America has spent decades building a sprawling higher-education system around a steady supply of college-age students. Now, there are about to be fewer of them to go around.
The U.S. graduated a record 3.9 million high school students in 2025. But that peak marks a turning point: By 2041, the country is projected to produce about 3.4 million high school graduates a year, a 13% drop, according to the Western Interstate Commission for Higher Education.
Colleges are already competing harder for the students who are available and are having more trouble predicting which acceptees will ultimately enroll. Students using the Common App applied to an average of 6.56 colleges this admissions cycle, up from 6.37 a year earlier.
That competition comes as rising costs put more pressure on college budgets. For schools that depend heavily on tuition to pay the bills, an empty seat means lost revenue; for the most vulnerable institutions, enough empty seats can threaten their survival.
“Nearly every college in the country is facing some kind of financial pressure,” Robert Kelchen, a professor at the University of Tennessee, Knoxville, who studies higher education finance, told Fortune.
Some schools are disappearing or joining forces with other institutions.
The Federal Reserve Bank of Philadelphia estimated that 80 colleges could close between 2025 and 2029, adding to the more than 300 degree-granting institutions that have shut down since 2008.
Merger talks are becoming another part of the conversation: 31% of private nonprofit college presidents surveyed said their institutions had held serious discussions about a merger or acquisition, with financial stability the most commonly cited reason.
At the same time, the traditional four-year college path is facing more competition. Enrollment at public two-year institutions focused on vocational programs grew nearly 20% between spring 2020 and spring 2025, according to the National Student Clearinghouse Research Center. And the price of a four-year degree is becoming hard to ignore, with annual sticker prices at dozens of U.S. colleges and universities now nearing or exceeding $100,000 when tuition, housing and other expenses are included.
And as careers in skilled trades become more attractive alternatives to four-year degrees, fewer high school graduates are choosing to go straight to college. The share enrolling immediately after graduation has fallen from 70% to 62% over the past decade. One scenario modeled in the education policy journal Education Next found that a 15% enrollment decline over five years would result in 23 additional college closures.
The business of filling a classroom
How much a shrinking student population hurts a college depends in part on how much it relies on those students for revenue.
And for schools that depend heavily on tuition, competing for students can itself eat into the revenue each one brings in. At private nonprofit colleges surveyed by the National Association of College and University Business Officers, nine in 10 first-time undergraduates received institutional grant aid in 2025-26, while the estimated tuition discount rate for those students reached 57.1%.
That leaves schools in a bind: They need tuition revenue, but charging closer to the sticker price can make it harder to fill the seats that generate it.
“Students and their families know that they have more market power to negotiate financial aid, further affecting the bottom lines outside of a few dozen of the most prestigious universities,” Kelchen said. Moving away from tuition discounting often isn’t feasible, he added, because “students will choose other colleges.”
And schools are trying to make that math work as their own bills rise. Inflation and health insurance costs are hitting institutions broadly, Kelchen said. The Trump administration has added to those pressures through cuts to federal research funding and a crackdown on international students who can be particularly valuable to college budgets because they pay full tuition. During the key May-to-August visa processing period last year, the U.S. issued 36% fewer F-1 student visas than during the same period in 2024, according to State Department data analyzed by The Chronicle of Higher Education.
When the math stops working
Hampshire College shows what the extreme end of that squeeze can look like. The private liberal arts college in Amherst, Massachusetts, is set to end academic operations after the fall semester.
It’s part of the so-called Five College consortium that also includes Amherst College, Mount Holyoke College, Smith College, and the University of Massachusetts Amherst, and its closure represents a dire warning that similarly vaunted schools could suffer the same fate.
But a school doesn’t have to be on the verge of closure to feel the same underlying pressures.
Syracuse University has a national brand and a $2.5 billion endowment, yet it fell short of its enrollment target this school year, contributing to a 1.5% budget shortfall, according to The Wall Street Journal. International enrollment had fallen by half amid the Trump administration’s crackdown on student visas, while the university took on $458 million in debt last year to build new dorms.
Kelchen said Syracuse is being hit by many of the forces affecting the broader industry. But it’s more vulnerable than some of its peers because it’s outside a major city or typical college town, and it’s located in a cold region with a declining number of high school graduates.
Even a sizable endowment doesn’t necessarily mean a college is safe as many are essentially house rich and cash poor.
“Colleges may have assets, but they are in their buildings or restricted endowment funds that they cannot use for daily operations,” Kelchen said.
While barred from directly drawing down that pool of money, nearly 200 private colleges still borrowed from restricted endowment funds in 2025, up from about 130 in 2021, according to estimates from higher-ed consulting firm Perspective Data Science.
Running out of cash on hand is the clearest indicator that a college is at high risk of closure, he added, while consistent operating losses, enrollment declines and large withdrawals from endowments can also signal distress.
Kelchen expects an uptick in closures rather than a massive wave, with schools in rural parts of the Northeast and Midwest facing particularly strong headwinds.
For the colleges that remain open, that may mean becoming smaller institutions than they ever expected to be.
