- Public regional universities across the US, such as Western Illinois University, are facing steep drops in student enrollment—some by nearly 50%—causing ripple effects across local economies.
- College towns like Macomb, Illinois, are seeing rising business closures, job losses, and falling property values as fewer students lead to declining spending and tax revenue.
- Flagship state universities with strong reputations and sports programs are thriving, while less prestigious schools are faltering in the face of demographic and financial headwinds.
A Tale of Two College Towns
According to the WSJ, in Macomb, Illinois, the economic downturn is tangible. Western Illinois University—once a regional academic hub—has lost nearly half its students since 2010, prompting dorm closures, faculty layoffs, and deserted streets once bustling with student life in this college town. A formerly full 800-student residence hall now serves as a training ground for police drills.
As enrollment falls, so does the city’s vitality. Local business owners, like Sullivan Taylor Coffee House’s Brandon Thompson, are struggling to stay afloat. “We’re down to bare bones,” Thompson says, facing mounting debts and contemplating bankruptcy.
Meanwhile, cities home to flagship universities—like Ann Arbor (University of Michigan) and Gainesville (University of Florida)—are experiencing rising enrollment, growing economies, and a surge in construction to meet demand.
A Shrinking Pipeline
This divergence between thriving and struggling college towns is fueled by broader trends: fewer high school graduates, especially after 2025; a generational drop in birthrates since 2007; and growing skepticism about the cost-benefit of college. Students who do pursue higher education are increasingly opting for prestigious institutions they believe will offer better job prospects.
In 2023 alone, the University of Tennessee Knoxville saw a 30% enrollment jump from 2015. Meanwhile, Tennessee’s 10 regional public colleges experienced a combined 3% decline abandoning struggling college towns tied to mid-tier and regional campuses.
Financial Strain and Community Impact
The impact on college towns isn’t just educational—it’s deeply economic. According to Brookings Metro, 75% of metro areas reliant on higher education grew more slowly than the US average between 2011 and 2023. In contrast, these same areas had outpaced the national economy in the prior decade.
In Macomb, city sales-tax revenue has declined “almost proportionally” with student enrollment. Local landmarks like Vitale’s Restaurant and Nelson’s Clothing are struggling or up for sale, unable to replace lost student customers and workers.
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Searching for a Lifeline
City leaders are now pushing to diversify Macomb’s economy. Factories from companies like Pella and NTN-Bower have added manufacturing jobs, and retailers like T.J. Maxx and Hobby Lobby have recently opened. A proposed sports complex could help draw visitors, but for many locals, it’s not enough to replace what the university once represented.
The Bigger Picture
Since 2013, over 240 smaller colleges and private schools have shut down. Analysts call the trend a “flight to quality,” where students flock to well-known institutions, abandoning mid-tier and regional campuses.
The coming years may only widen the divide. According to Savills, the number of high-school graduates will shrink starting in 2025, a long-anticipated “demographic cliff” that threatens to push more college towns toward economic stagnation—or worse.
Why It Matters
College towns are microcosms of the higher education system’s shifting landscape. As regional universities struggle to adapt to demographic and economic pressures, entire communities face uncertain futures. The collapse of the traditional college-town economy raises urgent questions about the sustainability of public education models and the regional development strategies that rely on them.
What’s Next
Expect more closures, consolidations, and financial interventions as state governments, universities, and communities scramble to address shrinking enrollments. For college towns like Macomb, the path forward will likely depend on reinvention—not revival.
