Colleges and universities face a complex, changing financial environment. With overall college enrollment predicted to fall even more by 2025, it’s time for higher education to look toward improving student retention rates as the key to stopping the financial breakdown. With only about half of all college students finishing a degree within six years, there’s plenty of room for improvement.
The future of college enrollment
According to The Hechinger Report, with the exception of the most elite schools in the country, colleges are going to see a significant drop in enrollment between the years 2025-2029. With an overall declining enrollment rate since 2011 and graduation rates that leave a lot of room for improvement, this is not welcome news for universities. While the most elite colleges in the country and a handful of others in the less populated, mountain states of the West won’t see the same sharp declines, most colleges are predicted to deal with this in one way or another.
And the challenges are not only predictions of future trouble. In 2017, 11 private colleges closed, and public universities and colleges are discovering that funding may be harder to come by. This report from the ICEF monitor explains and details predictions for the same trends to continue in years to come.
The forecast for future college enrollment means schools are feeling the pressure to perform better financially and professionals responsible for the financial health of colleges and universities ought to prepare now.
Slight Increase, Big Gains
Data analysis by Nuro Retention, a data analytics company that focuses on the student retention issue, has found that just a 1% increase in student retention can have a dramatic impact on a school’s financial picture.
Over a seven-year period, using a $10,000 per student annual tuition rate and a student body of 10,000, a 1% annual increase in student retention would lead to a gain of $25 million, according to the company’s analysis. That’s one reason why Nuro emphasizes the advantages of focusing on retention. Retaining students is a less expensive, all-around easier way to dramatically impact a school’s bottom line.
Improving the Student Retention Rate
With that kind of potential impact, solving the low student retention rate problem should be a primary focus for higher education. But getting to the bottom of why students drop out remains a challenge.
Companies such as Nuro Retention use data analytics to spot trends that indicate a student is at risk of dropping out of school. Contributors to high student dropout rates include financial pressures, challenges with social integration, and lower than average academic performance. But other factors are less obvious, such as socioeconomic background and whether a student’s parents completed college. Considering the financial impact that even a slight increase in the student retention rate can offer, more schools will need to turn to data analytics to help solve the issue.