership positions, this is a moment that demands courage, creativity, and a willingness to challenge long-held assumptions about how higher education should operate. The institutions that emerge strongest will be those that view the current crisis not as a collapse, but as an opportunity for reinvention.
Frequently Asked Questions
What is the 'enrollment cliff' in higher education?
The "enrollment cliff" refers to the significant drop in the number of traditional college-aged students expected to begin around 2025. This demographic shift is a direct result of lower birth rates following the 2007-09 recession. With a smaller pool of high school graduates, colleges will face intensified competition for fewer students, threatening the financial stability of many institutions.
Why is public trust in higher education declining?
Public trust in higher education is declining primarily due to concerns about high costs, student debt, and a low return on investment. According to a 2023 Gallup poll, only 36% of U.S. adults have high confidence in higher education. This skepticism is fueled by findings that nearly half of Americans believe a college degree is only worth the cost if no loans are needed, alongside a perception that universities are disconnected from the job market.
How is AI changing higher education?
Artificial intelligence (AI) is changing higher education by transforming how students learn and educators teach, while also creating new demands for AI-related skills. AI tools can act as personalized tutors and help with assignments, forcing institutions to rethink curriculum and assessment. Simultaneously, there is a surge in demand for courses in AI and data science to meet both student interest and industry needs.
Is a college degree still worth it in today's economy?
Whether a college degree is worth it is increasingly debated, as its value depends on the field of study, the institution, and the debt incurred. Public skepticism is growing, with a Pew Research survey finding only 22% of adults believe a four-year degree is worth the cost if it involves loans. The rise of skills-based hiring means a traditional degree is no longer the only path to a successful career, pressuring universities to prove their tangible return on investment.
What is the 'skills gap' and how does it affect college graduates?
The "skills gap" refers to the mismatch between the skills employers need and the skills that job applicants, including college graduates, possess. This misalignment leads to high rates of underemployment, with 52% of recent bachelor's degree holders taking jobs that do not require a college degree. This happens when academic programs don't keep pace with industry demands, leaving graduates unprepared for available high-skilled jobs.
What can universities do to survive the current challenges?
To survive, universities must innovate delivery models, align programs with labor market needs, diversify student recruitment, and control costs while proving their value. Key strategies include embracing hybrid learning, building industry partnerships to ensure curricula are relevant, and focusing recruitment on non-traditional students like adult learners. Institutions must become more responsive and accessible to thrive.
How has online learning impacted traditional universities?
Online learning has fundamentally impacted traditional universities by increasing competition and shifting student expectations toward more flexible and accessible education. With over half of U.S. college students now taking at least one online class, physical location is no longer a primary competitive advantage. Traditional universities must now compete with online institutions and corporate credential programs, forcing them to invest in their own online offerings and prove the unique value of a campus experience.
Sources
National Student Clearinghouse Research Center – "Undergraduate Enrollment Grew in the Fall of 2023"
BestColleges – "U.S. College Enrollment Decline Statistics" and "Online Learning Statistics"
Gallup Poll – "Americans' Confidence in Higher Education Down Sharply"
Pew Research Center – "Is College Worth It?"
Strada and Burning Glass Institute – "Underemployment and Its Long-Term Effects for College Graduates"
Harvard Business School – "The Degree Reset: Skills-Based Hiring"
Georgetown University Center on Education and the Workforce – "The Great Misalignment"
UNESCO – Global Education Monitoring Report
UK House of Commons Library – "Higher education student numbers"
Newsweek – "Japan's Declining Birth Rate Could Spark University Closures" and "China's Record-High College Graduates Face Economic Uncertainty"
Summary
Higher education faces a severe crisis, with undergraduate enrollment down nearly 15% since 2010 and an impending "enrollment cliff" set to begin in 2025.
This downturn is driven by plummeting public trust, a mismatch with labor market needs that leaves 52% of recent graduates underemployed, and disruption from online learning.
To survive, institutions must innovate by aligning programs with employer demands, embracing new delivery models, and diversifying recruitment beyond traditional high school graduates.
AI-powered tools like Havana can help institutions scale outreach to new student populations, turning a demographic challenge into a growth opportunity.
You've spent your career in higher education, building programs, recruiting students, and guiding your institution through challenges. Yet lately, every headline seems to prophesy doom: plummeting enrollments, campus closures, eroding public trust, and technological disruptions threatening the very foundations of your industry.
The once-steady flow of applicants has slowed to a trickle. Parents and students increasingly question whether a degree is worth the investment. Tech companies are creating their own credentials, bypassing universities entirely. And demographic projections show fewer college-aged students in the pipeline each year.
Is higher education truly facing an existential crisis? Are we witnessing the beginning of a collapse, or simply a painful but necessary transformation?
This analysis examines the converging forces reshaping higher education to help institutional leaders understand the depth of the challenges, recognize the urgency of adaptation, and identify strategic opportunities amid the turmoil.
The Numbers Don't Lie: A Decade of Decline and the Looming Enrollment Cliff
For decades, American higher education enjoyed steady growth. Undergraduate enrollment climbed approximately 2.2% annually from 1985 to 2010, peaking at roughly 18 million students. This growth reflected a widely shared belief in the necessity of a college degree for economic success and upward mobility.
Then everything changed.
Between 2010 and 2022, undergraduate enrollment fell by nearly 15%, erasing years of gains and leaving total enrollment about 14.8% below the 2010 high. The COVID-19 pandemic accelerated this decline dramatically – between fall 2019 and fall 2022 alone, U.S. colleges lost over a million students, as many postponed or abandoned college plans amid the disruption.
The most alarming aspect of this trend? The worst may be yet to come.
Demographic data reveals that birth rates plummeted after the 2007-09 recession, creating what experts call an "enrollment cliff" beginning around 2025, when this smaller cohort reaches college age. In other words, the pool of traditional college-aged students is about to shrink even further, threatening to turn today's enrollment challenges into tomorrow's existential crisis for many institutions.
There is a glimmer of hope in recent data. In fall 2023, college enrollment inched up for the first time since the pandemic, growing by about 1.2% over the prior year. However, as Doug Shapiro of the National Student Clearinghouse Research Center noted, this "small uptick" must be viewed in context: "There are still over a million empty seats on campuses today that were filled five years ago."
