By Marie Frati and Emalee Ro

The Great Recession was the largest economic decline since World War II (Rich 2013). It was a period of severe economic downturn from December 2007 to June 2009 in the United States. During the recession, the national unemployment rate increased from 5% in December of 2007 to 9.5% in June of 2009, peaking in the months after the recession at 10% (US Bureau of Labor Statistics 2012). Real GDP also experienced a significant contraction, falling by 4.3% from 2007 to 2009. 

Given such high levels of unemployment in the US during this recession, we became interested in changes in individuals’ quality of life. When people lose access to income, they will reduce spending and investment, potentially affecting their access to health and education. The Great Recession impacted the market for higher education: institutions faced supply shocks from the lack of government funding, as well as demand impacts due to families’ low income, unemployment, and wealth (Long, 9). Furthermore, rising unemployment led to income loss, increased debt, and greater financial insecurity for families (Long, 9). 

We would expect reductions in income and increases in tuition prices to cause a negative effect on enrollment. However, college enrollment rates increased during the Great Recession. In fact, the number of students who enrolled in college increased by almost 2.5 million, or nearly 16 percent, from 15.6 million undergraduate students in the fall of 2007 to 18.1 million students in the fall of 2010 (Barshay 2020). In this project, we explore the factors driving this surge, such as increased Pell Grants. We also consider the historical tendency for increases in college enrollment during economic downturns as individuals seek to enhance their human capital in a challenging labor market or decide that college is their only option in a labor market with few available jobs.

In addition, we analyze the effects of the Great Recession on health insurance coverage in the United States. In 2010, the Joint Economic Committee of the United States Congress announced the “health care coverage [was] at a record low.” The decline in health insurance coverage can be primarily attributed to rising unemployment, and subsequent losses of employer-sponsored insurance. It becomes clear that unemployment had a dual effect on both college enrollment and health insurance coverage during the Great Recession.

Data Analysis

Figure 1 displays the unemployment rate along with the percent of American citizens with any form of private insurance from 2005 to 2013, with data from the Center of Disease Prevention and Control and the US Bureau of Labor Statistics. We find that an increase in the unemployment rate coincided with a decrease in the percent of American citizens with any private health insurance coverage. The Great Recession, which is highlighted in gray on the graph, caused large increases in unemployment, with unemployment rates continuing to rise even after the official end of the recession in 2009. From 2007 to 2010, the unemployment rate increased by 5.2 percentage points (US Bureau of Labor Statistics 2025). The large decrease in the percent of citizens with private insurance is caused directly by unemployment, since it leads to the loss of employer-provided insurance. At the time, most Americans under the age of 65 had private health insurance only because their employer sponsored it. In 2007, 61.6% of Americans under the age of 65 relied on employer-provided private health insurance, and only 4.9% had other forms of private health insurance (Centers for Disease Control and Prevention 2023). As a result, with the loss of people’s jobs came the loss of their health insurance for many. In addition, since they were losing their jobs, and, therefore, their income, it is likely that unemployed citizens, after losing their employer-sponsored health insurance, could not afford the full cost of private health insurance on their own.

Figure 1

Sources: Centers for Disease Control and Prevention and the US Bureau of Labor Statistics

In Figure 2, which shows the unemployment rate and the percent of high school graduates enrolled in college from 2005 to 2013 with data from the US Bureau of Labor Statistics and the National Center for Education Statistics, we observe that the percent of enrolled graduates increased as unemployment rose. In the three years between 2007 and 2010, college enrollment increased by about 2.5 million students (Barshay 2020). Historically, when faced with economic downturns, people often decide to get higher education in order to gain new skills. As they see the risk of unemployment rising, they realize that the human capital gained from going to college makes them more valuable employees, or potential hires, which results in more students enrolling in college (Long, 9). New high school graduates may have also gone to college because it was their only option. Due to high unemployment, getting a job was unlikely, and going to college was more preferable than having a gap on their resumes. 

