Students are reshaping the higher education market by abandoning low-ranking schools and low-earning majors.
F ewer students are going to college, leading many to worry that young Americans are abandoning higher education and risking their future. But while college enrollment has plunged by more than 3 million since 2010, those “missing students” aren’t necessarily losing out. That’s because most of the drop in college enrollment has occurred at institutions with the worst student outcomes. At high-quality colleges, enrollment has actually increased.
College is often treated as a monolith — but as more and more evidence shows, there is considerable variation in the quality of education in different institutions. While some colleges reliably set up their graduates for success in life, others fail to even graduate most of their students. And the students lucky enough to earn degrees may find that those sheepskins don’t help them land a decent-wage job or pay down their student loans.
In a new report for the American Enterprise Institute, I explore the stark divergence in college enrollment trends between high- and low-quality institutions. I divide colleges into five groups based on student outcomes, including quantifiable metrics such as the percentage of students who complete their degrees, the share of borrowers paying down their student loans, and median earnings after graduation.
By my measure, a student attending a college in the top one-fifth of institutions nationwide is four times as likely to graduate and two times as likely to pay down her loans as a student attending a college in the bottom fifth. After leaving school, students at top-fifth colleges also earn $20,000 more annually than students from bottom-fifth colleges.
Students seem to be taking notice. Between 2010 and 2023, undergraduate enrollment at colleges in the bottom fifth of institutions dropped by 47 percent. For instance, the University of Phoenix, a major for-profit college chain, enrolled more than 330,000 students in 2010. But just a quarter of Phoenix’s students graduate, and earnings after enrollment are well below the national average. By 2023, undergraduate enrollment had dwindled to just 77,000 — a drop of more than three-quarters.
But Phoenix and other for-profit colleges are not solely responsible for the drop in enrollment: Low-quality public and private nonprofit colleges also saw their enrollments plummet over the same period. Almost all of the aggregate drop in enrollment is attributable to colleges in the bottom two-fifths of the student-outcomes distribution. For these “missing students,” perhaps avoiding college was not a missed opportunity, but a bullet dodged.
Meanwhile, higher-quality institutions have expanded, offsetting some of the fall in college enrollment. Institutions in the top fifth of student outcomes grew by 8 percent overall between 2010 and 2023. But some high-quality schools have grown much faster. In 2010, Texas A&M University enrolled just over 40,000 undergraduates. Today, enrollment exceeds 60,000.
Political scientists say that people “vote with their feet” by moving to states and cities with better policies. Similarly, students seem to be “learning with their feet” by choosing colleges that offer better prospects, and by sometimes electing to avoid college entirely if there is no good option available.
This new golden age of consumer choice extends to the subjects that students pursue once they arrive on campus. High-wage majors are increasingly popular. In 2023, colleges awarded three times as many bachelor’s degrees in computer science as in 2010. Nursing degree conferrals rose 91 percent over the same period, while engineering gained 63 percent. Interest in lower-earning majors waned: The number of degrees conferred in sociology, fine arts, and English literature are all below their 2010 levels.
It’s doubtful that students are poring through spreadsheets of college-outcomes data to optimize their post-secondary pathways. But information about the relative value of different colleges spreads in other ways: word of mouth, social media, and news coverage. It’s also significant that public opinion has shifted against the fallacy that college always pays off. While college can be an important tool for economic mobility, it’s not always a sure bet. Students therefore need to be careful if they decide to attend college. In recent years, this idea seems to have sunk in.
The recent decline in college enrollment is not a cause for alarm, but an opportunity. Colleges must work harder to ensure that their value is real in order to win back a skeptical public. That means investing in improving outcomes and expanding higher-value programs of study. Student choice has reshaped the market for higher education. Now it’s up to colleges to earn back students’ confidence.