Over 16 million students enrolled in an undergraduate degree, a 1.2% increase from the year before, according to a survey released Thursday by the National Student Clearinghouse, an education data provider.

But that growth came down almost entirely to rising interest in community colleges and undergraduate certificates, where enrollment massively outnumbered that at traditional four-year universities. While the number of new students seeking two-year associate’s degrees rose 2.2%, interest in bachelor’s degrees grew less than 1%. 

Overall, community colleges added 173,000 undergraduate students last fall, nearly double the number of new students at public four-year colleges. Private nonprofit universities actually suffered a decline in enrollment, losing nearly 60,000 students.

The report, which covers 97% of post-secondary enrollment across the country, illustrates traditional universities’ ongoing identity crisis while students rethink the validity of a four-year degree. As young Americans grow disillusioned by tales of crushing student debt loads, a tight labor market for entry-level jobs, and the threatening possibility that artificial intelligence might usurp some of those roles in the near future anyway, many are looking into other educational pathways.

One factor behind the divergence is cost. Average in-district tuition at public two-year institutions costs a little over $4,000 this year, while public four-year colleges tend to run in-state students around $12,000, according to the College Board. Universities and colleges tout rising tuition costs as investments into students’ futures, but while most data still suggests bachelor’s degree holders will earn more and face less unemployment over the course of their career, fresh grads are now facing a tough job market to navigate. In September, the unemployment rate for new college grads hit 9.5%, its highest since 2021.

The difficult labor market for entry-level roles has pushed more young people to low-cost alternatives, including community colleges and trade schools, which also surged in popularity last year. High-paying jobs that do not require degrees, such as escalator installation and electrical power-line repair, have gone viral among Gen Z audiences, and associate’s degrees and certificates are often functional pipelines for students interested in exploring skilled trades.

While the National Student Clearinghouse report did not say which areas of study community college-goers tend to opt for, other surveys have found that most students who are not planning on transferring directly to a four-year school favor degrees that will grant them quick entry to the workforce. These include nursing, engineering and information technology.

To be sure, earning a bachelor’s degree is still seen as a prerequisite for most knowledge work sectors. In addition to imparting social and creative problem-solving skills, recruiters still rank GPA and degrees highly in their search for new talent, although recent evidence suggests many companies are doubling down on hiring from top colleges. And alternative hiring pathways to white-collar work might have a harder time gaining traction than advocates claim. A Harvard study last year tracked hiring across hundreds of companies, finding that even when employers tout non-degree requirements in their job postings, only one in 700 new hires without a degree actually benefit from these programs.

For traditional colleges, slowing or declining enrollment adds to a list of financial pressures. Falling birth rates in the U.S. have contributed to a so-called enrollment cliff, a shrinking pool of eligible students that could lead to budget cuts and mergers or closures for less secure institutions. Another headache has been the sudden decline in international enrollment as the Trump administration has enforced strict visa requirements for students coming from abroad. 

International students are a significant revenue stream for schools, but the National Student Clearinghouse data suggests the U.S. has already become a less attractive destination. Graduate international student enrollment last fall declined nearly 6%, while the number of undergraduates from abroad grew 3.2%, less than half last year’s rate.