Higher Education

If you have spent any time around higher education lately, you have probably heard of the “demographic cliff” or “enrollment cliff” for years now. Well, it’s finally here. In terms of total number of births, the US peaked in 2007 at a little over 4.3 million births. That’s the highest year ever, even higher than the peak of the Baby Boom (not in terms of fertility rates, of course, I’m just talking about absolute number of births).

Babies born in 2007 turned 18 in 2025. But after 2007, births started to fall. In 2025, there were just about 3.6 million births, a decline of about 700,000 babies since 2007, or a 16 percent decline. The number of 18-year-olds won’t be exactly the same as the number of births in a given year: it’s actually usually a bit higher, as net immigration is much larger than the small number of children that die before they reach 18. For example, the 1982 birth cohort had 3.68 million babies, but 18 years later in the year 2000 there were 4.08 million potential college students.

Historically there have been about 10 percent more 18-year-olds than the birth cohort, but lately (2021-2025) it has only been about 5 percent higher than the birth numbers.

There are, of course, all kinds of social, economic, and political implications of falling births. I just want to mention one that is specific to the industry that I work in: potentially falling college enrollment. And because this enrollment will not be uniform across states and universities, this will cause serious budget issues for many colleges in the coming years.

Some folks in higher ed have lately been asking when the demographic cliff will hit. It’s here:

I was interviewed for an article “Navigating AI in Christian Higher Education“. Here’s an excerpt:

Rosenberg: What impact do you foresee in your field due to the increasing sophistication of AI, and what kind of skills do you think your students will need to be successful?

Buchanan: AI will reshape economic analysis and modeling, making complex data processing and predictive analytics more accessible. This will lead to more sophisticated economic forecasting and policy design. Economists will become more productive, and expectations will rise accordingly. While some fields might resist change, economics will be at the forefront of AI integration.

For students aiming to succeed, it’s crucial to embrace AI tools without relying on them excessively during college. Strong fundamentals in economic theory and critical thinking remain essential, coupled with data science and programming skills.

Interdisciplinary knowledge, especially in tech and social sciences, will be valuable. Adaptability and lifelong learning are key in this evolving field. Human skills like creativity, communication, and ethical reasoning will remain crucial.

While AI will alter economics, it will also present opportunities for those who can adapt and effectively combine economic thinking with technological proficiency.