A System That Forgot Its Mission
For generations, earning a college degree was viewed as one of the surest paths to a better life. Universities were expected to educate young adults, prepare them for careers, and develop the next generation of leaders, engineers, teachers, scientists, and entrepreneurs. According to historian Victor Davis Hanson, however, many American universities gradually lost sight of that mission. Instead of focusing primarily on education, they expanded their bureaucracies, increased costs, embraced political activism, and relied on an endless stream of federally backed student loan money to sustain an increasingly expensive system. Now, Hanson argues, those decisions are catching up with higher education.
The warning signs are everywhere. Colleges are no longer competing to admit the best students. Increasingly, they are competing simply to fill their classrooms. Schools across the country are cutting programs, offering larger tuition discounts, merging with neighboring institutions, or closing entirely. What many university leaders once feared as a distant possibility has now become reality.
As Hanson puts it, universities are discovering that “they will not reform on their own.”
The Demographic Cliff Has Arrived
One of the biggest challenges facing higher education has nothing to do with politics or economics. It is demographics.
For years, education experts warned that declining birth rates would eventually produce far fewer college-age students. That prediction has now become reality. The Association of Governing Boards calls it the “demographic cliff.”
The nation’s high school graduating class of 2025 represents the largest graduating class expected for many years. After that, the number of potential college students begins to shrink. Births peaked at approximately 4.3 million in 2007 before steadily falling. By 2024, only about 3.6 million babies were born, a decline of nearly 17 percent. Experts now project national college enrollment to decline another 5 percent by the beginning of the next decade, with California expected to lose 16 percent of its college-age population and New York about 14 percent.
Economist Nathan Grawe, who has studied these trends extensively, believes higher education may be entering “a slide that will last for at least the next 18 years.”
For universities that built their budgets around continually growing enrollment, that presents an enormous financial problem.
Students Are Becoming More Skeptical
The demographic challenge is only part of the story.
Families are also questioning whether college is worth the enormous cost.
According to Bureau of Labor Statistics data cited in the enrollment study, fewer than 63 percent of high school graduates enrolled immediately in college in 2024, down from 70 percent just eight years earlier. Many young people, particularly men, are choosing to enter the workforce instead.
The Guardian similarly reported that freshman enrollment among 18-year-olds fell another 5 percent in 2024, with public and private four-year institutions each experiencing declines of more than 6 percent. Education experts cited rising costs, uncertainty surrounding financial aid, and attractive employment opportunities as major reasons students are delaying or skipping college altogether.
Ironically, applications to many schools remain strong, but actual enrollment is slipping as families weigh whether the financial burden is justified.
Administrative Bloat Changed the Economics
Hanson argues that universities created much of their own financial crisis through what he calls administrative bloat.
Rather than investing primarily in teaching and research, colleges dramatically expanded the number of administrators, offices, compliance departments, diversity programs, student affairs divisions, and other non-teaching staff.
At Stanford University, Hanson notes that there is roughly one administrator or staff member for every student.
While that figure is anecdotal, broader national statistics show the same trend.
According to the American Enterprise Institute, public four-year universities now employ approximately 145 non-instructional staff members for every 1,000 students, while private nonprofit universities average 173 non-instructional employees per 1,000 students. Among the most administration-heavy universities, there are roughly 366 non-instructional employees for every 1,000 students, or more than one staff member for every three students. Some elite universities now employ more non-teaching staff than instructional faculty.
Washington University in St. Louis reported more full-time non-instructional employees than students.
The growth has been dramatic over time. Between 1993 and 2007, the number of full-time administrators at major research universities increased 39 percent, while instructional personnel grew only 18 percent. Inflation-adjusted administrative spending rose 61 percent during that period.
Hanson believes this transformation fundamentally changed the mission of many universities. Instead of focusing primarily on education, institutions increasingly acted, in his words, “in loco parentis,” attempting to supervise every aspect of student life while building ever-larger bureaucracies to support that role.
