American higher education is in crisis.
Two recent Supreme Court’s decisions have added to the crisis. In Students for Fair Admissions, Inc. v. President and Fellows of Harvard College the Court struck down the use of affirmative action in college admission decisions. In Biden v. Nebraska it struck down the president’s executive order to forgive some student loan debt. Both decisions add to a growing list of problems that threaten the future of many colleges and universities, including in Minnesota.
Higher education in America is a business. Colleges and universities are corporations. They sell education as their products to students who are their customers. They have to compete against other schools for students by offering a variety of majors and amenities. They need revenue streams such as tuition, grants, or donations to finance their costs. Yet the business plans that have defined higher education for the last fifty or more years are collapsing.
Prior to WWII colleges and universities were elite institutions for the wealthy few. Many schools excluded women and people of color. But after WWII, it was the GI Bill that encouraged returning veterans to go to college. The Cold War also pushed many into college as the race for technological superiority with the USSR heated up. States such as Minnesota created or vastly expanded inexpensive tuition to serve an exploding Baby Boom generation. Altogether, the U.S. in 1960 7.7% of the U.S. population had a college degree – by 2020 it was 37.5%. Much of American economic growth and global supremacy was fueled by college degrees where we had a dramatic lead over most of the world. The business plan of higher education was public dollars and an expanding student population eager to attend college.
Yet starting in the 1980s the business plan changed. States began cutting back on public support for higher education and previous grants now turned into loans as college increasingly came to be seen as a private benefit financed individually and not a public good financed by taxpayer dollars. The large Baby Boom population passed beyond college age, replaced by a much smaller Gen X population. Higher education became more heavily dependent on tuition, especially pricy professional education programs. So long as it looked like a college degree was worth it, students were willing to shell out tens of thousands of dollars and go into massive debt. Additionally, because of its quality, higher education benefited from large enrollments from international students willing to pay top dollar for a U.S. degree.
The financial crash of 2008 was a breaking point for college and universities and this new business plan. A college degree looked less attractive as tuition continued to increase. Moreover, students were tapped out. In 2010 for the first time ever, student loan debt exceeded credit card debt, and by law it was not dischargeable under bankruptcy. It has grown now to where it is $1.78 trillion, nearly twice the $986 billion in current credit card debt. For many, a college degree is a lifetime loan, impacting their ability to buy a house or raise a family.
But the 2008 crash created another problem – the enrollment cliff. Birth rates crashed in 2008 and continue to go down. Approximately 18 years later in 2025-2026 colleges are estimated to lose more than 575,000 students, or 15% of their students, with no immediate reversal from a large Millennial and Gen Z population. In part this is because these generations were among the most racially diverse in American history, yet the racial achievement gap in the U.S. and Minnesota means many of these students just will not be prepared or interested in college. Finally, International student enrollment is down both due to COVID and anti-immigration policies.
As a result states such as Minnesota were facing a higher education crisis. Between 2013 and 2022 MNSCU enrollment was down nearly 28%, with schools such as St. Cloud State down by more than 40%. And in case anyone thinks the crisis is simply for four-year schools, in Minnesota and nationwide less expensive two-year community colleges such as Minneapolis Community and Technical College have seen 40%-plus enrollment declines. The statewide educational racial achievement gap, among the worst in the nation, has hurt college and university enrollment in Minnesota too. And despite record 2023 legislative funding for higher education, the University of Minnesota has raised tuition again. Private colleges too in Minnesota are not immune from all of the trends noted above. One wonders who survives after 2025.
There is no immediate fix for higher education. Free college may help, but not solve some problems for affordability, but it does not fix the enrollment cliff or the crashing business plan that has structured colleges and universities in America. We are in danger of having fewer and fewer students attending fewer and fewer colleges, returning us back to the elitist days when only a few could attend.
David Schultz is a distinguished professor in the Department of Political Science, Department of Legal Studies and Department of Environmental Studies at Hamline University.
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