Even more telling is where this modest growth occurred. Community colleges saw the strongest rebound (+2.6%), while four-year universities experienced smaller increases (~0.6%). The type of programs gaining the most traction reveals a significant shift in student preferences:
Associate degree program enrollment rose 2.2% in 2023 – the first growth for two-year programs since at least 2015
Undergraduate certificate programs have seen three consecutive years of growth
Community colleges with a strong vocational focus saw a stunning 16% enrollment jump
These patterns suggest students are increasingly seeking shorter, career-aligned pathways rather than traditional four-year degrees – a rational response to rising costs and uncertain returns on investment.
Meanwhile, graduate enrollment – which had been a bright spot earlier in the pandemic – has softened. After an initial surge during the 2020 economic slowdown, graduate student numbers slipped in 2022 and only edged up 0.6% in 2023. This stagnation indicates the enrollment challenges aren't confined to undergraduates; even advanced programs are feeling the strain as fewer students feed the pipeline.
The financial consequences of these enrollment trends have already been severe. Dozens of U.S. colleges have closed or merged in recent years due to financial troubles tied to declining enrollment. Those most at risk are small private colleges and regional public campuses in areas with falling youth populations. The industry is essentially in a race to adapt – by recruiting more nontraditional students, expanding online programs, and finding new revenue sources – before the demographic reality hits full force.
The Digital Disruption: Online Learning and the AI Revolution
While physical campuses struggle with empty seats, virtual classrooms are burgeoning. The pandemic accelerated a digital transformation that was already underway, permanently altering how education is delivered and consumed.
In 2022, more than half of U.S. college students (54%) took at least one class online, and over one in four students (26%) studied exclusively online, according to BestColleges' analysis of federal data. Before 2020, only a minority of college students had any online courses; now a majority do. This shift is not merely a temporary pandemic response – online enrollment remains far above pre-2020 levels, indicating a lasting change in student preferences.
Institutions recognize this reality. A recent survey found 47% of college administrators plan to increase investment in online programs in the coming year, with virtually none intending to cut online offerings. There's good reason for this strategic focus: online courses attract working adults, parents, and other nontraditional learners who might never enroll in a campus-based program. In one poll, 68% of online college students were employed while studying and 95% had children at home, underscoring the appeal of flexible formats.
However, traditional colleges now face intense competition in the online space from both established players and new entrants. Massive Open Online Courses (MOOCs) on platforms like Coursera and edX have exploded from 300,000 learners in 2011 to 220 million by 2021. These platforms, along with coding bootcamps and corporate certificate programs, offer targeted skills training that undercuts the monopoly universities once held on advanced learning.
Tech giants have further disrupted the landscape by creating their own credentials. Companies like Google and IBM now offer career certificates and hire based on skills rather than degrees, challenging the notion that a college diploma is the only ticket to a good job. This "unbundling" of education – where students can pick up credentials à la carte online – pressures colleges to prove the added value of a multi-year degree.
The newest disruptive force is artificial intelligence. The rise of generative AI tools like ChatGPT is transforming how students learn and how educators teach. AI can now tutor students one-on-one, generate practice problems, and even grade essays. Some universities are cautiously piloting AI teaching assistants, while students increasingly use AI tools for help with assignments.
The impact of AI is twofold:
It enables more personalized, self-paced learning outside the traditional classroom
It forces educators to rethink curricula and assessment methods that AI can easily circumvent
Simultaneously, demand for AI-related knowledge is booming. Business schools report that enrollment in courses on generative AI surged by over 500% in just one year. Colleges are racing to create new programs in data science, machine learning, and AI ethics to meet student and industry interest.
This digital revolution raises existential questions for traditional institutions: If cutting-edge job skills can be learned through an online course or interactive AI tutor at a fraction of college tuition, how will brick-and-mortar universities justify their costs? The competitive advantage of geographic proximity has evaporated as students can now enroll in programs from anywhere in the world. A student in rural America can take courses from prestigious universities without leaving home – or choose alternatives that don't involve traditional higher education at all.
The Crisis of Confidence: Declining Public Trust in the Value of a Degree
Perhaps the most troubling trend for university leaders is the precipitous decline in public trust. Americans have grown increasingly skeptical that a college education is worth the cost or aligned with societal needs.
According to a Gallup poll released in 2023, only 36% of U.S. adults say they have "a great deal" or "quite a lot" of confidence in higher education – an all-time low, plummeting from 57% just eight years earlier. This erosion of trust spans all demographics – young and old, college graduates and non-graduates, Democrats and Republicans – though it is most pronounced among Republicans, where confidence fell to a scant 19%.
"Higher education has really been losing ground with every major constituency," observed Zach Hrynowski, a Gallup education researcher. "It would follow that folks would stop engaging with that institution and enrolling... And we've seen that."
Public opinion on the importance of a degree for success has likewise turned ambivalent. A Pew Research Center survey found only 25% of Americans now believe a four-year college degree is "extremely or very important" to get a well-paying job. A plurality – 40% – said a degree is "not too important" or "not at all important" for economic success today.
This marks a sea change from past decades: as recently as 2013, 70% of Americans called college very important. By 2019 that had slipped to just over half, and now it's down to roughly a third. Those saying college is "not too important" jumped from only 4% in 2010 to 24% now.
The skepticism largely stems from concerns about return on investment. With student debt exceeding $1.7 trillion nationally and tuition outpacing inflation for years, many Americans aren't convinced that the payoff justifies the price tag. In the Pew survey:
Only 22% of adults agreed that the cost of a four-year degree is worth it "even if someone has to take out loans"
Nearly half (47%) said college is worth the money only if no loans are needed
29% flatly said the cost is not worth it in today's economy
Even among college graduates themselves, barely one-third believe that taking on debt for college was a worthwhile investment. These findings reflect real anxieties about graduates burdened with tens of thousands in loans, struggling to find high-paying jobs in their field.
Another factor eroding trust is the perception that universities are disconnected from practical reality or mired in ideological battles. Some Americans – particularly conservatives – view campuses as promoting political agendas or lacking intellectual diversity. Simultaneously, a growing chorus across the political spectrum questions whether colleges are teaching the skills needed in today's job market.