FIgure 2

Sources: National Center for Education Statistics and the US Bureau of Labor Statistics

While this uptick in college enrollments happens often during recessions, the Great Recession had additional factors that amplified this effect. One such factor was the growth of financial aid. The 2009 Recovery Act increased the amount of Pell Grants given to low-income students and reconfigured requirements so that more students were eligible for it (Barshay 2020). This alleviated families struggling with unemployment and income loss, encouraging students who would have otherwise decided not to attend college to enroll. The Great Recession also occurred at the same time as a surge in the number of college-age people, which naturally led to a larger pool of college applicants and attendees (Long, 10). 

Conclusion

Our analysis reveals a relationship between high unemployment rates and increased college enrollment rates as well as decreased health insurance coverage during the Great Recession. We find that the rise in unemployment directly contributed to a decline in private health insurance coverage due to the loss of employer-supplied insurance. Moreover, the economic downturn contributed to a significant increase in college enrollment rates, driven by multiple factors, such as increased financial aid, the individual’s desire to enhance skills and differentiate themselves in a challenging labor market, and a lack of other options. These trends highlight the need for policies addressing both the healthcare insurance of the unemployed and the long-term financial implications of increased educational attainment during economic recessions. 

Policies that provide health insurance for low-income families are especially valuable during recessions. As for education, increasing financial aid may allow more students to enroll in college; however, cutting funding for education and the ensuing rise of tuition prices eventually led to massive pools of student debt, discouraging high school graduates from attending higher education. Education funding was cut during the Great Recession, leading to a 19% increase in tuition from 2006 to 2012 (Barashay 2020). Because of this, student loan debt surpassed credit card debt in 2010, with students accruing a record amount of debt: $132 billion in loans a year (Barshay 2020). Thus, it may be more beneficial to cut less education funding during recessions, even if it means scholarships and grants will be smaller in size, since lower college tuition will likely sustain more long-term growth in college enrollment instead of sharp spikes during recessions.

References

1. Barshay, Jill. 2020. “How the Last Recession Affected Higher Education. Will History Repeat?” The Hechinger Report, April 6. https://hechingerreport.org/how-the-2008-great-recession-affected-higher-education-will-history-repeat/.
2. Casey, Robert P., Jr. 2011. “Fact Sheet: Health Insurance Coverage in 2010: Health Care Coverage at Record Low.” Senate Joint Economic Committee of the US Congress. https://www.jec.senate.gov/public/_cache/files/5d1bf3fa-221e-4c68-9de3-4e3d4690a309/health-care-coverage-at-record-low—highlights-from-the-census-bureau-s-update-on-health-insurance-coverage-in-the-united-states.pdf.
3. Cohen, RA. 2023. “Long-Term Trends in Health Insurance: Estimates from the National Health Interview Survey, United States, 1968–2022.” National Center for Health Statistics. https://www.cdc.gov/nchs/data/nhis/health_insurance/TrendHealthInsurance1968_2022.pdf
4. Digest of Education Statistics. 2022. “Number of Recent High School Completers and Percent Enrolled in College, by Sex and Level of Institution: 1960-2022.” National Center for Education Statistics. https://nces.ed.gov/programs/digest/d23/tables/dt23_302.10.asp?current=yes.
5. Long, Bridget Terry. 2013. “The Financial Crisis and College Enrollment: How have Students and their Families Responded?” In How the Financial Crisis and Great Recession Affected Higher Education, edited by Jeffery Brown and Caroline Hoxby. University of Chicago Press. https://scholar.harvard.edu/files/btl/files/blong_-_the_financial_crisis_and_college_enrollment_-_july_2013.pdf.
6. Rich, R. 2013. “The Great Recession”. Federal Reserve History. https://www.federalreservehistory.org/essays/great-recession-of-200709
7. US Bureau of Labor Statistics. 2025. “Civilian Unemployment Rate, United States, 2005-2025.” Graphics for Economic News Releases. https://www.bls.gov/charts/employment-situation/civilian-unemployment-rate.htm.
8. U.S. Bureau of Labor Statistics. 2012. “The recession of 2007–2009”. Spotlight on Statistics. https://www.bls.gov/spotlight/2012/recession/pdf/recession_bls_spotlight.pdf#:~:text=In%20December%202007%2C%20the%20national%20unemployment%20rate,peaked%20at%2010.0%20percent%20(in%20October%202009).