Graduate Students: The Low-Hanging Enrollment Fruit

The coronavirus pandemic has induced one of the most difficult economic recessions in modern history. The initial lockdowns nationwide led to eye-popping furloughs and job loss. Though there has been some economic recovery, the inability of the United States to fully get the pandemic under control has resulted in stubbornly high unemployment, particularly among Black workers, and many of those who lost jobs are now long-term unemployed. The pandemic has also greatly affected individual behavior, making it difficult to understand how this recession plays out compared to other recessions.

One of the more challenging predictions has been enrollment in higher education. Initial data reported by colleges and universities to the National Student Clearinghouse (NSC) have shown a three percent decline in enrollment. These data would be even worse if it weren’t for graduate enrollment, which has actually increased nearly three percent.

College enrollments tend to increase during recessions as people who lose jobs turn to higher education to gain new skills or credentials to help them find employment. This was true of the Great Recession, where there was a steady increase in higher education enrollments from 2007 until a peak in 2010-11, and then a subsequent decline as the economy recovered. As of 2019, enrollment numbers were similar to what they were prior to the Great Recession. But in this recession, even with a stubbornly high unemployment rate sitting at 8 percent, there has been a four percent decline in undergraduate enrollments. Among first-time would-be college students, the decline is even steeper, at 16 percent. For the community college sector, a sector that had booming enrollments during the last recession, enrollment is down nearly ten percent.

These numbers are worrisome–while it could be the case that students are just waiting out the pandemic, there is no crystal ball about how this plays out. Colleges and universities that teach a large share of traditionally-aged students were already facing a demographic cliff. Now, this year, budgets will be slammed. If enrollments don’t hit targets in the future, institutions on the financial brink may be forced to shutter. And with no further federal stimulus of the scope needed to bail out colleges and universities, institutions are looking for every way to cut costs and for low-hanging fruit to bring in revenue.

The NSC data have made clear that the only bright spot for enrollments, ripe for the picking, are graduate students. The higher education policy field honestly pays very little attention to graduate students and their outcomes. Instead, we focus on undergraduate students, a much larger population in our higher education system, and specifically on improving affordability and increasing national attainment of undergraduate credentials, while reducing equity gaps. But this has resulted in very little attention paid to graduate students, who have access to basically unlimited federal loans capped only at the institution-set cost of attendance.

In the lead up to the pandemic recession, graduate programs accounted for 40 percent of the federal student loans issued each year. Now, with graduate student enrollments continuing their upward trend despite COVID-19, colleges and universities will find ways to capitalize on an easy revenue source. Here’s how this will play out:

• Increased enrollment in post-baccalaureate certificates and master’s degrees. From 2000 to 2016, total graduate student enrollment rose 38 percent. Over the same period, according to trends in the National Postsecondary Student Aid Study of graduate students (NPSAS), the share of graduate students enrolled in master’s degrees jumped from 65 percent to 70 percent. The share enrolled in graduate certificates, meanwhile, has crept upwards since 2008 from five to six percent. That may seem small, but according to the recent release of NSC data based on this fall’s enrollment, post-baccalaureate (7.4 percent increase over 2019) and graduate certificates (3.9 percent increase) have seen the biggest enrollment gains during the pandemic of any credential type. Master’s degrees still maintained robust growth at 3.5 percent.
• Increased enrollment among students of color, particularly for Latinx students. According to the NSC data, growth in graduate enrollment has been driven by Latinx and Black students in particular who have seen an increase in year over year changes in enrollment of 14 and 10 percent, respectively.
• Higher debt loads. Cumulative average loan debt among graduate borrowers has been growing from 2000 to 2016 according to the NPSAS. Overall, the average graduate student borrower in 2016 had a cumulative debt (including undergraduate debt, though much of the debt is accumulated for graduate-level education) of $71,000, a 68 percent increase since 2000. Master’s degree borrowers had a cumulative debt load of approximately $58,000 in 2016, an increase of 70 percent from 2000. And graduate certificate borrowers had a cumulative debt load of $65,000, or an increase of about 105 percent.
• Growing equity concerns. While cumulative debt for graduate students grew 68 percent overall from 2000 to 2016, the growth has been enormous for graduate students of color. Latinx graduate borrowers, who lead the current drive in graduate enrollments according to the NSC data, have seen their debt grow 87 percent, to an average of $66,000. For Black borrowers, who are disproportionately affected by the negative consequences of student loan borrowing, the growth has been 112 percent, for an average of nearly $94,000. Further, an analysis of large balance student loan borrowers (those with loans greater than $50,000) show a slowing of repayment trends.
• Weak accountability for colleges and universities. It is relatively easy for colleges and universities to build out graduate programs, to add master’s degrees and certificates. And because there is a large source of federal funding available to students, albeit through loans, the incentive is to expand and build these programs even though their outcomes vary widely, and might not be a good investment for the student. This includes using Online Program Management (OPM) companies to provide the education–in other words, outsourcing a credential program, and the marketing for that program, with very little oversight. Colleges and universities can also exploit the federal student loan program, and skirt accountability since Grad PLUS loans aren’t included in cohort default rate calculations and gainful employment rules have gone by the wayside.

It’s hard to break through the noise right now in discussing higher education enrollments, especially because we rightfully have deep concerns about the enrollment declines of community college students who have been hit particularly hard by the pandemic. But while we’re looking at that problem, we’re ignoring the alarms on graduate students.

Enrolling in graduate school can be an important next step for those who obtained a bachelor’s degree. But the system is set up to be predatory, to charge a lot of money, fueled by loans made with taxpayer dollars and students on the hook to repay, with very little understanding of student outcomes and huge equity implications. Accreditors, state, and federal policymakers need to keep their eyes on this concerning trend.

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