Japan is considering one of the most significant restructurings of its higher education sector in decades, with the Ministry of Finance proposing the closure or merger of around 250 private universities by 2040 as the country confronts a shrinking youth population and mounting enrollment pressures.
The proposal, presented at an April meeting of the Fiscal System Council, would reduce Japan’s private university sector by approximately 40%, targeting 250 institutions out of the 624 private universities operating nationwide as of 2024.
At the same time, the government has proposed cutting undergraduate admission quotas by around 140,000 students by 2040.
The recommendations come as more than half of Japan’s private universities are now failing to meet freshman enrollment targets. According to a fiscal 2025 survey by the Promotion and Mutual Aid Corporation for Private Schools of Japan, 53% of private universities did not fill their first-year quotas.
The enrollment crisis is being driven largely by Japan’s long-term demographic decline.
The population of 18-year-olds has fallen sharply from approximately 2.05 million in 1992 to 1.09 million in 2024, according to government data. Projections from the National Institute of Population and Social Security Research suggest the number will fall below one million by 2035 and decline further to around 740,000 by 2040.
Despite these demographic trends, the number of private universities expanded significantly over the same period, rising from 384 institutions in 1992 to 624 in 2024 following decades of deregulation and university expansion.
The Finance Ministry has questioned whether continued subsidies for under-enrolled institutions remain justifiable.
Government support for private universities totals approximately ¥300 billion in the current fiscal year. Finance officials argued that some universities operating below capacity are offering remedial courses covering material typically taught during compulsory education, including basic arithmetic and introductory English grammar.
“Some classes at these universities are teaching content that students typically learn during their years of compulsory education,” a senior Finance Ministry official said, according to domestic media reports.
“It’s doubtful that they’re providing an education of a quality that justifies the provision of government subsidies.”
The Ministry of Education, Culture, Sports, Science and Technology (MEXT) has signalled that sector consolidation is likely unavoidable, although officials have pushed back against applying uniform cuts nationwide.
Education Minister Yohei Matsumoto said universities should not be subject to “cookie-cutter decisions,” stressing the importance of preserving institutions that contribute to regional economies, healthcare systems, welfare services, and infrastructure.
In response to the finance ministry proposal, MEXT published an opinion paper noting the need to maintain universities capable of supplying talent for regional industries and growth sectors such as artificial intelligence and semiconductors.
A senior ministry official told domestic media that some downsizing of the private university sector is nevertheless considered “inevitable,” with future subsidies expected to be distributed more selectively toward institutions aligned with labor market needs and regional development priorities.
The debate has also triggered criticism from within the higher education sector.
Makoto Watanabe, a professor at Hokkaido Bunkyo University, said while many educators acknowledge that Japan has too many small private institutions, policymakers bear some responsibility for the current situation.
“We all recognise that fewer children are being born in Japan now, but the education ministry approved the opening of several new universities in the last decade, so it is partly its responsibility that there are too many now,” he said.
“The issue of the nation’s birth rate is not new, so why did the bureaucrats who are now planning to close private universities approve the opening of others?”
Analysts say the proposed restructuring reflects a broader reckoning facing Japanese higher education as demographic decline accelerates and institutions compete for a shrinking pool of domestic students.
For international education stakeholders, the reforms may also signal a shift in Japan’s higher education strategy — away from expansion and toward consolidation, quality assurance, and stronger alignment between university output and workforce needs.
As domestic student numbers continue to fall, universities likely to survive sector restructuring may increasingly prioritise internationalisation, research competitiveness, and programs linked to national industrial priorities.
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