It is no secret that the labor market has been an unfriendly zone for newly minted college graduates. As CNBC recently put it: “20- to 24-year-olds with bachelor’s degrees have seen the most extreme levels of unemployment compared with historical levels than other educational groups.” This may explain some recent polling data from NBC:

Almost two-thirds of registered voters say that a four-year college degree isn’t worth the cost.

Just 33% agree a four-year college degree is “worth the cost because people have a better chance to get a good job and earn more money over their lifetime,” while 63% agree more with the concept that it’s “not worth the cost because people often graduate without specific job skills and with a large amount of debt to pay off.”

That one-third positive polling rate is down from essentially 49 percent in 2017 and 53 percent in 2013.

This decline in favorability coincides with a drop in the number of students enrolled in college (see below from the National Center for Education Statistics).

Not only is the total number of students down, the fraction of high-school grads enrolling has declined as well.

This raises some questions about the financial health of the postsecondary education sector. A new NBER working paper by Joshua Goodman and Joseph Winkelmann sheds some important light on the dynamics. First, the decline is driven by 2-year colleges (“community colleges”), which are down by 30 percent since the Great Recession. Enrollment in 4-year colleges is holding up just fine.  Moreover, about 10-percentage points of the decline come from 2-year colleges being reclassified as 4-year colleges.

The authors go on to note that: “pre-Great Recession data shows a 1 percentage point increase in the local unemployment rate increases first-time community college enrollment by 2 percent, suggesting many students are on the margin between community college and job opportunities.” Further, the students who are most sensitive to weakening labor markets are those who have not completed a degree.

In short, given that the labor market appears to be softening, the enrollment prospects for 2-year colleges may be looking up.