I wonder how this drop in demand is distributed between American students who are eligible for financial aid and federally-backed student loans and foreign students who almost always pay full price.

As an anecdote from my own engineering school experience, a staggeringly large proportion of my classes were populated by foreign, usually Chinese and Indian, students. My college has a pretty good brand, and I understand many of these students were willing to pay to have its cachet on their resume. Also, many of these students, especially the Chinese ones, seemed to be from very well-off families (at least if the number of Canada Goose coats and Supreme hoodies is any indication).

This is an anecdote, so take it with a grain of salt, but it suggests a hypothesis: maybe the drop in demand is among American students who are mostly paying discounted prices anyway, while demand among foreign students who are willing and able to pay the staggering sticker price remains high.