Latest / The Demographics Podcast with Fexingo: Aging Populations, Birth Rates, and Economic Impact / Falling Birth Rates Reshape the Education Industry
Transcript
- Lucas: So let's talk about something that touches almost every family, at least in developed economies: the education system. We've been tracing how falling birth rates ripple through industries—toys, housing, insurance. Today I want to look at schools. Luna: And by schools you mean everything from kindergarten through college, right? Lucas: Exactly. The whole pipeline. And the anchor number I want to start with is this: in 2007, the US had about 4.3 million births. By 2023, that number had dropped to roughly 3.6 million. That's a decline of roughly 15 percent. Luna: So those 2007 babies are heading to college about now, and the 2023 babies are just starting preschool. Lucas: Right. And you can trace the contraction year by year. In 2014, about 4 million kids entered first grade. Fast forward to this year, 2026—the cohort entering first grade is from the 2020 birth year, which was around 3.6 million births. That's roughly 400,000 fewer children in one grade level. Luna: Four hundred thousand fewer kids. That's a massive hit to any school district's funding, since most states fund schools per pupil. Lucas: It's brutal, especially for rural districts. In states like West Virginia, Vermont, and Mississippi, some elementary schools have already consolidated or closed because they simply don't have enough students to justify keeping the lights on. The National Center for Education Statistics projects that K-12 enrollment will continue to fall through at least 2030. Luna: And this is before we even get to the teacher shortage paradox. You'd think fewer students means less need for teachers, but many districts are still scrambling to find qualified educators. Luna: If walking through the economy with us has made something click for you, there's a simple way to keep this show ad-free. It's buy me a coffee dot com slash fexingo. Honestly, if today was worth a coffee to you, that's the link. Lucas: Yeah, listener support is what keeps us independent. No ads, no sponsors. Just the kind of conversation we're having now. So thanks to anyone who chips in. Lucas: Anyway, back to the numbers. So the K-12 piece is painful. But the bigger alarm bells are ringing in higher education. Demographers have been warning about an 'enrollment cliff' for years, and it's starting to arrive. Luna: Right, the cliff. That's the point where the number of 18-year-olds peaks and then drops sharply. In the US, that peak was around 2025 or 2026, depending on the region. Lucas: Correct. After this year, the number of high school graduates is expected to decline for at least a decade. The Western Interstate Commission for Higher Education projects a drop of about 10 percent in the number of high school graduates by 2037. Luna: And colleges have already started feeling it. I saw a report that more than 30 private colleges have closed or merged just in the last three years. Lucas: It's accelerating. Let me give you a specific case. There's a small liberal arts college in the Northeast—I won't name it because the situation is still fluid—but it's a school that historically charged about $50,000 a year in tuition. This year, they announced a 40 percent tuition cut, down to $30,000, just to maintain enrollment. Luna: Forty percent. That's massive. But doesn't that just shift the financial burden? They still have the same fixed costs—buildings, faculty salaries, maintenance. Lucas: Exactly. It's a short-term fix. Long-term, many of these schools are on life support. The ones that survive will be either the elite universities with huge endowments, or public universities that still get state subsidies. The middle tier—private colleges that aren't Harvard—they're the ones at risk. Luna: And it's not just the US. South Korea is a preview of where we're heading. Their fertility rate is the lowest in the world—0.72 children per woman as of 2024. Their universities are already in crisis mode. Lucas: South Korea is a fascinating and terrifying case. They have more than 400 universities and colleges, but the number of 18-year-olds has fallen from about 700,000 in 2000 to under 400,000 now. That's a 40 percent drop. Luna: And I read that more than a dozen universities there have closed or merged in the past few years. Some are even offering massive scholarships just to attract international students from Southeast Asia. Lucas: International students are a stopgap. But the competition for them is global. Australia, Canada, the UK—they're all competing for the same shrinking pool of students from China and India, whose birth rates are also falling. Luna: So what does this mean for the average listener? If you're a parent with young kids, are there any silver linings? Lucas: I think there are a couple. First, class sizes could shrink, which generally leads to better educational outcomes. Second, schools may become more innovative—offering more personalized learning, maybe even shifting resources to adult education as the population ages. Luna: Adult education is a bright spot. A lot of community colleges have already pivoted to serve working adults, offering evening classes and certification programs in fields like healthcare and IT. Lucas: Right. And that's where the growth will be. The Bureau of Labor Statistics projects that jobs requiring some postsecondary education—but not necessarily a four-year degree—will grow faster than average. So we might see a shift from traditional degree programs to shorter, more vocational training. Luna: That could be good for the economy. But it's a tough transition for institutions that have spent decades marketing the four-year degree as the only path to success. Lucas: Absolutely. And there's another angle: the education industry is a major employer. In the US, about 8 million people work in education—teachers, administrators, support staff. As enrollment falls, those jobs will be under pressure. Luna: So we're looking at not just empty classrooms, but also fewer jobs in a sector that's traditionally been stable. Lucas: Exactly. That's the economic multiplier. Fewer kids means fewer teachers, which means less spending in local economies, which means fewer tax revenues for schools—it's a downward spiral. Luna: Unless, as you said, they pivot to adult education. Or maybe they start offering childcare for the few children that are being born, to help raise the birth rate. Lucas: Some countries are trying that. Hungary, for example, has poured money into family subsidies and free daycare. Their fertility rate has ticked up from 1.2 to about 1.6. Not enough to replace the population, but it shows policy can make a difference. Luna: So the education industry is going to look very different in a decade. Fewer traditional schools, more adult learning, and likely more consolidation. Lucas: I think that's the bottom line. The baby bust is reshaping education from the ground up. And it's not just about numbers—it's about what we expect from schools and colleges in a world with fewer young people. Luna: That's a good place to leave it. Next time, maybe we look at how this affects the travel industry? Fewer families with kids might mean more trips for retirees. Lucas: That's a great idea. We'll put that on the list.