If you're looking at student housing, or a client has asked you about it, the first hard question usually sounds something like this: aren't there going to be fewer college students?
It's a fair question. The number of U.S. high school graduates is projected to fall 12.5% cumulatively by 2041, according to the Western Interstate Commission for Higher Education. Higher education has a name for this: the demographic cliff. Fewer graduating seniors means fewer college students, and fewer college students means less demand for the housing that serves them.
We take that seriously. But the national number hides the part that matters most to a housing investor. The decline isn't landing evenly.
The pressure is hitting smaller, less selective schools first. Total U.S. college enrollment peaked around 2010 and has not returned to that level, according to RealPage data. Between 2015 and 2024, 243 degree-granting institutions closed, according to The Hechinger Report.
That's the part of higher education the cliff threatens. The threat is real, and a student housing strategy exposed to those schools is exposed to it.
The universities in the Power 4 athletic conferences (the SEC, Big Ten, Big 12, and ACC) tell a different story. These are mostly large flagship universities with national recognition, and they've outperformed other schools on the measures that drive housing demand.
|
|
Power 4 |
Non-Power 4 |
|
Acceptance rate (2014-2024 avg) |
60.5% |
71.7% |
|
Annual enrollment growth (2014-2024 avg) |
1.4% |
0.5% |
|
Undergraduate enrollment growth (2024) |
3.1% |
1.3% |
Source: RealPage and Georgetown University Center on Education and the Workforce data.
The SEC stood out in 2024, growing undergraduate enrollment 4.2%, according to RealPage data.
Most of the projected decline in graduates is still ahead, so the natural next question is how Power 4 schools hold up as it unfolds. The answer comes down to selectivity. A school that admits 60% of its applicants has room. If fewer students apply, it can admit a larger share of them and hold enrollment steady. A school that already admits nearly three out of four applicants has much less room to adjust. When the pool gets smaller, the schools with the deepest applicant demand are in a position to absorb it, and the schools without it feel the decline first.
In our view, the students who once spread across many institutions will increasingly concentrate at fewer of them. That's a thesis, not a certainty. It's also why university selection sits at the center of how we think about this asset.
Enrollment also responds to the economy, often in the opposite direction from most real estate. When jobs get scarce, going back to school gets more attractive. During the Great Recession, total U.S. postsecondary enrollment rose by 2.4 million students, according to the U.S. Census Bureau. That pattern hasn't held in every downturn. National enrollment declined during the pandemic and remains below its 2010 peak. Over the same decade, enrollment at Power 4 universities grew an average of 1.4% a year from 2014 to 2024, compared with 0.5% at other schools, according to RealPage data. Demographics shape the long-term pool. The economy moves enrollment within it.
Demand only tells you part of the story. A housing market also depends on how many new beds are being built.
Nationally, new student housing deliveries fell from an average of about 102,000 beds per year between 2015 and 2019 to 46,000 beds in 2025, a 55% decline, according to RealPage. At Power 4 schools, new supply in 2025 totaled roughly 18,000 beds, according to RealPage data. High construction costs and elevated interest rates have made new projects harder to finance.
Rents responded. Average annual rent growth at Power 4 schools rose from roughly 2.0% over 2015 to 2019 to roughly 5.0% over 2020 to 2024, according to RealPage data. Rent growth has moderated more recently across the broader market, but occupancy has stayed strong, reaching 95.1% across the Yardi 200 universities in Fall 2025, the second-highest level since 2019, according to Yardi Matrix.
None of this is permanent. Supply shortages tend to correct over time as rents rise or borrowing costs fall, and construction may pick up again. A strong university also doesn't make every property near it a good investment. Location, competing supply, and execution still decide how an individual property performs, and individual properties can underperform the market around them.
If a client raises the demographic cliff, here's the short answer:
Yes, the number of high school graduates is projected to decline. But the decline is concentrated at smaller, less selective schools. Large flagship universities admit a smaller share of their applicants, have grown enrollment faster, and have more room to absorb a smaller pool. The risk depends on which universities you're exposed to, not on student housing as a category.
The full case, including the supply picture, why private markets are now the primary route into pure-play student housing, and how to evaluate a manager, is in The Case for Student Housing.
What is the demographic cliff in higher education?
The demographic cliff is the projected decline in the number of U.S. high school graduates. The Western Interstate Commission for Higher Education estimates a 12.5% cumulative drop by 2041. Because most college students enroll after high school, fewer graduates is expected to mean fewer college applicants. For student housing investors, that raises a direct question about future demand for beds near campus.
Does the demographic cliff affect all universities equally?
No. The pressure has landed hardest on smaller, less selective institutions. Between 2015 and 2024, 243 degree-granting institutions closed, according to The Hechinger Report. Large flagship universities have moved in the other direction. Across the Power 4 athletic conferences (the SEC, Big Ten, Big 12, and ACC), undergraduate enrollment grew 3.1% in 2024, compared with 1.3% at other schools, according to RealPage.
Why might Power 4 universities be better positioned as the number of high school graduates declines?
It comes down to how selective a school is. Power 4 universities accept about 60.5% of applicants, compared with 71.7% at other schools, based on 2014 to 2024 averages from RealPage and Georgetown University Center on Education and the Workforce data. A school that turns applicants away has room to admit more of them if the applicant pool shrinks. A school that already admits most applicants has less room to adjust. That's our view, not a certainty. Most of the projected decline hasn't happened yet, and a strong university doesn't make every nearby property a sound investment.
Is new student housing construction keeping up with demand?
Not currently. National new deliveries fell from an average of about 102,000 beds per year between 2015 and 2019 to 46,000 beds in 2025, a 55% decline, according to RealPage. High construction costs and elevated interest rates have made new projects harder to finance. That may not last. Supply shortages tend to correct over time as rents rise or borrowing costs fall.
Society Hill Capital is an alternative asset manager. This material is for informational and educational purposes only. It is not an offer to sell or a solicitation of an offer to buy any security, and it is not investment, legal, or tax advice. Any offering is made only under Rule 506(c) of Regulation D, solely to investors whose accredited status has been verified through reasonable steps, by means of a confidential private placement memorandum, which controls. Statements about future market conditions are forward-looking and subject to risks and uncertainties; actual results may differ materially. Past performance and historical sector data are not indicative of future results. Private real estate investments are speculative and illiquid and involve the risk of loss of the entire investment. Certain information has been obtained from third-party sources believed to be reliable but has not been independently verified.