The latest data from the National Student Clearinghouse Research Center on student enrollments in higher education was featured prominently in the business and education headlines this week.  Higher education enrollment declined 1.4% this fall to 19 million students considerably off the high water mark of 20.6 million reached in 2011.  There are many interesting elements of this data that can be unfolded from careful analysis.  Hard times for for-profit colleges and institutions outside of the South and West are clearly evident.  Likewise, the sensitivity of enrollments of adult students (students over the age of 24) accounted for almost the entire decline.

From the perspective of strategic planning, however, the most interesting element of the data is the decline in enrollment at small four-year institutions.  Almost half of the enrollment decline for four-year private institutions came at small schools (those with less than 3,000 students overall).  These schools have been particularly challenged in recent years struggling to maintain enrollments in the face of high tuition and the questionable market-place value of a liberal arts education from a small college.  These colleges are closing at the pace of about five per year and Moody’s recently projected that this pace will triple in the upcoming years.

Given that the enrollment drops have occurred in older students, it is clear that the problems for small private schools are not coming from their traditional student populations (traditional aged 18 to 22 year olds).  During the last 25 years, many of these small institutions have aggressively pursued adult students.  They have developed degree completion programs in both face-to-face and on-line formats.  In some cases, they have bought “turn key” programs from other universities as well as for-profit businesses.  Many have experienced budget saving growth from these programs.  That is both good and bad. To the degree that these new adult students have kept the some of these institutions afloat, they have been saviors.  To the degree, however, that they have allowed these institutions to avoid questioning the fundamental problems with their core educational programs (those dealing with traditional 18 to 22 year olds), they may have made these institutions more vulnerable in the long run.   At many small institutions, traditional programs are unprofitable and unsustainable.  Rather than address these problems and make fundamental changes in the core educational program, the band-aid of “adult programs” has been applied balancing the books for the short-run but allowing the problem of the relevance of the core program to be ignored.  This is a precarious strategy.

The recent enrollment data highlights the dangers of failing to address the fundamental strategic flaw of many small colleges — their core programs need new  initiatives to make them competitive in the 18-24 year old market but their programs for adult students have merely diverted their attention.  They are now increasingly dependent on adults students who, as we saw in recent data, can come and go with the business cycle.  This is a dangerous place to exist–an improving economy diminishes the demand for your product and a declining economy makes your customers less capable of paying for your services.  This is not an attractive business plan.  

It’s time for small colleges to get back to the basics.  They need to find ways to make their core programs viable.  They need new strategic initiatives directed toward traditional students.  Adult programs can be attractive sources of revenue; but if they forestall a discussion of changes to traditional programs, they will only delay the “day of reckoning” not avoid it.