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Harvard University's iron gate in Cambridge, Massachusett. (Photo: Marcio Jose Bastos Silva/Shutterstock)

Ironic Demographics: The Higher Education Bubble

• April 14, 2014 • 11:59 AM

Harvard University's iron gate in Cambridge, Massachusett. (Photo: Marcio Jose Bastos Silva/Shutterstock)

Demographic decline is shrinking the pool of applicants for all but a handful of global superbrands, 80 percent of which are located in the United States.

In case you haven’t heard, higher education is dying. Tuition is too damn high. Demographic decline is shrinking the pool of applicants. For example, in Poland:

After growing rapidly for two decades, higher education enrollments peaked in 2009, having risen fivefold to almost 2 million. This year, the numbers have tailed off and are set to fall farther, even though Poland’s university enrollment rate is the fourth highest among Organization for Economic Cooperation and Development nations.

By 2020, the number of 19-year-olds in Poland will be about 361,500 – almost half the level of 2002’s high-water mark, when those born at the height of the baby boom of the early to mid-1980s reached university age, according to a report published by the Perspektywy Education Foundation.

“By 2016, the number of places on offer in state universities will be equal to the number of teenagers graduating from high school,” explains Witold Bielecki, rector of Kozminski University in Warsaw, one of Poland’s most highly regarded private universities.

Poland has reached peak college student. It’s all downhill from here. Unless Poland does a better job of attracting freshmen from other countries (“exporting” higher education). In that competitive global space, the rich get richer:

Top universities in the UK’s regions are sliding down the international league table as the US institutions cement their dominance and universities in Seoul and Hong Kong are rising quickly through the ranks, according to new research.

The latest Times Higher Education World Reputation Rankings show a widening gap between a “golden triangle” of institutions in London, Oxford and Cambridge, while Bristol has become the latest respected institution to drop out of the top 100. This follows the fall of Leeds, which lost its top 100 place last year, and Sheffield, which dropped out in 2012.

As usual, the elite group of global “superbrands’’ dominates the top 10, headed by Harvard University, followed by the Massachusetts Institute of Technology and Stanford University. Cambridge was the highest-placed UK institution in fourth, followed by Oxford in fifth. In total, the US has eight of the top 10 places.

Emphasis added. Superbrand universities don’t worry about the higher education bubble and demographic doom. The world is their oyster. Demand outstrips supply, the higher ed gap between the haves and the have nots widens:

Bruce Poch, a former admissions dean at Pomona College in Claremont, Calif., said he saw “the opposite of a virtuous cycle at work” in admissions. “Kids see that the admit rates are brutal and dropping, and it looks more like a crapshoot,” he said. “So they send more apps, which forces the colleges to lower their admit rates, which spurs the kids next year to send even more apps.”

For most of the past six decades, overall enrollment boomed, while the number of seats at elite colleges and universities grew much more slowly, making them steadily more selective. Enrollment peaked in 2011, and it has dropped a bit each year since then, prompting speculation that entry to competitive colleges would become marginally easier. Instead, counselors and admissions officers say, the pool of high-achieving applicants continues to grow, fed partly by a rising number from overseas.

At the same time, students send more applications than they once did, abetted by the electronic forms that have become nearly universal and uniform applications that can make adding one more college to the list just a matter of a click. Seven years ago, 315 colleges and universities accepted the most widely used form, the Common Application; this year, 517 did.

As in Poland, the United States has hit peak college student. Unlike Poland, some universities (i.e. superbrands) saw admission rates get even lower. Demographics be damned, not all higher education markets are created equal.

Before dooming regional eds and meds, check to see if services are exported. Tradable eds and meds are the cornerstone of a divergent Legacy Economy. Tuition and health care costs are never too damn high. Geography matters. Whereas the Innovation Economy is dying. Wages are too damn high. Geography is dead.

Jim Russell

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