Is declining higher education demand a concern?

In the last couple of years demand for higher education has trended down, with enrolments falling slightly in 2018 compared to 2017. This post explores some reasons why this might be happening.

Demographic trends are always important to enrolments and participation rates.  Unfortunately no data source tells us in total or by age how many people meet the eligibility criteria for a Commonwealth-supported place.

The size of the birth cohort has a significant influence, but under-counts eligible persons due to migration. With 22 per cent of domestic students born overseas migration is important to demand. ABS demographic data includes migrants, but because of long-term temporary residents over-states how many people are eligible for a CSP.

As universities generally require students to have completed Year 12, final year of school enrolments are also a guide to potential demand. However, this is also an imperfect indicator, due to temporary migrants and not all Year 12 students taking subjects that qualify them for university entry.

With all these caveats, the chart below shows that none of the potential population indicators suggest that, holding participation rates constant, that demand for higher education should be up in aggregate terms. The (temporarily) falling size of the birth cohort and the slight dip in Year 12 students would suggest that demand might trend down.

potential uni students

And indeed that is what we are seeing, with a small decline in late-teenage applications since 2017 (chart below). With offers hardly changing the offer rate is slightly up on earlier times. As I tell every media outlet that calls me about the latest attack on ATAR, it has never been easier to get into university. It’s quite possible that participation rates could slightly increase due to a smaller cohort seeking a stable supply of places.17-19 year old applications

For older people aged 20 years or more the decline in demand is more significant, with applications now down 7 per cent on their 2017 peak. As my post earlier this week noted, the fall in demand in 2018 did translate into fewer older commencing students. With offers down as well, I except enrolments will fall again.

apps 20 years plus

When I wrote about last year’s downward applications trend, I suggested two possible explanations, a reasonably strong job market creating alternatives to higher education and the maturing demand driven system. As more people went to university straight after school (note the steep increase in 17-19 year old offers between 2010 and 2013 in that chart), the pool of potential 20-something commencers should fall. A larger percentage than previously of the age cohort who might have considered university had already done so in their late teens.

But looking at the applications data on the previous education of applicants I am less sure that these factors explain the observed trend. The number of applicants with no reported prior higher education participation is higher than before the demand driven system, while the number of applicants who had previously been in the system is declining (chart below). The biggest fall is in people with incomplete higher education.

Possibly under demand driven funding more people were admitted to a course they were satisfied with in the first instance, reducing the need to re-apply for a different course (keeping in mind that the absolute numbers of applications is still high). But this is speculation; more detailed data analysis is needed.

no previous stable


Many of these no-previous-higher-education applications will not translate into increased attainment – there is a declining offer rate and this group has high attrition. But despite more people acquiring degrees in the few years after leaving school, demand is not down for people with no previous higher education participation.

At the macro level, weak demand for higher education does not seem to signal any major issue. Degree attainment levels are likely to be stable or even increase slightly. But at the micro course level there is at least one potential problem, in teacher education. Although there was no major change between 2018 and 2019, demand for undergraduate teacher education courses has declined over time (chart below).

teacher ed applicantsUnfortunately we don’t have a national report on applications for postgraduate teaching courses, but enrolment data in the chart below shows that they are also in decline.

teacher commencements

As there is a rising population of school-age children, application and enrolment trends in teacher education  courses seem out of line with likely workforce requirements.  A report on the problem was published this week. The various policies aimed at improving teaching workforce quality seem to be affecting the quantity of students.

There are plenty of ideas around about how to making teaching a more attractive career. My former Grattan colleagues have contributed to this discussion. But it is a reminder that it is not just funding policy that affects the number of students.

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