According to the findings, college attendance surged throughout the recession, particularly in the hardest-hit states. Part-time enrolment climbed while full-time enrollment decreased, with the gains concentrated among students of color.
What impact does a recession have on colleges?
Although it may appear at first glance that recessions and economic conditions have little direct impact on college students, events in 2002 and early 2003 show that the economy’s health can have a big impact on college students. The 2001 recession, as well as the stock market bear market from 2000 to 2002, contributed to the widespread state budget crises in 2003. The current budget crisis is having a significant influence on public education, both in college and in K-12. States cut educational services and increased student tuition and fees at the college level. The job market for students and graduates was also impacted by the 2001 recession and subsequent jobless recovery. So, let’s take a closer look at a few of these impacts.
Recessions, or periods when economic output falls rather than rises, often reduce tax receipts, particularly income taxes and, to a lesser extent, sales taxes, while increasing government spending on social safety net programs (jobless benefits, health and welfare programs). These dynamics combine to cause state budget shortfalls and tough financing decisions, as evidenced by the 2003 funding cuts for state-supported schools and universities, as well as reductions in student support.
The stock market’s decline from 2000 to 2002 (as illustrated in Chart 1) intensified the 2001 recession’s severe effects on educational services and college students. From the March 2000 peak of $18.3 trillion to December 2002, the bear market resulted in a very uncommon period of three consecutive annual decreases in stock market valuation and a loss on paper of nearly $6.7 trillion in market valuation. 1 The rapid drop in stock market valuation cut earnings on capital gains and stock options, lowering personal income and state tax receipts that help fund educational programs.
The bear market has also affected the returns on endowments that support education and programs at many private and public universities, as well as the value of stocks held by some parents to support their children’s education. As a result of the economic downturn, several private universities may be facing funding constraints.
Budget cuts can have a direct impact on education and students in a variety of ways.
2 As programs compete for lower funding, course offerings, programming, and student activities may be reduced. Student loan, employment, and aid funding opportunities may also be limited. As a result of the present financial shortfall, several colleges have raised tuition and fees as they try to make ends meet. These indirect repercussions of the recession on college programs, however, are not the only ways in which the recession has impacted college students.
Students faced a more difficult economic climate as members of the labor force during the 2001 recession and the “jobless” expansion that began in November 2001 and continued into 2003. The recession of 2001 led in a predicted rise in the unemployment rate among college students. According to the National Center for Educational Statistics and the American Council on Education, around 80% of all undergraduates work while attending college. 3 Unemployment rates for people aged 16 to 19 and 20 to 24, the demographic categories that constitute the majority of college students, generally climb sharply during recessions (shown by shaded columns on the chart) and into the early stages of recovery, as seen in Chart 2. In the soft labor market, not only current students, but also recent college grads, have discovered less job options. During an expansion, however, the unemployed situation usually improves, as shown in the graph.
In a downturn, what happens to education?
People often pursue higher education to obtain new abilities and boost their future career prospects during times of recession. This is supported by research. “In general, recessions lead to enrollment increases for many schools,” says Bob King, Collegis Education’s senior vice president of partner strategy.
During economic downturns, what happens to community college enrollment numbers?
This autumn, California’s community college system is seeing a drop in student enrollment across the board, with some schools reporting double-digit losses.
The fact that fewer students have signed up for classes this fall suggests a concerning trend for the nation’s largest college system, which has 116 schools serving over two million students. While enrollments have been basically steady in previous years, with differences among colleges, the picture appears to be different this year, with the coronavirus pandemic, job losses, the switch to mostly online classes, and historic wildfires complicating the picture.
Chancellor of California Community Colleges Eloy Ortiz Oakley said during a Board of Governors meeting Monday, “This is an issue that we’re paying very close attention to, that we’re very concerned about, particularly as it relates to any loss of enrollment for our most vulnerable student populations.” “We had a brief drop in enrolment at the start of the (fall) semester. That chasm is beginning to close. We’ll have more information in November, but for now, we’re probably looking at a 5 percent to 7 percent drop in enrolment.”
According to Oakley, the college system had “an increase in enrolment over the summer term, which is wonderful news.” Many students were able to recuperate from the pandemic’s beginning and continue with their studies.”
Oakley’s figures are based on a community college poll that has received fewer than half of the responses so far, with the majority indicating dropping enrollments, including part-time and full-time students. Officials indicated that some universities are defying the trend and reporting somewhat higher enrollments.
