“Go to graduate school to advance your career! Get ahead with a master’s degree! Graduate degree holders see a significant pay increase!”
Pitches like these are Marketing 101 for schools that offer graduate degree programs. The data backs them up: on average, master’s degree graduates earn 20% more than Americans with only a bachelor’s degree. No wonder graduate enrollment climbed a healthy 11% over the past decade.
There is one problem, however: behind the headlines, graduate demand is eroding. How should we understand this paradox and what can schools do to turn things around?
Blinded by Enrollment
Five years ago, Eduventures published The Deceptive Graduate Enrollment Growth Story, pointing out that graduate enrollment growth lagged population growth among Americans aged 25-44 with a bachelor’s degree as their highest credential. In other words, while graduate enrollment kept going up, the graduate enrollment rate kept falling. This trend has continued (Figure 1).
The Current Population Survey, a monthly survey of about 100,000 people on multiple topics, reports an ever-lower ratio of qualified Americans enrolled in graduate school — down 30% in 13 years. Yet federal data (IPEDS) shows graduate enrollment up steadily in recent years, hitting a record of almost 3.3 million students as of fall 2024 (the most recent year available). Two factors explain this apparent contradiction.
The first is age cohort size. Americans aged 25-44 with a bachelor’s degree as their highest credential — the age band that accounts for over 50% of graduate enrollment — increased almost 30% between 2013 and 2024. Total graduate enrollment grew by only 12% over the same period.
The second is international students. In this population, graduate enrollment grew by more than 50% between 2013 and 2024. Strip out international students, and graduate enrollment (aged 25-44) grew by a measly 1%.
Figure 2 summarizes these trends.
In summary, headline graduate enrollment data obscures that enrollment in the core age group (aged 25-44) has grown more slowly than the underlying population and that international students have compensated for sluggish domestic demand. Younger (domestic) graduate enrollment grew 23% over the period but is a much smaller market.
Schooled on No Graduate School
If graduate school outcomes are so compelling, why is the enrollment rate down for the core domestic age cohort?
The sliding age dependency ratio may be one driver. The ratio of working age to non-working age Americans is in long-term decline as birth rates have fallen and life expectancy has increased. Combined with sustained low unemployment and the absence of a recession in over a decade and a half (excepting the short-lived COVID downturn), the incentive to pursue a graduate degree has weakened.
Graduate degree alternatives are another explanation. Noncredit certificates, bootcamps, and microcredentials have proliferated, offering short, affordable, career-oriented options. Reliable data is scarce, but Eduventures estimates that hundreds of thousands of Americans with a bachelor’s degree have enrolled. Universities have been at the forefront of the non-degree push, and some non-degree offerings ladder into degree programs, but price point and margins pale in comparison to master’s or doctoral degrees.
There’s also real and perceived disquiet about return-on-investment from undergraduate education — which may have fueled the softening graduate enrollment rate.
The irony is that efforts to make graduate education more convenient both boosted and undermined demand. Asynchronous online master’s degrees, the norm in many fields of study, address time scarcity for working adults (a major enrollment inhibitor), but the price is loss of experiential breadth and differentiation. Graduate degrees have become more flexible but also more transactional: schools market program outcomes but say little about the student experience. Co-location of students and synchronous interaction are judged as pedagogically dispensable but weaken the bonds between students, faculty, and institution. Non-degree options question the necessity of the degree.
Now AI is pushing the convenience mantra of contemporary graduate programs to the next stage. Why enroll at an institution when a large language model (LLM) resembles a 24/7 omniscient tutor?
Figure 3 illustrates the paradox of greater convenience and reduced demand.
Now What?
The lackluster domestic graduate enrollment rate is about to be exposed. International student enrollment is in freefall following the Trump administration’s deportations, visa delays, and saber-rattling about curtailment of working rights. Only the most selective schools can rely on international demand to cover domestic shortfalls.
The end of Grad PLUS loans and low federal student loan limits for most graduate programs will further depress domestic demand. Where a graduate degree is required for occupational entry or advancement, markets will adapt. Where a graduate degree is discretionary, alternatives will loom large.
Another recession will happen eventually, stimulating graduate degree demand, but short-term economic disruption will not arrest deeper graduate enrollment rate decline.
Growth in the prospective graduate school cohort hid a cratering enrollment rate. But cohort growth has slowed in recent years and will slow further through 2030 as the combined age and bachelor’s attainment bulge moves into the latter half of the 25-44 age band. Enrollment rates are considerably lower for Americans in their late-30s and early-40s compared to their late-20s.
The Bottom Line
A multitude of factors explain the graduate enrollment rate decline in the core 25-44 age band. Cohort size, unemployment, and geopolitics are beyond institutional control. Higher education leaders must rethink the student experience.
Another tenet of Marketing 101 is to identify a competitive niche. Universities need to highlight experiences that non-degree providers and LLMs cannot. If content is ubiquitous and access unlimited, institutions should focus on scarcity: socialization, hands-on experience, immersion, community, challenge, verification, and curation.
Returning to full-time, residential graduate programming is a non-starter, but creative combinations of online convenience and in-person experience hold promise. The goal is a demonstrably superior experience for which students will pay a premium and suffer some inconvenience.
Eduventures Adult Prospect Research™ has consistently found more prospective graduate student demand for hybrids of campus and online than visible in the market. Higher education leaders must look for flaws in the non-degree and LLM stories.
Today’s graduate degree pitch looks very similar to that of a decade ago, oblivious to the graduate enrollment rate decline and as if AI never happened. But game-changing work is underway. Examples include Matter & Space, Southern New Hampshire University’s “human development” platform, the hybrid degree apprenticeship model at Reach University, and Arizona State University’s Praxis, a simulated professional practice tool.
To revive the graduate enrollment rate, higher education leaders must reeducate prospective students to think about not only graduate degree outcomes but the process by which those outcomes are achieved. The essence of graduate school will only gain value in the world of AI, but schools must sell more than convenience.
