They solved for the equilibrium

Yet GWU is taking a surprising and radical step that has prompted deep faculty anxiety: It is choosing to shrink — a lot.

Over the next five years, the private university just west of the White House aims to slash the undergraduate population of its D.C. campuses 20 percent. That would mean 2,100 fewer students, less tuition revenue and tough choices on whether to reduce faculty and financial aid or find other ways to balance the budget.

Many colleges have scrambled in recent times to cope with falling enrollment amid demographic upheaval. GWU provides the rare case of a school announcing in advance, as a public strategy, that it wants to get smaller…

LeBlanc declined to rule out faculty layoffs or other significant steps to reduce expenditures. He said those issues will be hashed out in consultation with faculty, trustees and others in the development of a strategic plan.

Here is more from Nick Anderson at The Washington Post.  Keep in mind that universities cannot do much to control their labor costs in the short or even medium-run, and thus shifts in demand can have a spectacularly large impact on finances.