It's not all bad news – other surveys indicate Americans still acknowledge certain positives. Majorities agree that higher education contributes to scientific advances and the public good, and most support public funding for colleges. But those abstract positives aren't alleviating individual worries about cost and career payoffs. Trust in the institution of higher education is now markedly lower than trust in the military, small business, or even the police.
This reputational damage poses a serious challenge: colleges depend on public goodwill for student enrollment, government funding, and philanthropy. If faith in the enterprise continues to falter, the entire financing model of U.S. higher education – which relies on people believing in the long-term value of a degree – could be at risk.
The Great Misalignment: Degrees Offered vs. Labor Market Needs
One of the most damaging criticisms levied at universities is that they aren't keeping pace with the changing job market. Employers increasingly report a "skills gap" where they struggle to find workers with specific abilities needed, even as millions of degree-holders work in jobs that don't require their education.
Consider the sobering outcomes for recent graduates: According to a report by the Strada and Burning Glass Institutes, 52% of bachelor's degree graduates are "underemployed" in jobs that typically do not require a four-year degree within a year of finishing school. Even a decade later, 45% remain underemployed. Most striking, fully 88% of those underemployed graduates are in jobs that require only a high school diploma or less.
These figures paint a stark picture: universities are graduating large numbers of people into an economy that does not have college-level positions for them, or perhaps into roles where their specific degrees didn't align with available opportunities. As the report's authors noted, "The large number of underemployed individuals demonstrates a mismatch between the graduates coming out of college and the skills and experience employers seek."
From the employer side, there's a movement toward skills-based hiring as a response to this mismatch. Many companies, especially in tech, have realized that a diploma is not the only proxy for ability. A Harvard Business School study termed it a "degree reset": between 2017 and 2019, 46% of middle-skill jobs and 31% of high-skill jobs dropped or relaxed their degree requirements in job postings.
Major firms like Google, IBM, and Apple have publicly shifted to valuing demonstrated skills and portfolios over formal education in certain roles. Analysts predict that if this trajectory persists, as many as 1.4 million jobs in the next five years could open up to non-degree holders that previously would have required college. The implication is profound: employers are saying a degree alone isn't enough – or even necessary – for many careers.
Part of the disconnect lies in what students study versus where jobs are growing. Universities continue to mint large numbers of graduates in fields like communications, general liberal arts, or psychology, where the direct job pipelines are limited. Meanwhile, there are shortages in areas like nursing, software development, and skilled trades.
A Georgetown University Center on Education and the Workforce analysis highlighted this "great misalignment" at the sub-baccalaureate level: in fully half of U.S. labor markets, at least 50% of the certificates and associate degrees awarded would need to shift fields of study to match actual job openings projected. More than one-quarter of all middle-skill credentials (associate degrees/certificates) granted in the U.S. have no direct occupational match in the job market (e.g., liberal arts programs).
Among those graduates in non-occupational fields, only 42% successfully transfer to complete a bachelor's, leaving a huge number with a credential that doesn't slot into a career path. These individuals often struggle to find good-paying work, even as industries complain they can't find workers with relevant training.
Universities are beginning to respond by realigning curricula and enhancing career services. There's greater emphasis on internships (notably, students who complete internships have a 48.5% lower chance of post-college underemployment), co-ops, and experiential learning to ensure graduates have applicable skills. Some institutions are pruning low-demand majors and investing in programs aligned with high-demand fields like cybersecurity, data analytics, and healthcare.
The rise of alternative credential programs also speaks to this gap. Non-degree programs such as coding bootcamps, tech sales certificates, or digital marketing courses have proliferated precisely because traditional degrees weren't supplying job-ready skills fast enough. In one survey, nearly 1 in 3 Americans said that nondegree credential programs (like professional certificates or trade apprenticeships) provided more value than a college degree.
The job market is sending a clear signal: the focus is shifting from "What credential do you have?" to "What can you do?" Universities that adapt by ensuring their degrees impart in-demand skills (and by better signaling those skills to employers) will fare best. Those that don't may see their graduates and reputations suffer in the employment arena.
A Global Perspective: Is the Crisis Universal?
While the challenges facing U.S. higher education are severe, a global perspective reveals a more nuanced picture. Around the world, universities are contending with many of the same forces – demographic change, technological disruption, and questions of value – albeit in varying ways.
Surprisingly, global enrollment has actually been rising, driven by developing regions. UNESCO data shows that the number of students in higher education worldwide hit a record 264 million in recent years, up 25 million from 2020. This growth comes primarily from Asia and Africa, where expanding populations and increasing access to education are sending more young people to college. Women now outnumber men in tertiary education worldwide (113 women enrolled per 100 men).
However, this growth is uneven. Europe presents a mixed tableau:
Western and Northern European nations have generally maintained or grown enrollments modestly
Eastern and Southern European countries face declines due to aging populations
More than one-third of European countries saw a decrease in tertiary enrollments from 2016 to 2021
The UK just recorded its first enrollment dip in a decade in 2023, a 1.1% drop partly due to fewer EU students post-Brexit
East Asian education powerhouses are confronting the demographic cliff head-on. In Japan, a government task force warned that by 2040 the number of college freshmen could fall to just 510,000, down from 630,000 in 2023. Already over half of Japan's private universities are struggling to meet enrollment targets, especially in rural areas. The Japanese government is urging universities to broaden recruitment beyond traditional 18-year-olds or face an "unprecedented crisis" where whole regions might end up with no local universities at all.
China and India present contrasting challenges. China has massively expanded its higher education system and now graduates over 11 million university students annually – expected to rise to 12.2 million in 2024. This flood of graduates has raised concerns about underemployment, with youth unemployment hitting 21.3% in mid-2023. China's dilemma is almost the mirror image of America's – rather than too few students, China has so many college graduates that the economy can't absorb them all in high-skilled jobs.
India, conversely, is in expansion mode. With a growing young population, India aims to increase its gross enrollment ratio from around 27% to 50% by 2035. This involves creating new universities and colleges, embracing online education, and allowing foreign universities to operate in India. However, like in many countries, quality and graduate employability remain major challenges.
