As college students return to classes, there is an eerie feeling of the calm before the storm. The campus environment feels similar to any other recent year, but there is an unmistakable sense that we are on the verge of a slew of changes, some of which might even be considered historically significant pivots years from now. We’re keeping an eye on several non-policy, federal policy, and state policy trends in higher education.
Non-policy Trends
There are two main non-policy-related trends that warrant close attention.
One, the rise of Artificial Intelligence (AI). These computer tools are rapidly improving and have huge implications for both how education is delivered and the value of such education. Even if AI stops improving, its current capabilities raise serious questions about the content, delivery, and value of traditional college education. There are concerns about students relying too much on these tools, essentially using them to cheat their way through college. But many professors are also relying on them for lesson planning and grading, which raises the question of how much value these professors are really adding. There are also concerns about AI’s impact on the job market for recent graduates, which will then affect the demand for college among current high school students. There is little doubt that AI will affect higher education, but we don’t yet know how or how fast.
The second non-policy trend is a bit of a puzzle. For decades, tuition has been on an unrelenting upward climb, such that increasing tuition was almost a natural law. But tuition has stopped climbing and has even fallen a bit in the past few years. This is the trendline equivalent of snow in July, and while snow in July would be a huge topic of discussion and debate, the reversed trendline for tuition is barely acknowledged. Needless to say, we don’t know what caused the sudden (and welcome) reversal, but this should be getting much more attention than it has to date.
Federal Policy Trends
There are two federal policy trends we’re keeping an eye on.
First, the recently passed One Big Beautiful Bill Act legislation. This law made several beneficial changes to federal policy, including ending GradPLUS loans, capping ParentPLUS loans, phasing out many of the income-driven student loan repayment plans (including the Biden SAVE plan), allowing colleges to limit their students’ borrowing, and introducing an accountability metric based on post-graduation earnings. There were also some undesirable features of the new student loan repayment plan, such as waiving unpaid interest and providing a subsidy for low-earning graduates. There are also some wild cards, like the introduction of the workforce Pell and an increase in the endowment tax.
The second federal trend is the Trump administration’s jihad against some of the top colleges in the country. Through a series of funding freezes, investigations, and other strong-arm tactics, the administration is clearly trying to reshape higher education. While there are howls of protest, the dirty little secret is that many of the tools the administration is using are not new.
For example, the administration’s attempts to prohibit funding for colleges that push Diversity, Equity, and Inclusion (DEI) closely mimic the Obama and Biden administrations’ prohibition of funding for colleges that didn’t use their preferred (and wrong) campus policies regarding sexual assault, harassment, and rape. If we’re lucky, after all the various court cases are decided, some of higher education’s excesses will be curtailed, and courts (or new legislation) will place more limits on federal government involvement with and interference in higher education.
State Policy Trends
There are also two state-level trends that we’re monitoring.
One, the growth of performance-based funding. Historically, states have funded colleges directly, loosely based on enrollment. But there is a growing shift towards performance-based funding. While early iterations were neither performance-based (relying on easily gamed metrics like the number of graduates) nor funding (they often included hold-harmless provisions and would only affect a negligible portion of total funding), there have been improvements along both dimensions over the years. Very few colleges are funded entirely based on reasonable measures of performance (Texas State Technical College is perhaps the lone exception), but we’re at least headed in the right direction.
Second, a group of states is seeking to launch a new accreditor. Accreditors are quasi-private organizations that can turn on or off a college’s access to federal financial aid programs like Pell grants and student loans. Accreditation is a complete mess, but there are no easy solutions. One of the things that would help would be more competition among accreditors, so if this effort is successful, it would be welcome news.
Many of these trends could individually have a big impact on higher education, and collectively, they almost certainly will. We’ll be keeping a close eye on these trends over the coming year. As the saying goes, “may you live in interesting times.”