On one hand, the workforce in advanced economies like the U.S. is on the brink of a demographic cliff, and the need to upskill and reskill workers is on the rise. On the other hand, higher education institutions (HEIs) are facing an enrollment cliff, which is poised to worsen in the coming years.
The HEIs need students to sustain themselves, and the economy urgently requires skilled workers to drive growth. There is clearly an intersection of needs.
Yet, data from the National Center for Education Statistics (NCES) shows a 2% shrinkage in the higher education sector. According to an article published in Inside Higher Ed, data shared by the U.S. Department of Education indicates that 99 colleges and universities closed, merged, or lost Title IV status between the 2022-23 and 2023-24 academic years.
So, why is the higher education sector shrinking despite a dire skills shortage in the workforce? Why are universities and colleges unable to address the needs of the economy and fulfill their potential in building the future workforce—a role that could drive substantial revenue growth?
The answer may have its roots in a fundamental problem: most universities and colleges tend to operate and view their success solely through an academic lens! This sharply contrasts the need for a market-driven, student-centric approach that aligns with workforce demands and evolving societal needs, often overlooking market demands and operational efficiencies.
What is needed for the university is to embrace educational innovation while executing the right set of business strategies that emphasize financial health, learner outcomes, and better alignment with the economic and social realities of both the industry and the prospective students.
And there are success stories that pave the way for others. For instance, some regional public universities have recently reported a significant boost in enrollment by adopting strategies such as clear and competitive pricing, efficient recruitment processes, and student-focused marketing efforts. (Refer: Unlikely Enrollment Success Stories)
The Fundamental Disconnect: Academic Focus vs. Market Reality
Here are key strategic solutions that can help universities drive growth and innovation in their approach to address their problems.
1. Streamlining operations via automation to reduce costs and improve student services
Universities often face inefficiencies in administrative processes and resource allocation, leading to unnecessary costs. Measures such as streamlining administrative processes, outsourcing non-core functions, and adopting technology to automate tasks (e.g., admissions, financial aid processing, and scheduling) can reduce costs, optimize resources, and allocate funds more strategically.
This not only improves operational efficiency but also enhances the student experience by offering faster and more reliable services, eventually leading to higher student success.
Many universities leverage student lifecycle management technology, including predictive data analytics, to alleviate the impact of the enrollment cliff. Florida International University (FIU), for instance, has been successful in proactively predicting students at risk by investing in a suite of analytics software, leading to a 10% increase in their 4-year graduation rates.
Another example of a university’s effort to refocus its staff’s attention on their core mission—delivering high-quality education—while leveraging technology to manage non-core functions, such as handling student inquiries, is Broward College. By implementing AI-powered chatbot to deflect 75% of calls and messages, the college has saved approximately $500,000!
2. Employing a market-driven program strategy to optimize their program portfolios
Many universities continue to emphasize academic programs without assessing their market relevance or aligning them with emerging job trends. Traditionally, academic success is measured by standards such as research outputs and/or curriculum rigor. However, HEIs need to pivot toward market-driven strategies that consider:
- Enrollment trends and employability outcomes
- Collaboration with industries to co-create programs aligned with current and future workforce demands
- Sunsetting programs with low enrollment and limited career prospects while expanding offerings in high-demand fields like healthcare, technology, and green energy
Embracing new ways of recruiting students, such as social media and video outreach, often goes hand-in-hand with tried-and-tested methods of going out on the road and having conversations with students—a strategy that helped Temple University boost its enrollment numbers: a whopping 30% increase in first-year students and a 29% boost in transfers.
Read Also: Edtech Survival Guide: 7 Ways to Secure your Future
3. Viewing the student as a consumer and offering tailor-made products and experiences that meet their preferences
Today’s students approach higher education as informed consumers, deciding which institution to attend, which program to enroll in, and how much they are willing to pay. They increasingly demand personalized and engaging experiences throughout their lifecycle—from enrollment to graduation.
HEIs must embrace this shift by:
- Utilizing artificial intelligence methodologies such as advanced analytics and machine learning to understand student preferences and behaviors
- Offering flexible learning formats (e.g., online, hybrid, and self-paced options)
- Enhancing support services, such as career counseling and mental health resources, to improve overall satisfaction and retention
The COVID-19 pandemic forced several universities to adopt AI as an emergency communication solution. Since then, Chatbots and AI systems have been used to enhance student engagement and retention. Admission support and enrollment are other areas where AI-driven chatbots and GenAI tools are being used effectively to increase efficiency and improve the overall student experience.
For instance, the University of Oklahoma launched SoonerBot, a chatbot, which helped them increase recruitment numbers for their freshman class in 2019. Likewise, Georgia State University (GSU) managed to reduce the “summer melt” (students not enrolling after admissions) by over 30% using AI-powered chatbots.
Conclusion: The Path Forward: From Survival to Leadership
Higher education's shift from traditional academic models to market-responsive, student-centric approaches isn't merely about institutional survival—it's about reclaiming its essential role in economic and social development.
The institutions that will thrive in this new era will be those that effectively balance educational excellence with market responsiveness, creating sustainable models that serve students, employers, and society. The time for incremental change has passed. Bold transformation is now an imperative.
For institutional leaders, the question is no longer whether to change, but how quickly and effectively can they lead this essential transformation. A critical step forward is intelligently partnering with organizations to reduce operational costs and leverage edtech platforms and marketplaces for better enrollment and student engagement.
As outlined in EdTech Survival 101, institutions that embrace technology-driven solutions are seeing real impact—from streamlining operations to enhancing student outreach and engagement.
Many institutions are already making strides by rethinking their strategies. Whether it’s optimizing operations or enhancing outreach, the right partnerships can accelerate progress.
Learn more about our EdTech solutions and connect with us to explore how we can support your journey.