Latin America experienced a vast expansion of higher education in the 2000s but now faces a period of reckoning. Countries like Brazil, Mexico, and Chile dramatically grew college enrollment with new public universities and a boom in private institutions. A notable feature is the prominence of private providers: about 54% of higher education students in Latin America are enrolled in private institutions, the highest share for any world region. With economic stagnation and tighter government budgets, growth has tapered off, and the focus has shifted to improving completion rates and ensuring graduates have skills aligned with labor market needs.
Africa represents perhaps the starkest contrast to the U.S. situation. Sub-Saharan Africa still has the lowest higher education enrollment rate (around 9% gross enrollment), but demand is skyrocketing due to a booming youth population. Universities there face overcrowding and limited funding – essentially the inverse of Japan's problem: too many prospective students and not enough seats or resources.
This global perspective reveals that the phrase "higher education industry collapse" is too sweeping. Many countries are still expanding their collegiate systems. But virtually everywhere, the traditional model of higher education is under pressure to change. Whether it's the U.S. grappling with fewer students and skeptical publics, Europe adjusting to an aging society, Asia recalibrating an overproduction of graduates, or Latin America balancing expansion with quality, the common thread is that old equilibriums have been disrupted.
Conclusion: Crisis or Transformation?
So, is the higher education industry collapsing? In the United States, it is undeniably in a moment of crisis: enrollments fell for a decade, finances at many institutions are shaky, and the public's faith in college is waning. The traditional college paradigm – a residential four-year journey for recent high school graduates – is shrinking and evolving. Some smaller colleges will likely close; others will reinvent themselves to survive.
What we are witnessing is less a sudden collapse than a gradual reckoning and restructuring. Higher education is being forced to prove its value in concrete terms – to students, families, and employers. That means controlling costs, updating curricula, embracing technology, and focusing on outcomes. Institutions that can do so stand a better chance of thriving in the new landscape. Those that cling to old models may not survive the coming decades. As one Gallup analyst advised college leaders, there's "no silver bullet" to regain public confidence, but ignoring the warning signs is not an option.
The industry itself is not disappearing, but rather splintering into a new form. Education is still highly valued, but it's being sought in more varied ways: through online platforms, bite-sized credentials, employer-based training, and AI-powered tools – not just through brick-and-mortar universities.
Crucially, the societal need for educated citizens and skilled workers has not diminished. In fact, as the world becomes more complex – with AI, global competition, and urgent issues like climate change – one could argue we need more and better education than ever. The question is whether existing colleges will lead in providing it, or whether new models will overtake them.
The next few years will be pivotal. The enrollment cliff around 2025 will test which institutions have adapted by broadening their reach to adult learners, online students, and other non-traditional populations. Public policy will also play a role: decisions on funding, student debt relief, and workforce training programs could alleviate or exacerbate the pressures on colleges.
For institutional leaders, the implications are clear:
Embrace innovation in delivery models: The future is hybrid, combining the best of online and in-person experiences. Rigid adherence to traditional models is increasingly untenable.
Align programs with market needs: The disconnect between degrees offered and employer demands must be addressed. This means developing stronger industry partnerships, emphasizing experiential learning, and creating clearer pathways from education to employment.
Rethink the value proposition: As alternatives proliferate and public skepticism grows, institutions must articulate their unique value more clearly. What does your institution offer that a self-paced online course or corporate training program cannot?
Diversify student recruitment: The demographic cliff demands looking beyond traditional 18-year-old high school graduates. Adult learners, international students, and career-changers represent critical growth opportunities. Leveraging AI-powered tools like Havana can help institutions scale their outreach, engage these diverse student populations 24/7, and ensure no potential applicant is missed, turning a demographic challenge into a growth opportunity.
Control costs while improving outcomes: The challenge is not merely to cut expenses but to enhance value. This may require difficult decisions about program prioritization, administrative efficiency, and resource allocation.
Casting the situation as a "collapse" misses the full picture. Yes, the old models are failing under the weight of new realities. But like a phoenix, higher education may be reborn in a form better suited to the 21st century – more accessible, more responsive to labor market needs, more technologically sophisticated, and perhaps more diverse in its institutional forms.
The headlines of falling enrollments, rising tuitions, and eroding trust serve as a clarion call: adapt or perish. The colleges and universities that heed this call will shape the future of learning – if they can survive the present tumult. The question is not whether higher education will continue to exist, but what form it will take, who will lead the transformation, and which institutions will thrive in the new reality.
For those in leadership positions, this is a moment that demands courage, creativity, and a willingness to challenge long-held assumptions about how higher education should operate. The institutions that emerge strongest will be those that view the current crisis not as a collapse, but as an opportunity for reinvention.
Frequently Asked Questions
What is the 'enrollment cliff' in higher education?
The "enrollment cliff" refers to the significant drop in the number of traditional college-aged students expected to begin around 2025. This demographic shift is a direct result of lower birth rates following the 2007-09 recession. With a smaller pool of high school graduates, colleges will face intensified competition for fewer students, threatening the financial stability of many institutions.
Why is public trust in higher education declining?
Public trust in higher education is declining primarily due to concerns about high costs, student debt, and a low return on investment. According to a 2023 Gallup poll, only 36% of U.S. adults have high confidence in higher education. This skepticism is fueled by findings that nearly half of Americans believe a college degree is only worth the cost if no loans are needed, alongside a perception that universities are disconnected from the job market.
How is AI changing higher education?
Artificial intelligence (AI) is changing higher education by transforming how students learn and educators teach, while also creating new demands for AI-related skills. AI tools can act as personalized tutors and help with assignments, forcing institutions to rethink curriculum and assessment. Simultaneously, there is a surge in demand for courses in AI and data science to meet both student interest and industry needs.
Is a college degree still worth it in today's economy?
Whether a college degree is worth it is increasingly debated, as its value depends on the field of study, the institution, and the debt incurred. Public skepticism is growing, with a Pew Research survey finding only 22% of adults believe a four-year degree is worth the cost if it involves loans. The rise of skills-based hiring means a traditional degree is no longer the only path to a successful career, pressuring universities to prove their tangible return on investment.
What is the 'skills gap' and how does it affect college graduates?