Community colleges across the country appear to be seeing even steeper enrollment decreases than California. According to Inside Higher Ed, the 24-campus Alabama Community College system has seen a 29 percent reduction, and enrollments at Pennsylvania’s 14 community colleges are down ranging from 3 percent to 30 percent this fall.
During a recession, community college enrollments typically rise as students struggle to find work and attempt to enhance their abilities by enrolling in college courses.
When the economy is doing well and students prefer to work rather than go to school, community colleges have seen minor enrollment drops in the past.
However, according to Michelle Siqueiros, head of the Campaign for College Opportunity, a California-based advocacy organization, dropping enrollments during the current recession are at least in part a reflection of students’ reluctance or inability to participate in online instruction. “Despite the fact that many of us are tech-savvy, there is a strong sense that students want to be in the classroom,” she said. “This could be a lost generation,” says the author, “since kids who drop out or do not enroll in college often do not return.”
Why do more people enrol in higher education during a recession?
Higher education has a peculiar characteristic in that it runs in the opposite direction of the economy. When the economy is stagnant, demand for college grows as unemployed people decide to return to school in order to enhance their career prospects. Since the coronavirus outbreak appears to be causing a new recession right now, I thought it might be helpful to review what occurred to schools and institutions during the Great Recession of 2008 to help us think through what could or might not happen this time.
From 15.6 million undergraduate students in the fall of 2007 to a peak of 18.1 million students in the fall of 2010, the number of students enrolled in college increased by about 2.5 million, or nearly 16 percent. According to Doug Shapiro, executive research director of the National Student Clearinghouse Research Center, the majority of the increase was driven by older individuals rather than traditional college-age students who had recently graduated from high school. These seniors primarily attended two-year community colleges and for-profit online schools like University of Phoenix.
Back-to-school shopping did not happen overnight. There was a gap of 18 months. Workers were laid off first. They then ran out of jobless benefits. “When they realize they won’t be able to find another job, they begin to consider going back to school, according to Shapiro. “And it takes them a year and a half to two years to get through the entire process of selecting a school and getting into one.”
How did the Great Recession of 2008 influence education?
This study examines the impact of the Great Recession on public schools, including:
- Approximately 300,000 school personnel were laid off in the end. This equates to approximately 4% of the education workforce.
- States were hurt harder if they relied on state taxes to fund schools rather than local tax sources. Because sales and income taxes are more volatile than property taxes, this is the case.
- Although the federal stimulus helped close financial shortages, some data suggests it ran out too quickly and wasn’t targeted to the districts who needed it the most.
What does a possible recession imply for higher education?
As the coronavirus spreads across the country, it has had a significant influence on higher education. Most institutions have made a hasty transition to an all online experience for their students. Due to public health concerns, many students have been compelled to leave their residences. In phase three of its legislative package to combat the coronavirus, Congress recognized these issues and granted some relief to universities and students. At the present, phase three is focused on schools and students, but when the economy recovers from the coronavirus, higher education is expected to face a fresh issue.
What impact does the economic downturn have on education?
Negative effect 1: As adult income declines, it becomes more difficult for parents to cover direct educational costs such as tuition, fees, books, supplies, uniforms, and private tutoring. As a result, educational outcomes are affected because the youngster is either absent from school or underprepared for it.
What impact did the Great Recession have on higher education?
Since the financial crisis, the amount of student debt owed in the United States has more than doubled, to $1.5 trillion. The Great Recession’s second long-term impact on higher education was a significant shift in the majors that students chose in college. It’s all about the work for this generation of kids.
Why is there a drop in college enrollment?
The causes for the reduction in enrolment have been widely addressed dropping birthrates, broad immediate employment availability, and increased public skepticism of the need for higher education but the long-term consequences have received less attention.
Why are fewer students attending college?
“As institutions negotiate yet another year of COVID-19, our final look at fall 2021 enrollment shows undergraduates continuing to sit out in droves,” said Doug Shapiro, executive director of the National Student Clearinghouse Research Center. “The potential damage to these kids’ wages and futures if they do not dramatically reengage in their education is considerable, and it will have a significant influence on the nation as a whole in years to come.”
The research provides a more detailed assessment than the nonprofit’s last November report, which indicated a 6.5 percent reduction in California, owing to the fact that approximately 33% more institutions supplied data.
There were also declines in four-year public universities across the country. California’s public four-year university enrolment fell by 2.9 percent from fall 2020 to fall 2021, outperforming 25 other states.
After Washington, New York, Maine, Mississippi, Oregon, Pennsylvania, and South Dakota, California suffered the eighth-largest reduction in community college enrollment. According to Shapiro, the fall in community colleges is likely attributable to students preferring the job market over education.