US College Attendance Dropped Amid Pre-Recession Housing Boom, Study Finds

When the U.S. economy was booming in the late 1990s, many young Americans decided a quick payday was a better option than sitting through a professor’s lecture. But when the economy collapsed in the late 2000s, 20-somethings responded by sprinting back to the classroom.

The United States’ strong housing sector in the late 1990s and early 2000s contributed to a significant drop in college enrollment over the same period, according to a study released last week. Past research suggested that trend reversed in 2007 and 2008 during the Great Recession, when a poor job market led young adults to enroll in droves.

Using various metrics, scholars with the National Bureau of Economic Research analyzed the employment and education habits of people ages 18 to 25 from the late 1990s to 2006, when the U.S. housing market’s collapse began. Escalating home values created jobs in fields that do not necessarily require college degrees, such as in the real estate, construction and service industries.

With many jobs available, young adults eschewed college in favor of immediate entry into the labor force -- and the resulting payday. Overall, the study found factors associated with the strong housing sector contributed to roughly 30 percent of the college enrollment slowdown.

“Across several different (and complementary) data sources and empirical strategies, we consistently find evidence that the housing boom reduced college attendance and educational attainment,” the study said. “These effects are generally similar for men and women, and seem to be concentrated among students studying at two-year colleges or towards Associate degrees. Applying our local labor market effects nationally, we find that the national housing boom can account for roughly 30 percent of the observed slowdown in college-going for young men and women.”

Previous research suggested the collapse of America’s housing market – and subsequent Great Recession in the late 2000s -- pushed young adults to pursue college educations. Without easy access to jobs, evidence showed young adults were more likely to enter college and to finish their degrees during the Great Recession. Moreover, college attendance has increased during every recession since the 1960s, Stanford University economist Caroline Hoxby said last March.

In 2013, a Harvard University study found a lack of jobs during the Great Recession pushed more Americans to enroll in college, despite rising tuition costs and increased reliance on student loans to pay for education.