Stuff reported last week:
North Island universities are blaming high employment and a drop in school-leavers with University Entrance for a big fall in enrolments by New Zealand students.
All five North Island universities told RNZ they had started the year with fewer full-time-equivalent domestic students than the same time last year.
The drop was trivial at Waikato, but significant at the remaining four institutions.
The two South Island institutions that shared their figures with RNZ, Canterbury and Lincoln, reported increased domestic enrolments...
The University of Auckland said it had been expecting a fall in domestic enrolments this year, but the actual result was lower than expected due to "the relatively low numbers achieving University Entrance"...
Massey University described its eight percent drop in domestic FTE students as slight and said [it] was prone to labour market shifts...
Victoria University said its enrolments "have been affected over the past few years by the intersection of changes in student demand, the growth of new areas of study and the waning of others, demographic changes, unique economic conditions (i.e., low unemployment and growing cost of living), closed borders, and the broader impacts of Covid-19".
To understand what's going on, it is worthwhile to unpack the things that contribute to domestic school-leaver university enrolments. I focus on domestic school-leavers, as they make up the majority of new university enrolments, and it turns out that the changes are mostly predictable.
Take this simple identity:
E = P * [S/P] * [U/S] * [E/U]
E is the number of domestic school-leaver enrolments. P is the total population (of New Zealand). S/P is the proportion of the population who are school-leavers. U/S is the proportion of school-leavers who achieve university entrance. E/U is the proportion of those who achieve university entrance who ultimately enrol at university.
This identity essentially describes where domestic school-leaver enrolments come from, and understanding each component of the identity, and changes in each component, will give us a good understanding of what is happening with enrolments (and what is likely to happen in the future).
Let's start with P, the population of New Zealand. The population is growing, at about 0.7 percent per year. As for S/P, the proportion of the population who are school-leavers, this is shrinking slowly over time. This is obvious when you look at a population pyramid for New Zealand (like this one). The age cohorts at the bottom of the pyramid are smaller than those above them. That also means that when you combine P and S/P, the number of school leavers is declining, and likely to continue to decline in the future.
Moving on to U/S, the proportion of school-leavers who achieve university entrance, we know that this was artificially inflated during the pandemic, as NZQA gave away lots of bonus NCEA credits (e.g. see here for 2021). Those bonus credits came to an end this year, and there were fewer credits available in 2022. This means that we should expect a smaller proportion of school leavers to achieve university entrance from 2022, compared with 2021 or 2020. There may be a small decrease in 2023 again, and then beyond that the proportion of school leavers achieving university entrance will probably return to its long-run flat trend (see page 2 of this document).
Finally, E/U is the most uncertain component. The proportion of those who achieve university entrance who ultimately enrol at university depends on labour market conditions, as the statements from Massey University and Victoria University note. When the economy is doing well, and jobs for school leavers are relatively plentiful, more school leavers will opt to go straight into the workforce, rather than to university. Right now, at 3.4 percent, the unemployment rate is close to the lowest it has been over the last 15 years. Even the youth unemployment rate (for those aged 15 to 24 years) is very low, at 9.6 percent. However, the economy may tip into recession later this year (or at least, that is what is expected by many economists - see here and here). If the economy slows, there will be fewer jobs for school leavers (and for everyone else), and enrolments might start to pick up.
When we put this all together, we realise that the demographic trends (P and S/P) together contribute to lower enrolments, and student achievement (U/S) will lead to lower enrolments this year and next year (after a temporary increase over the last two years). Finally, economic conditions (E/U) will likely increase enrolments later this year, and perhaps into next year.
Overall, it probably isn't all bad news for universities as a whole in the short term, but only if the expected recession comes to pass. Longer term, the demographic changes weigh more heavily, and domestic enrolments are likely to decline over time as a result. Of course, the universities are busy competing for those declining enrolments, and that competition will no doubt heat up as the declining total enrolments start to eat into university budgets.
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