Of the various trends to emerge from the pandemic, one is the undeniable decline in college enrollment and its continuing drop. According to the National Student Clearinghouse, there are 1 million fewer students enrolled in college right now than there were prior to the pandemic. What are the factors driving this trend, and could it continue over the next year? In this segment of Backstage Pass, recorded on Jan. 14, Fool.com contributors Rachel Warren and Toby Bordelon discuss.
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Rachel Warren: We've seen this great reset across so many different sectors and so many different types of ways. One of the most obvious being people quitting their jobs at record rates and maybe going to a job that they can be remote or flexible or hybrid or perhaps freelance.
I know of course this also includes community college enrollment. But you think about the fact that the cost of getting a four-year degree in the U.S., is vastly more expensive than in many other western countries. That has been weighing down on students for a very, very long time. I know for me, it was the only way I was able to afford to go to college some years ago, was I worked through school, sometimes full-time. I did not go away to school, I did my college online.
Even then, it was definitely a challenge at times. I have very, very good friends that work in a lot of different industries, that like what you were saying, got these multi, hundreds of thousands [laughs] of dollars degrees. Those did enable them to find really good jobs in many cases.
But I do think people are evaluating the types of lives that they want to lead now and the direction they want to take their life in. I think when you have a once in a lifetime pandemic, in so many ways it makes you evaluate what matters, what are my priorities? I think in education, is extremely valuable.
I will be interested to see if maybe some people that are taking a pause. That's something I did earlier on in my college education, I took a pause and then went back. Maybe people need to take a break and maybe people need to rest, do a little bit of a mental reset, prioritize and get back to it.
Then I think in some cases you're going to see people as we have a different kind of a job environment. There are so many opportunities available. I think employers are seeing that they need to be more open to all different types of talent and not just these four things that have to be on the hiring list.
I remember looking at jobs years ago where they would want you to have three degrees and all this experience and there was just no way you'd ever be able to meet some of those requirements.
I think that that is something where people are seeing there's actually a lot of opportunities right now. There's a lot of flexibility for workers. Maybe I actually don't need that four-year degree right now. I did see an interesting article on NPR and they were talking about, in the short-term this could be a good thing.
But over the long term, could some of the people that have pulled back from school as things readjust have a more difficult time maintaining jobs that are paying really well and that can provide for them and their families? I think it's going to depend. I don't think it's going to be one thing across the board. I think there's a lot of opportunity out there right now.
There's so many creative people with incredibly entrepreneurial spirits where you don't need a college degree to take your idea and put it to fruition. Yeah, I think people are changing how they want to live their lives, how they want to work, where they want to go to school. I think it's not surprising that this carries over to education.
Toby Bordelon: Good thoughts from both of you. You both touched on this, about this idea of reassessing, thinking about whether it's really worth it. Especially the way you phrase it, Connor. All of a sudden the pandemic made people think about, is this really what I want to do instead of just defaulting into it like we've done for so long. This is kind of relates to the pricing power conversation we had.
The cost of college has been high, it's been going up for a while. We've been looking at these increases for a while wondering what is it going to finally stop? What's going to stop this? Maybe the pandemic was that.
Raising prices works until it doesn't. If you are Netflix and you raise prices by a dollar every couple of years it's probable fine, no one is going to care. If you try to raise prices by a dollar every month, at some point in the course that year, a lot of people are going to say, "Wait, what's going on? I don't need this."
As a company, when you have a subscription model or a default habit model, you want to avoid doing something that makes people remember they're paying you or think about why they're paying you. Because in then they might make it there from decision. I think that's probably, like you said, what the pandemic did. It made people think, "Wait a minute, is this worth it? Is this amount of money really worth what I'm getting? Let me reassess."
That's probably what's going on. Now, you think about the community college aspect to this down 30%, that's a little bit more of concern to me. Because I think some of that might be cost-driven and opportunity driven. Not everyone did well last year. Some people are still struggling.
A lot of people got hit hard in the pandemic with the layoffs and we're just starting to recover from that. What we may be seeing there is a lot of people saying, "I just don't have the money." That's just flat out the money is not there. Then when you pair that as you guys mentioned with higher wages, all of a sudden there is an opportunity cost calculation. It's a little different than it was two years ago.
Do I really want to get this associates degree or do I want to go make 60,70 grand a year? If the opportunity is there to get a good paying job without going to college for two years, maybe a lot of people take that and there's nothing wrong with that. They can do quite well that way.
Especially my friends, if you were taking some of that higher salary and investing it in the market as you go, you could find yourself 20 years later in a very good spot. We'll see how this goes. I want to see what the report looks like in 2022. See if people start coming back and/or whether this is a permanent decrease and then what does that mean for colleges? Are some of them are going to not make it, some of the smaller private liberal arts colleges, we'll see. Interesting times in the educational sphere.