For decades, attending universities has been the Chinese version of the "American Dream", promising a rise from rags to riches for those who have studied hard and invested heavily in education.

A recent slump, however, in the number of students enrolling to take the college entrance examinations has awakened Chinese universities to an inconvenient truth: the era of glory has gone and they will soon have to contend for the decreasing number of students.

This year, central China`s Henan province reported a decrease of 97,000 applicants for the national college entrance exam (NCEE). It is the largest year-on-year drop for the province after the number of applicants took a downward spiral in 2008.

The province, however, after registering 855,000 applicants for the exam in June, still ranks the first in China.

More alarming is that the trend is becoming national. According to a report on eol.cn, a major portal reporting on education in China, this year`s NCEE registration has dropped 10 percent in Anhui, 6 percent in Beijing, and 12 percent in Shanghai.

The overall number of candidates seeking to take the NCEE in China, it said, shrank 1 million in 2009 and 2010 after the culmination of candidates in 2008.

Going-out students

A number of factors, including a declining birth rate, difficulties in obtaining quality education, and easier access to overseas universities, have combined to drain the student pool of Chinese universities.

"This year`s huge drop followed the exodus of second-time applicants who are disappointed by the fierce competition," said Chen Daqi, an official at the provincial office for college enrollment.

This extraordinary competition in the NCEE used to compel many Chinese students to study extra years before they receive high enough scores and satisfactory offers. In Henan, about one-third of those taking the NCEE are not first-time applicants.

Apart from the disenchanted veterans this year, many are also leaving the NCEE army as they question the quality of Chinese higher education.

"For sure, China has more universities and modern campuses, but few are encouraging innovation and cultivating talents," said a Luoyang citizen  surnamed Qi.

Like many wealthy families, Qi is applying for an American university for his 18-year-old son through the city`s burgeoning education agencies.

Yang Fei, manager of a Zhengzhou-based education agency, said his business has taken a cheerful upturn since 2008, as the appreciation of the Renminbi and the depreciation of Chinese universities make studying abroad a favored option for high school students.

"In the past, only those with poor academic performances came to us as they couldn`t get admitted to domestic universities, but now top students have become our major customers," said Yang.

However, Yang also feels the pressure, as many senior high schools are setting up their own institutions to provide consulting services and training programs.h   According to the Education Department of Henan, more than 40 high schools in the province are awaiting approval for their international cooperation programs, while over 20 have opened classes to prepare their students for studies abroad.

Private schools at peril

Xia Tao, who works for a private university in Shandong, said the shrinking student pool has threatened the operation of the school, which largely relies on tuition fees from recruited students.

Shandong ranks the second among Chinese provinces in terms of NCEE takers, but this year marks the third consecutive year for the figure to fall.

"Recruitment was already very hard, as private universities lack the public recognition of the public counterparts. Now it`s like rubbing salt into the wound," said Xia.

Educational experts said that the reduced supply of students has brought a financial crisis to Chinese universities and colleges. Many private schools, due to their low rank and enrollment rate, are nearly forced into insolvency.

Deng Xiangchao, vice dean of the School of Art of Shandong Jianzhu University, said the low enrollment rate would also hit public universities that look to more students to pay the huge debts incurred by their expansion fever.

"The crisis is not necessarily a bad thing. It shows the public discontent of the declining quality of higher education and will whip universities into reforms," said Deng.

Chinese universities have been obsessed in building larger campuses since 1999, when the central government called for the popularization of higher education, and now it is time to catch up in quality, said Deng.