The pivotal role educational sector should play
South Korea has the lowest fertility rate in the world. This phenomenon may be caused by the high economic inequality such as the high cost of living, low wages, lack of quality job opportunities and rising housing unaffordability. Young couples in Korea tend to delay or even give up on having children. These days marriage is like a lifestyle choice to many of them as well.
Low birthrates can cause a socio-economic collapse. Low fertility rates coupled with increased life expectancies lead to a rapidly aging population. The aging population has already bulked up a pressure point for social safety nets in Japan, Korea and China. There shall be rising health care costs, a smaller workforce supply and more liabilities for pension plans. Soon after previous generations retire, the burden of health care and pension provision falls on the shoulders of the working-age young population.
Universities will struggle to maintain their current student body size, impacting tuition revenue and overall funding to maintain their huge overheads. A shrinking pool of potential students due to low birthrates can lead to reduced enrollment numbers. Institutions may have to consider significant budget cuts, reduced faculty positions and limited resources for research and cutting-edge facilities.
Universities must adapt to serve an older demographic or find innovative ways to attract younger students. As birthrates decline, the age distribution of the population changes. With fewer potential students, universities compete fiercely for new student recruiting. Institutions may have to invest more in marketing, scholarships and student support services to attract applicants. Maintaining a vibrant and diversified academic community becomes a challenge with declining enrollment. It is a tough time for higher education indeed.
Universities must play a crucial role in driving scientific progress, technological advancements and societal development. Fewer students do not necessarily mean less research and innovation. Diversifying revenue sources such as partnerships, philanthropy and government grants would play a critical role in the face of demographic shifts. Hence, sustainable funding models are essential for universities to survive.
Research universities create foundations for breakthroughs in various fields such as medicine, chemistry, energy and global peace. Students would benefit by learning from scientific leaders and innovators even if the institutions are kept small as long as they can keep fueling resources for advanced research. Research universities have already invested in cutting-edge labs, libraries and specialized equipment for many decades. Through research, faculty members stay at the forefront of their fields, enriching their teaching with up-to-date knowledge. Research universities, therefore, play a pivotal role in advancing knowledge, fostering innovation and shaping the future.
The landscape of higher education, though, is indeed undergoing significant changes, and the future of universities is a topic of concern in policy-making. More than a hundred private colleges in the United States in recent years have closed, merged with other schools or announced plans to close. If colleges continue to rely heavily on tuition fees for their operating budgets, they won’t be able to sustain their operations as declining enrollment leads to reduced revenue, fewer program offerings and ultimately institution’s financial instability.
The impending decline in the number of prospective students known as the ‘admission cliff’ poses a significant challenge to ordinary universities with no specialties. The graduating high school classes are expected to be smaller by population in 2025. Experts anticipate that more colleges may face closure in the coming years. The effects of the pandemic in recent years have exacerbated existing challenges. But systematic challenges such as enrollment declines, financial strain and changing demographics persist and continue to impact universities.
We certainly need an entrepreneurial leader in higher education who can wisely tackle these known and unknown challenges on the horizon. While some universities would still thrive and adapt, many others grapple with significant hurdles. The evolving landscape calls for strategic planning and innovative solutions to ensure the long-term sustainability of higher education institutions.
Education indeed plays a pivotal role in addressing societal challenges. Education would continue to contribute to solving various socio-economic problems. Higher education institutions should not burden society, though. A well-educated workforce would drive economic growth, innovation and national strategic competitiveness. Access to quality education reduces poverty by creating opportunities for employment and entrepreneurship.
It is time to wake up for the educational sector. However, universities should not forget to teach universal values such as respect, cooperation and acceptance so that they can foster understanding, empathy and tolerance in these highly fragmented worlds. Investing in education is an investment, not an expense for a better future for individuals and societies alike. Education must not end in school. It should continue throughout life and universities should grab these opportunities.
Daniel Shin is a venture capitalist and senior luxury fashion executive, overseeing corporate development at MCM, a German luxury brand. He also teaches at Korea University.