The "skills gap" refers to the mismatch between the skills employers need and the skills that job applicants, including college graduates, possess. This misalignment leads to high rates of underemployment, with 52% of recent bachelor's degree holders taking jobs that do not require a college degree. This happens when academic programs don't keep pace with industry demands, leaving graduates unprepared for available high-skilled jobs.
What can universities do to survive the current challenges?
To survive, universities must innovate delivery models, align programs with labor market needs, diversify student recruitment, and control costs while proving their value. Key strategies include embracing hybrid learning, building industry partnerships to ensure curricula are relevant, and focusing recruitment on non-traditional students like adult learners. Institutions must become more responsive and accessible to thrive.
How has online learning impacted traditional universities?
Online learning has fundamentally impacted traditional universities by increasing competition and shifting student expectations toward more flexible and accessible education. With over half of U.S. college students now taking at least one online class, physical location is no longer a primary competitive advantage. Traditional universities must now compete with online institutions and corporate credential programs, forcing them to invest in their own online offerings and prove the unique value of a campus experience.
Sources
National Student Clearinghouse Research Center – "Undergraduate Enrollment Grew in the Fall of 2023"
BestColleges – "U.S. College Enrollment Decline Statistics" and "Online Learning Statistics"
Gallup Poll – "Americans' Confidence in Higher Education Down Sharply"
Pew Research Center – "Is College Worth It?"
Strada and Burning Glass Institute – "Underemployment and Its Long-Term Effects for College Graduates"
Harvard Business School – "The Degree Reset: Skills-Based Hiring"
Georgetown University Center on Education and the Workforce – "The Great Misalignment"
UNESCO – Global Education Monitoring Report
UK House of Commons Library – "Higher education student numbers"
Newsweek – "Japan's Declining Birth Rate Could Spark University Closures" and "China's Record-High College Graduates Face Economic Uncertainty"
Summary
Higher education faces a severe crisis, with undergraduate enrollment down nearly 15% since 2010 and an impending "enrollment cliff" set to begin in 2025.
This downturn is driven by plummeting public trust, a mismatch with labor market needs that leaves 52% of recent graduates underemployed, and disruption from online learning.
To survive, institutions must innovate by aligning programs with employer demands, embracing new delivery models, and diversifying recruitment beyond traditional high school graduates.
AI-powered tools like Havana can help institutions scale outreach to new student populations, turning a demographic challenge into a growth opportunity.
You've spent your career in higher education, building programs, recruiting students, and guiding your institution through challenges. Yet lately, every headline seems to prophesy doom: plummeting enrollments, campus closures, eroding public trust, and technological disruptions threatening the very foundations of your industry.
The once-steady flow of applicants has slowed to a trickle. Parents and students increasingly question whether a degree is worth the investment. Tech companies are creating their own credentials, bypassing universities entirely. And demographic projections show fewer college-aged students in the pipeline each year.
Is higher education truly facing an existential crisis? Are we witnessing the beginning of a collapse, or simply a painful but necessary transformation?
This analysis examines the converging forces reshaping higher education to help institutional leaders understand the depth of the challenges, recognize the urgency of adaptation, and identify strategic opportunities amid the turmoil.
The Numbers Don't Lie: A Decade of Decline and the Looming Enrollment Cliff
For decades, American higher education enjoyed steady growth. Undergraduate enrollment climbed approximately 2.2% annually from 1985 to 2010, peaking at roughly 18 million students. This growth reflected a widely shared belief in the necessity of a college degree for economic success and upward mobility.
Then everything changed.
Between 2010 and 2022, undergraduate enrollment fell by nearly 15%, erasing years of gains and leaving total enrollment about 14.8% below the 2010 high. The COVID-19 pandemic accelerated this decline dramatically – between fall 2019 and fall 2022 alone, U.S. colleges lost over a million students, as many postponed or abandoned college plans amid the disruption.
The most alarming aspect of this trend? The worst may be yet to come.
Demographic data reveals that birth rates plummeted after the 2007-09 recession, creating what experts call an "enrollment cliff" beginning around 2025, when this smaller cohort reaches college age. In other words, the pool of traditional college-aged students is about to shrink even further, threatening to turn today's enrollment challenges into tomorrow's existential crisis for many institutions.
There is a glimmer of hope in recent data. In fall 2023, college enrollment inched up for the first time since the pandemic, growing by about 1.2% over the prior year. However, as Doug Shapiro of the National Student Clearinghouse Research Center noted, this "small uptick" must be viewed in context: "There are still over a million empty seats on campuses today that were filled five years ago."
Even more telling is where this modest growth occurred. Community colleges saw the strongest rebound (+2.6%), while four-year universities experienced smaller increases (~0.6%). The type of programs gaining the most traction reveals a significant shift in student preferences:
Associate degree program enrollment rose 2.2% in 2023 – the first growth for two-year programs since at least 2015
Undergraduate certificate programs have seen three consecutive years of growth
Community colleges with a strong vocational focus saw a stunning 16% enrollment jump
These patterns suggest students are increasingly seeking shorter, career-aligned pathways rather than traditional four-year degrees – a rational response to rising costs and uncertain returns on investment.
Meanwhile, graduate enrollment – which had been a bright spot earlier in the pandemic – has softened. After an initial surge during the 2020 economic slowdown, graduate student numbers slipped in 2022 and only edged up 0.6% in 2023. This stagnation indicates the enrollment challenges aren't confined to undergraduates; even advanced programs are feeling the strain as fewer students feed the pipeline.
The financial consequences of these enrollment trends have already been severe. Dozens of U.S. colleges have closed or merged in recent years due to financial troubles tied to declining enrollment. Those most at risk are small private colleges and regional public campuses in areas with falling youth populations. The industry is essentially in a race to adapt – by recruiting more nontraditional students, expanding online programs, and finding new revenue sources – before the demographic reality hits full force.
The Digital Disruption: Online Learning and the AI Revolution
While physical campuses struggle with empty seats, virtual classrooms are burgeoning. The pandemic accelerated a digital transformation that was already underway, permanently altering how education is delivered and consumed.
In 2022, more than half of U.S. college students (54%) took at least one class online, and over one in four students (26%) studied exclusively online, according to BestColleges' analysis of federal data. Before 2020, only a minority of college students had any online courses; now a majority do. This shift is not merely a temporary pandemic response – online enrollment remains far above pre-2020 levels, indicating a lasting change in student preferences.
