Oversupply has become a new crisis in higher education in Taiwan. When the declining in enrollment accompanies with the oversupply higher education by coincidence, what might happen in this system? Affecting by declining of graduates in secondary education, the higher education enrollment has decreased dramatically in 2016. There are 203 departments left 2,953 vacant seats in 23 universities in 2016. Specifically, six universities cannot attract 50 percent of their required enrollment in this year. Facing the crisis, this study aims to explore how the declining of birth rate and enrollment might challenge the oversupply higher education system. We applied time series data and related policy intervention to interpret the impact on the oversupply system. The estimated result reveals the enrollment will decrease 78 thousand in 2023. It means the university’s revenue will decrease 28 billion when comparing 2016 and 2023. Reviewing the policy intervention for higher education, this study shows that cutting the enrollment is the most wanted strategy for MOE, while it only reveals short-term effect for the temporary treatment. For long run, this study suggests remodeling the higher education system to fit the global competition, universities cooperation and merge, deregulating and building multiple management systems for sustainable development.