Federal Student Loans Removed Market Discipline
According to Hanson, another major contributor to rising costs was the expansion of federally guaranteed student loans.
Once the federal government guaranteed loans, universities knew students would continue receiving financing regardless of how quickly tuition increased.
Without normal market pressures limiting prices, tuition climbed much faster than inflation.
Meanwhile, student debt exploded.
Federal student loan balances now total roughly $1.7 trillion nationwide, while repayment problems continue to mount. Hanson argues that guaranteed financing allowed universities to continue expanding programs and bureaucracy without facing the normal financial discipline that most businesses encounter.
Students, meanwhile, often graduated carrying tens of thousands of dollars in debt, or never graduated at all.
Too Many Students Never Finish
One of the most troubling statistics involves graduation itself.
Hanson argues that universities have become remarkably inefficient at producing graduates despite their soaring costs.
The enrollment study paints a similar picture.
As of 2024, only about 40 percent of women and 37 percent of men over age 25 held a bachelor’s degree or higher. Many students begin college but never complete it.
Hanson notes that many students now require roughly six years rather than four to complete a bachelor’s degree, while a substantial share leave school without graduating.
For those students, the financial burden remains even though the diploma never arrives.
Foreign Students Became Financially Important
As domestic enrollment began slowing, many universities increasingly turned toward international students.
According to the Association of Governing Boards, American colleges enrolled a record 1.126 million international students during the 2023 to 2024 academic year, representing nearly 6 percent of total enrollment.
Unlike many American students, international students often pay full tuition with few institutional discounts.
For universities facing enrollment pressure, these students became an increasingly valuable source of revenue.
Reuters reported that Chinese students alone numbered nearly 290,000 during the 2022 to 2023 academic year. At the same time, growing national security concerns have prompted universities and federal officials to limit Chinese students’ access to certain advanced scientific research programs while encouraging greater recruitment of students from countries such as India for science and engineering fields.
Whether international enrollment will continue growing remains uncertain as immigration policies evolve and visa processing changes.
The Closures Have Already Begun
The financial pressure is no longer theoretical.
Some colleges have already disappeared.
The Association of Governing Boards describes the closure of Birmingham-Southern College after 168 years as one example of the difficult decisions many institutions now face. Despite repeated attempts to reduce costs, cut faculty positions, lower tuition, and raise private donations, years of operating deficits ultimately forced the college to shut its doors.
Other public university systems have merged campuses to cope with declining enrollment, including Pennsylvania’s state university system.
Meanwhile, institutions that continue thriving often share common characteristics. They are located in growing states, possess large endowments, maintain strong academic reputations, and increasingly emphasize practical career preparation, internships, and workforce outcomes.
A Reckoning for Higher Education
Victor Davis Hanson argues that American universities did not simply become victims of changing demographics. In his view, they spent decades expanding bureaucracy, increasing tuition, relying on federally guaranteed loans, and drifting away from their central educational mission. Now those decisions are colliding with fewer college-age students, greater public skepticism, and increasing competition from skilled trades and alternative career paths.
The data suggest that many of the pressures Hanson identifies are real. Birth rates have declined. Enrollment is falling. Administrative staffing has grown substantially. Student debt has reached historic levels. Colleges across the country are discounting tuition more heavily while competing harder than ever for applicants.
Whether universities respond by shrinking bureaucracy, reducing costs, modernizing academic programs, or simply continuing existing practices may determine which institutions survive the coming decades. For many colleges, the long anticipated enrollment cliff has finally arrived, and the choices they make now may determine whether they adapt or become the next campus forced to close its doors.
FAM Editor: Ronald Reagan once said “Whatever you subsidize you get more of.” The problem is that while we thought we were subsidizing student education, we were actually subsidizing University bloat. The student loan programs actually take on a socialist bent, separating the costs from the value of the product, sending costs spiraling up. This needs to change…