Institutions recognize this reality. A recent survey found 47% of college administrators plan to increase investment in online programs in the coming year, with virtually none intending to cut online offerings. There's good reason for this strategic focus: online courses attract working adults, parents, and other nontraditional learners who might never enroll in a campus-based program. In one poll, 68% of online college students were employed while studying and 95% had children at home, underscoring the appeal of flexible formats.
However, traditional colleges now face intense competition in the online space from both established players and new entrants. Massive Open Online Courses (MOOCs) on platforms like Coursera and edX have exploded from 300,000 learners in 2011 to 220 million by 2021. These platforms, along with coding bootcamps and corporate certificate programs, offer targeted skills training that undercuts the monopoly universities once held on advanced learning.
Tech giants have further disrupted the landscape by creating their own credentials. Companies like Google and IBM now offer career certificates and hire based on skills rather than degrees, challenging the notion that a college diploma is the only ticket to a good job. This "unbundling" of education – where students can pick up credentials à la carte online – pressures colleges to prove the added value of a multi-year degree.
The newest disruptive force is artificial intelligence. The rise of generative AI tools like ChatGPT is transforming how students learn and how educators teach. AI can now tutor students one-on-one, generate practice problems, and even grade essays. Some universities are cautiously piloting AI teaching assistants, while students increasingly use AI tools for help with assignments.
The impact of AI is twofold:
It enables more personalized, self-paced learning outside the traditional classroom
It forces educators to rethink curricula and assessment methods that AI can easily circumvent
Simultaneously, demand for AI-related knowledge is booming. Business schools report that enrollment in courses on generative AI surged by over 500% in just one year. Colleges are racing to create new programs in data science, machine learning, and AI ethics to meet student and industry interest.
This digital revolution raises existential questions for traditional institutions: If cutting-edge job skills can be learned through an online course or interactive AI tutor at a fraction of college tuition, how will brick-and-mortar universities justify their costs? The competitive advantage of geographic proximity has evaporated as students can now enroll in programs from anywhere in the world. A student in rural America can take courses from prestigious universities without leaving home – or choose alternatives that don't involve traditional higher education at all.
The Crisis of Confidence: Declining Public Trust in the Value of a Degree
Perhaps the most troubling trend for university leaders is the precipitous decline in public trust. Americans have grown increasingly skeptical that a college education is worth the cost or aligned with societal needs.
According to a Gallup poll released in 2023, only 36% of U.S. adults say they have "a great deal" or "quite a lot" of confidence in higher education – an all-time low, plummeting from 57% just eight years earlier. This erosion of trust spans all demographics – young and old, college graduates and non-graduates, Democrats and Republicans – though it is most pronounced among Republicans, where confidence fell to a scant 19%.
"Higher education has really been losing ground with every major constituency," observed Zach Hrynowski, a Gallup education researcher. "It would follow that folks would stop engaging with that institution and enrolling... And we've seen that."
Public opinion on the importance of a degree for success has likewise turned ambivalent. A Pew Research Center survey found only 25% of Americans now believe a four-year college degree is "extremely or very important" to get a well-paying job. A plurality – 40% – said a degree is "not too important" or "not at all important" for economic success today.
This marks a sea change from past decades: as recently as 2013, 70% of Americans called college very important. By 2019 that had slipped to just over half, and now it's down to roughly a third. Those saying college is "not too important" jumped from only 4% in 2010 to 24% now.
The skepticism largely stems from concerns about return on investment. With student debt exceeding $1.7 trillion nationally and tuition outpacing inflation for years, many Americans aren't convinced that the payoff justifies the price tag. In the Pew survey:
Only 22% of adults agreed that the cost of a four-year degree is worth it "even if someone has to take out loans"
Nearly half (47%) said college is worth the money only if no loans are needed
29% flatly said the cost is not worth it in today's economy
Even among college graduates themselves, barely one-third believe that taking on debt for college was a worthwhile investment. These findings reflect real anxieties about graduates burdened with tens of thousands in loans, struggling to find high-paying jobs in their field.
Another factor eroding trust is the perception that universities are disconnected from practical reality or mired in ideological battles. Some Americans – particularly conservatives – view campuses as promoting political agendas or lacking intellectual diversity. Simultaneously, a growing chorus across the political spectrum questions whether colleges are teaching the skills needed in today's job market.
It's not all bad news – other surveys indicate Americans still acknowledge certain positives. Majorities agree that higher education contributes to scientific advances and the public good, and most support public funding for colleges. But those abstract positives aren't alleviating individual worries about cost and career payoffs. Trust in the institution of higher education is now markedly lower than trust in the military, small business, or even the police.
This reputational damage poses a serious challenge: colleges depend on public goodwill for student enrollment, government funding, and philanthropy. If faith in the enterprise continues to falter, the entire financing model of U.S. higher education – which relies on people believing in the long-term value of a degree – could be at risk.
The Great Misalignment: Degrees Offered vs. Labor Market Needs
One of the most damaging criticisms levied at universities is that they aren't keeping pace with the changing job market. Employers increasingly report a "skills gap" where they struggle to find workers with specific abilities needed, even as millions of degree-holders work in jobs that don't require their education.
Consider the sobering outcomes for recent graduates: According to a report by the Strada and Burning Glass Institutes, 52% of bachelor's degree graduates are "underemployed" in jobs that typically do not require a four-year degree within a year of finishing school. Even a decade later, 45% remain underemployed. Most striking, fully 88% of those underemployed graduates are in jobs that require only a high school diploma or less.
These figures paint a stark picture: universities are graduating large numbers of people into an economy that does not have college-level positions for them, or perhaps into roles where their specific degrees didn't align with available opportunities. As the report's authors noted, "The large number of underemployed individuals demonstrates a mismatch between the graduates coming out of college and the skills and experience employers seek."
From the employer side, there's a movement toward skills-based hiring as a response to this mismatch. Many companies, especially in tech, have realized that a diploma is not the only proxy for ability. A Harvard Business School study termed it a "degree reset": between 2017 and 2019, 46% of middle-skill jobs and 31% of high-skill jobs dropped or relaxed their degree requirements in job postings.
