Enrollment declines threaten the economic futures of college towns

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The University of Arizona’s undergraduate enrollment has increased in recent years, bucking the declines experienced by many colleges throughout the U.S. For the Tucson region, the university’s home, that upward trend is key. 

Higher education institutions are “the most important” element to the economic life of Arizona cities and towns, said Michael Guymon, president and CEO of the Tucson Metro Chamber. 

“The University of Arizona is the greatest economic asset that we have in the region,” he said. 

The area also hosts Arizona State University facilities, Pima Community College and various trade schools. Those institutions are “extremely important for us to provide much-needed postsecondary education to develop the skills needed for companies to hire the right people and ultimately to succeed,” Guymon said.

Enrollment at colleges and universities throughout the U.S. has dropped significantly in recent years, a trend worsened by the COVID-19 pandemic. And enrollment could continue to drop 5% to 10% a year in the near future, according to Clive Belfield, a professor of education and labor economics at Queens College, part of the City University of New York. 

The U.S. is experiencing a declining college-aged population, while rising college costs, student loan debt and a reasonably attractive labor market have prompted some prospective students to avoid higher ed, Belfield said. 

College leaders have also grappled with stagnant state funding and pressures to lower tuition, along with stagnant state funding. As a result, since 2016, more than 90 colleges and universities in 34 states have announced or finalized mergers or closures.

These college closures and the declining enrollment can have major ramifications for cities and towns that rely on the vast economic benefits that higher education provides.

Colleges are “primary economic engines” and a major part of the rural economy, said Matthew Wagner, chief program officer at Main Street America, a group that aims to improve the economic viability of downtowns. 

A vibrant student enrollment is intrinsically linked to the success of businesses in college towns, said Wagner. 

Educational institutions bring in new talent that can fill open positions, and hire local residents, he said. Money is spent locally by students and staff, visiting parents and grandparents and those attending campus sporting events. So does college backend operations that require contracting with local businesses, including restaurants, retail, construction, and various trade and professional services, he said.

The economic stakes in Arizona

Whether enrollment at Arizona colleges and universities grows or declines in future years is a billion-dollar question for the state. A 20% increase in enrollment at Arizona institutions would generate over $5 billion in social gains per cohort, a recent report from Helios Education Foundation and Education Forward Arizona found. The report analyzed a single cohort of nearly 69,000 high school graduates from the class of 2022.  Meanwhile, a 10% increase in college completion rates would generate $1.3 billion per cohort, the report stated.

In Tucson, Pima Community College’s enrollment declined at the onset of the pandemic, the college’s website said, especially among students who are racial minorities. The college reported that Pima County had either the lowest or second-lowest percentage of high school graduates by county in the state since 2015.

At the University of Arizona, recent enrollment growth has largely stemmed from out-of-state students, while its share of in-state students has decreased, news site Tucson.com reported. 

That trend is coupled with the region’s aging population. Tucson’s population of 16- to 24-year-olds is smaller than the generation before it, Guymon said, making it difficult for companies to fill job vacancies. 

“We aren’t seeing the types of numbers we need to fill all of the positions that exist in our region in the short and long term,” said Guymon. 

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