Shakeout Accelerates for China’s Private Colleges

China’s private universities are experiencing a major enrollment crisis, with a growing number of institutions unable to fill their freshman classes, suggesting a significant shakeout in the sector that has expanded rapidly over the past two decades[para. 1]. After the 2025 national college entrance exam (gaokao), several provinces, notably Guangxi and Yunnan, issued multiple, and at times unprecedented, recruitment appeals to fill widespread vacancies. Guangxi even launched a fourth round of undergraduate admissions without a minimum entrance score, illustrating the severity of the crisis[para. 2].

In stark contrast to struggling private institutions, new research-focused private universities like Fuyou University of Science and Technology are witnessing a surge in demand, with admission thresholds approaching those of leading public schools. This divide highlights the emergence of “winners and losers” within the private education market[para. 3][para. 18]. The crisis is notably pronounced this year, with Guangdong province—a key economic region—seeing unfilled seats at private universities rise annually for five years; over 14 private universities in the province needed supplemental recruitment for 2025, and some still had more than 2,000 vacancies even after multiple rounds of appeals[para. 4].

Industry experts caution that retention rates are likely worse than reported, as many students withdraw after the academic year begins[para. 5]. The accelerated shakeout of private universities, according to Zhang Duanhong of Tongji University’s Higher Education Research Institute, results from demographic changes and market saturation. Schools lacking quality teaching, effective management, or a core competitive advantage face closure[para. 6]. The present difficulties are the culmination of explosive growth: in 2002 there were only four degree-conferring private undergraduate institutions, but by June 2025, the number had rocketed to 411, making up over a third of China’s undergraduate universities[para. 7].

While gaokao participation increased for seven consecutive years (with a minor drop in 2025), families are becoming more selective due to economic pressures and job market realities, questioning the value of expensive private degrees[para. 8]. Tuition for private universities generally ranges from 20,000 to 50,000 yuan ($2,760–$6,900) per year—a four-year degree may cost up to 400,000 yuan ($55,200)[para. 9]. However, these schools often can’t match public universities for research capability or faculty quality, and graduates frequently encounter degree discrimination from employers, leaving them caught between academic and vocational pathways[para. 10].

The simultaneous expansion of public universities and vocational undergraduate programs has further diverted applicants, intensifying competition and financial pressure on private institutions. Some are reducing staff numbers to cope: for example, a Yunnan private college cut its economics and management faculty by half within a little over a year[para. 12].

Despite the broad crisis, a few institutions, like Zhuhai College of Science and Technology and Nanguo Business School, are thriving, filling classes with high-performing students in early admission rounds[para. 14]. Publicly traded education companies reflect the turbulent landscape: New Higher Education Group has managed to increase tuition by 9.5% to attract more students, while China Education Holdings saw overall revenue growth of 11.8% to 3.67 billion yuan ($507 million), but net profit fell 9.7% due to higher costs[para. 15][para. 16]. In some cases, thousands of prospective students declined admission offers[para. 16].

Analysts predict the crisis may prompt mergers, consolidations, and transformation of smaller schools into applied or vocational colleges serving regional needs. Institutions investing in sectors such as AI, elder-care, or e-commerce may thrive by targeting market niches—differentiated competition is likely key to survival for private universities moving forward[para. 19][para. 20].