Major firms like Google, IBM, and Apple have publicly shifted to valuing demonstrated skills and portfolios over formal education in certain roles. Analysts predict that if this trajectory persists, as many as 1.4 million jobs in the next five years could open up to non-degree holders that previously would have required college. The implication is profound: employers are saying a degree alone isn't enough – or even necessary – for many careers.
Part of the disconnect lies in what students study versus where jobs are growing. Universities continue to mint large numbers of graduates in fields like communications, general liberal arts, or psychology, where the direct job pipelines are limited. Meanwhile, there are shortages in areas like nursing, software development, and skilled trades.
A Georgetown University Center on Education and the Workforce analysis highlighted this "great misalignment" at the sub-baccalaureate level: in fully half of U.S. labor markets, at least 50% of the certificates and associate degrees awarded would need to shift fields of study to match actual job openings projected. More than one-quarter of all middle-skill credentials (associate degrees/certificates) granted in the U.S. have no direct occupational match in the job market (e.g., liberal arts programs).
Among those graduates in non-occupational fields, only 42% successfully transfer to complete a bachelor's, leaving a huge number with a credential that doesn't slot into a career path. These individuals often struggle to find good-paying work, even as industries complain they can't find workers with relevant training.
Universities are beginning to respond by realigning curricula and enhancing career services. There's greater emphasis on internships (notably, students who complete internships have a 48.5% lower chance of post-college underemployment), co-ops, and experiential learning to ensure graduates have applicable skills. Some institutions are pruning low-demand majors and investing in programs aligned with high-demand fields like cybersecurity, data analytics, and healthcare.
The rise of alternative credential programs also speaks to this gap. Non-degree programs such as coding bootcamps, tech sales certificates, or digital marketing courses have proliferated precisely because traditional degrees weren't supplying job-ready skills fast enough. In one survey, nearly 1 in 3 Americans said that nondegree credential programs (like professional certificates or trade apprenticeships) provided more value than a college degree.
The job market is sending a clear signal: the focus is shifting from "What credential do you have?" to "What can you do?" Universities that adapt by ensuring their degrees impart in-demand skills (and by better signaling those skills to employers) will fare best. Those that don't may see their graduates and reputations suffer in the employment arena.
A Global Perspective: Is the Crisis Universal?
While the challenges facing U.S. higher education are severe, a global perspective reveals a more nuanced picture. Around the world, universities are contending with many of the same forces – demographic change, technological disruption, and questions of value – albeit in varying ways.
Surprisingly, global enrollment has actually been rising, driven by developing regions. UNESCO data shows that the number of students in higher education worldwide hit a record 264 million in recent years, up 25 million from 2020. This growth comes primarily from Asia and Africa, where expanding populations and increasing access to education are sending more young people to college. Women now outnumber men in tertiary education worldwide (113 women enrolled per 100 men).
However, this growth is uneven. Europe presents a mixed tableau:
Western and Northern European nations have generally maintained or grown enrollments modestly
Eastern and Southern European countries face declines due to aging populations
More than one-third of European countries saw a decrease in tertiary enrollments from 2016 to 2021
The UK just recorded its first enrollment dip in a decade in 2023, a 1.1% drop partly due to fewer EU students post-Brexit
East Asian education powerhouses are confronting the demographic cliff head-on. In Japan, a government task force warned that by 2040 the number of college freshmen could fall to just 510,000, down from 630,000 in 2023. Already over half of Japan's private universities are struggling to meet enrollment targets, especially in rural areas. The Japanese government is urging universities to broaden recruitment beyond traditional 18-year-olds or face an "unprecedented crisis" where whole regions might end up with no local universities at all.
China and India present contrasting challenges. China has massively expanded its higher education system and now graduates over 11 million university students annually – expected to rise to 12.2 million in 2024. This flood of graduates has raised concerns about underemployment, with youth unemployment hitting 21.3% in mid-2023. China's dilemma is almost the mirror image of America's – rather than too few students, China has so many college graduates that the economy can't absorb them all in high-skilled jobs.
India, conversely, is in expansion mode. With a growing young population, India aims to increase its gross enrollment ratio from around 27% to 50% by 2035. This involves creating new universities and colleges, embracing online education, and allowing foreign universities to operate in India. However, like in many countries, quality and graduate employability remain major challenges.
Latin America experienced a vast expansion of higher education in the 2000s but now faces a period of reckoning. Countries like Brazil, Mexico, and Chile dramatically grew college enrollment with new public universities and a boom in private institutions. A notable feature is the prominence of private providers: about 54% of higher education students in Latin America are enrolled in private institutions, the highest share for any world region. With economic stagnation and tighter government budgets, growth has tapered off, and the focus has shifted to improving completion rates and ensuring graduates have skills aligned with labor market needs.
Africa represents perhaps the starkest contrast to the U.S. situation. Sub-Saharan Africa still has the lowest higher education enrollment rate (around 9% gross enrollment), but demand is skyrocketing due to a booming youth population. Universities there face overcrowding and limited funding – essentially the inverse of Japan's problem: too many prospective students and not enough seats or resources.
This global perspective reveals that the phrase "higher education industry collapse" is too sweeping. Many countries are still expanding their collegiate systems. But virtually everywhere, the traditional model of higher education is under pressure to change. Whether it's the U.S. grappling with fewer students and skeptical publics, Europe adjusting to an aging society, Asia recalibrating an overproduction of graduates, or Latin America balancing expansion with quality, the common thread is that old equilibriums have been disrupted.
Conclusion: Crisis or Transformation?
So, is the higher education industry collapsing? In the United States, it is undeniably in a moment of crisis: enrollments fell for a decade, finances at many institutions are shaky, and the public's faith in college is waning. The traditional college paradigm – a residential four-year journey for recent high school graduates – is shrinking and evolving. Some smaller colleges will likely close; others will reinvent themselves to survive.
What we are witnessing is less a sudden collapse than a gradual reckoning and restructuring. Higher education is being forced to prove its value in concrete terms – to students, families, and employers. That means controlling costs, updating curricula, embracing technology, and focusing on outcomes. Institutions that can do so stand a better chance of thriving in the new landscape. Those that cling to old models may not survive the coming decades. As one Gallup analyst advised college leaders, there's "no silver bullet" to regain public confidence, but ignoring the warning signs is not an option.
