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Will College Enrollment Decreases Affect the Student Housing Industry?

College Enrollment Decreases Effects

Digested from “Are Enrollment Rates Really That Bad? Student Housing Experts Weigh In” in Bisnow (10/26/16) by Bunch, Julia

Enrollment at U.S. colleges and universities has been on the downswing over the last few years, but that fact might not affect the student housing industry too much.

That’s because many large state universities are increasing their focus on recruiting student from out of state, and these students will certainly need housing.

At public colleges and universities, out-of-state students pay higher tuition than in-state students, and this increased tuition can help make up for declining state funding for higher education. According to the Center on Budget and Policy Priorities, the average state is now spending 18 percent less per student than before the Great Recession.

Kevin White, acquisitions director for Virtus Real Estate Capital, tells Bisnow that Southeastern Conference (SEC) schools have done a particularly good job of recruiting out-of-state students. The University of Alabama draws 62 percent of its freshmen class from out of state, according to the National Center for Education Statistics. Out-of-state freshmen account for 55 percent of first-year students at the University of Mississippi and 47 percent at the University of Arkansas.

Of the top 10 universities with the most new student housing supply in 2016, six are SEC schools, according to Axiometrics data.

In addition, Brian Thompson, director of acquisitions at student housing developer Core Spaces, says that the overall college enrollment drop isn’t a big an issue at Tier 1 flagship institutions. Indeed, The Hechinger Report notes that the bulk of enrollment declines are at for-profit and community colleges.

Given that high school graduation are on the upswing, Thompson expects enrollment at flagships to grow over the next five to 10 years.

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