Undergraduate enrollment in the United States peaked in 2010 and has been steadily declining¹ —a trend that is likely to accelerate in the coming years. Rising college costs are often blamed for this drop, but that explanation is misleading. While sticker prices have increased, the net cost of attending public four-year universities—after adjusting for inflation and financial aid—has remained essentially flat since 2006, and costs at private institutions have even declined slightly.²

This structural decline in enrollment presents challenges for higher education and, by extension, for student housing investors. Although student housing has historically attracted real estate investors with higher yields³ and diversification benefits compared to conventional apartments, future investment success will depend on identifying institutions and markets that can thrive despite falling enrollment. In this piece, we examine the drivers behind declining enrollment and provide a framework for identifying schools where growth is likely to continue, making them attractive targets for student housing investment.

Dissecting the enrollment decline

The overall decline in undergraduate enrollment masks significant variation across different types of institutions. For student housing investors, it’s important to note that most enrollment losses have occurred at community colleges (two-year institutions),⁴ where demand for student housing is minimal because most students commute from home. However, even four-year institutions—both public and private—are experiencing growth that is slower than the overall U.S. population and are approaching a demographic cliff.

While institutional differences explain where enrollment declines are most pronounced, four key factors are driving the broader downward trend and suggest that the situation may worsen in the years ahead.

1. Weaker job prospects for college graduates:

Historically, college was seen as one of the most reliable paths to success in the United States, with the percentage of high school graduates enrolling in college rising from 45% in 1960 to a peak of 70% in 2009.⁵ However, over the past 15 years, the unemployment rate for recent college graduates has increased relative to the overall U.S. unemployment rate, and since 2019 has been higher than the national average.⁶ Further, while college graduates still earn roughly 90% more than those without a college degree, the wage premium has shrunk by 10 percentage points over the last 25 years.⁷ These shifts in labor market dynamics have led more high school graduates to question the value of college.

2. Rising demand for non-college educated workers:

Retirements among baby boomers in blue-collar jobs are creating strong demand for new workers in these fields. From 2024 to 2027, more than 4.1 million Americans will reach age 65—the traditional retirement age—each year.⁸ Younger workers have responded to these opportunities: enrollment in apprenticeship programs has surged by 66% over the past decade, while undergraduate college enrollment has declined.⁹

3. A shrinking pool of college-age students:

Declining fertility and birth rates since 2007 mean fewer college-age Americans¹⁰. As children born in 2007 now reach college age, colleges are beginning to feel the impact of this demographic shift. Additionally, while foreign students represent only a small share of total enrollment, recent proposed policy changes—such as modifications to student visa rules and caps on foreign enrollment at U.S. institutions—have the potential to further reduce enrollment. In response to these challenges, many schools have increased their acceptance rates; however, this approach has its limitations.

4. The impact of artificial intelligence:

While still somewhat speculative, emerging data indicates that AI may further reduce demand for college-educated workers. A recent Stanford study found a decline in demand for young workers (ages 22 to 25) in positions identified as highly exposed to AI, even after accounting for factors such as company layoffs¹¹. Notably, software developers were among the roles most affected by AI exposure. Although the long-term impact is still uncertain, this trend could eventually lead to lower enrollment—and therefore reduced student demand—at STEM-focused universities and other four-year institutions, depending on how widely large language models (LLMs) are adopted.

Identifying institutions with resilient enrollment trends

Despite these headwinds, some institutions have managed to grow enrollment. By examining historical enrollment patterns across more than 340 four-year institutions over the past 15 years, we can statistically identify the factors that have set these schools apart.¹² Leveraging these insights, student housing investors can better anticipate which markets and institutions are most likely to thrive—even as headwinds persist.

• State population growth: One of the consistent predictors of enrollment growth is the population growth of the state where the school is located. With 73% of college students attending in-state schools,¹³ local demographics matter.
• Climate: Milder winters, measured by average January temperatures, is associated with stronger enrollment growth, even after accounting for state population growth. College students prefer nice weather.
• STEM degrees: Schools with a higher proportion of students pursuing STEM degrees have historically seen stronger growth, though this effect has lessened recently.
• Selectivity: Schools with higher acceptance rates—that is, those admitting a larger percentage of applicants—have experienced weaker enrollment growth, a trend that has become more pronounced as the college-age population declines. In other words, institutions that maintain greater selectivity are better positioned to withstand these demographic challenges. Notably, while acceptance rates have generally increased, larger schools (defined here as those with more than 30,000 undergraduate students) have fared far better.¹⁴

• Football: Public four-year institutions without a football team in one of the major conferences (Power 5, at the time of our analysis) significantly underperformed. This suggests that membership in a major athletic conference provides important advantages, such as greater brand exposure and a more vibrant campus life.

Conclusion

In summary, while the declining value of a college education and demographic trends present challenges for student housing, opportunities remain for discerning investors. Focusing on institutions in growing states with mild weather, strong STEM programs and a strong football brand can help mitigate risks. Schools that buck the national trend, combined with the sector’s attractive yields and diversification benefits, suggest that student housing can still play a valuable role in a well-constructed real estate portfolio. As the landscape evolves, a data-driven, nuanced approach will be essential for identifying resilient markets and maximizing portfolio performance.

¹National Center for Education Statistics (NCES) 2023 Digest Table 303.70; includes two- and four-year institutions.

²College Board, Annual Survey of Colleges, CES, IPEDS Fall Enrollment data as of 10/1/2024.

³MSCI – Real Capital Analytics as of 6/30/2025.

⁴National Center for Education Statistics (NCES) IPEDS. Based on a methodology created by The Burning Glass Institute as of 9/30/2025. Analysis includes all U.S. institutions and is based on classification of the institution in 2010. This eliminates any inconsistency issues due to institutions changing their classification.

⁵National Center for Education Statistics (NCES), U.S. Department of Commerce, Census Bureau, Current Population Survey (CPS) 2023 Digest Table 302.60.

⁶Federal Reserve Bank of New York, U.S. Census Bureau and U.S. Bureau of Labor Statistics, Current Population Survey (IPUMS) as of 6/30/2025.

⁷Cline, Alexander, and Barış Kaymak 2025 “Demand for College Labor in the 21st Century.” Federal Reserve Bank of Cleveland, Economic Commentary 2025-04.

⁸Retirement Income Institute, Social Security Administration as of 1/1/2024.

⁹National Center for Education Statistics (NCES), U.S. Department of Labor. Latest apprenticeship data available through fiscal year 2021.

¹⁰World Bank, U.S. Centers for Disease Control and Prevention as of 12/31/2023.

¹¹National Center for Education Statistics (NCES) 2023 Digest Table 310.20.

¹²For more detail see Appendix A.

¹³College Board, National Center for Education Statistics (NCES) IPEDS as of 10/1/2024.

¹⁴National Center for Education Statistics (NCES) IPEDS, J.P. Morgan Asset Management as of 9/30/2025.

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