The industry itself is not disappearing, but rather splintering into a new form. Education is still highly valued, but it's being sought in more varied ways: through online platforms, bite-sized credentials, employer-based training, and AI-powered tools – not just through brick-and-mortar universities.
Crucially, the societal need for educated citizens and skilled workers has not diminished. In fact, as the world becomes more complex – with AI, global competition, and urgent issues like climate change – one could argue we need more and better education than ever. The question is whether existing colleges will lead in providing it, or whether new models will overtake them.
The next few years will be pivotal. The enrollment cliff around 2025 will test which institutions have adapted by broadening their reach to adult learners, online students, and other non-traditional populations. Public policy will also play a role: decisions on funding, student debt relief, and workforce training programs could alleviate or exacerbate the pressures on colleges.
For institutional leaders, the implications are clear:
Embrace innovation in delivery models: The future is hybrid, combining the best of online and in-person experiences. Rigid adherence to traditional models is increasingly untenable.
Align programs with market needs: The disconnect between degrees offered and employer demands must be addressed. This means developing stronger industry partnerships, emphasizing experiential learning, and creating clearer pathways from education to employment.
Rethink the value proposition: As alternatives proliferate and public skepticism grows, institutions must articulate their unique value more clearly. What does your institution offer that a self-paced online course or corporate training program cannot?
Diversify student recruitment: The demographic cliff demands looking beyond traditional 18-year-old high school graduates. Adult learners, international students, and career-changers represent critical growth opportunities. Leveraging AI-powered tools like Havana can help institutions scale their outreach, engage these diverse student populations 24/7, and ensure no potential applicant is missed, turning a demographic challenge into a growth opportunity.
Control costs while improving outcomes: The challenge is not merely to cut expenses but to enhance value. This may require difficult decisions about program prioritization, administrative efficiency, and resource allocation.
Casting the situation as a "collapse" misses the full picture. Yes, the old models are failing under the weight of new realities. But like a phoenix, higher education may be reborn in a form better suited to the 21st century – more accessible, more responsive to labor market needs, more technologically sophisticated, and perhaps more diverse in its institutional forms.
The headlines of falling enrollments, rising tuitions, and eroding trust serve as a clarion call: adapt or perish. The colleges and universities that heed this call will shape the future of learning – if they can survive the present tumult. The question is not whether higher education will continue to exist, but what form it will take, who will lead the transformation, and which institutions will thrive in the new reality.
For those in leadership positions, this is a moment that demands courage, creativity, and a willingness to challenge long-held assumptions about how higher education should operate. The institutions that emerge strongest will be those that view the current crisis not as a collapse, but as an opportunity for reinvention.
Frequently Asked Questions
What is the 'enrollment cliff' in higher education?
The "enrollment cliff" refers to the significant drop in the number of traditional college-aged students expected to begin around 2025. This demographic shift is a direct result of lower birth rates following the 2007-09 recession. With a smaller pool of high school graduates, colleges will face intensified competition for fewer students, threatening the financial stability of many institutions.
Why is public trust in higher education declining?
Public trust in higher education is declining primarily due to concerns about high costs, student debt, and a low return on investment. According to a 2023 Gallup poll, only 36% of U.S. adults have high confidence in higher education. This skepticism is fueled by findings that nearly half of Americans believe a college degree is only worth the cost if no loans are needed, alongside a perception that universities are disconnected from the job market.
How is AI changing higher education?
Artificial intelligence (AI) is changing higher education by transforming how students learn and educators teach, while also creating new demands for AI-related skills. AI tools can act as personalized tutors and help with assignments, forcing institutions to rethink curriculum and assessment. Simultaneously, there is a surge in demand for courses in AI and data science to meet both student interest and industry needs.
Is a college degree still worth it in today's economy?
Whether a college degree is worth it is increasingly debated, as its value depends on the field of study, the institution, and the debt incurred. Public skepticism is growing, with a Pew Research survey finding only 22% of adults believe a four-year degree is worth the cost if it involves loans. The rise of skills-based hiring means a traditional degree is no longer the only path to a successful career, pressuring universities to prove their tangible return on investment.
What is the 'skills gap' and how does it affect college graduates?
The "skills gap" refers to the mismatch between the skills employers need and the skills that job applicants, including college graduates, possess. This misalignment leads to high rates of underemployment, with 52% of recent bachelor's degree holders taking jobs that do not require a college degree. This happens when academic programs don't keep pace with industry demands, leaving graduates unprepared for available high-skilled jobs.
What can universities do to survive the current challenges?
To survive, universities must innovate delivery models, align programs with labor market needs, diversify student recruitment, and control costs while proving their value. Key strategies include embracing hybrid learning, building industry partnerships to ensure curricula are relevant, and focusing recruitment on non-traditional students like adult learners. Institutions must become more responsive and accessible to thrive.
How has online learning impacted traditional universities?
Online learning has fundamentally impacted traditional universities by increasing competition and shifting student expectations toward more flexible and accessible education. With over half of U.S. college students now taking at least one online class, physical location is no longer a primary competitive advantage. Traditional universities must now compete with online institutions and corporate credential programs, forcing them to invest in their own online offerings and prove the unique value of a campus experience.
Sources
National Student Clearinghouse Research Center – "Undergraduate Enrollment Grew in the Fall of 2023"
BestColleges – "U.S. College Enrollment Decline Statistics" and "Online Learning Statistics"
Gallup Poll – "Americans' Confidence in Higher Education Down Sharply"
Pew Research Center – "Is College Worth It?"
Strada and Burning Glass Institute – "Underemployment and Its Long-Term Effects for College Graduates"
Harvard Business School – "The Degree Reset: Skills-Based Hiring"
Georgetown University Center on Education and the Workforce – "The Great Misalignment"
UNESCO – Global Education Monitoring Report
UK House of Commons Library – "Higher education student numbers"
Newsweek – "Japan's Declining Birth Rate Could Spark University Closures" and "China's Record-High College Graduates Face Economic Uncertainty"