Colleges haven’t had it easy as of late.
The year kicked off with the messy rollout of the new Free Application for Federal Student Aid form. The FAFSA came about three months later than usual, meaning institutions will be making financial aid offers on a truncated timeline.
In statehouses and Congress, policymakers have been vocal about colleges’ costs, their diversity programming and their response to the latest Israel-Hamas war. The reignited battle in the Middle East has inflamed political tensions on campus, and House Republicans have fervently held colleges’ feet to the fire on spiking antisemitism.
Pandemic-era federal relief money has also dried up, contributing to cost cutting at colleges nationwide.
As Higher Ed Dive looks ahead on the economic and partisan forces shaping higher education, we anticipate these seven storylines will be worth watching in 2024.
Continued consolidation
Colleges scaling back their academic offerings — or closing altogether — isn’t anything new. But the recent speed and frequency with which institutions have been announcing consolidation has been notable.
Few colleges have been immune to financial stressors like enrollment declines and tough economic conditions.
Even public flagships, like West Virginia University, have recently experienced major cutbacks. WVU’s board approved plans in September to slash 28 degrees, including all language majors. E. Gordon Gee, the institution’s president, has said the austerity measures would help remedy an estimated $45 million budget deficit.
Private nonprofit institutions have also suffered, such as Christian Brothers University, a Tennessee college that plans to drop a dozen academic programs to bridge a $4 million budget gap.
Colleges have also been pushing out tenured faculty, a decision usually reserved for the most egregious budget crises. But in some cases, like at Dickinson State, presidents are arguing that they’re finances haven’t crashed but that faculty reductions are still needed to head off greater turmoil.
Educator layoffs have, and will likely continue to, attract the attention of the American Association of University Professors. The leading faculty group has criticized the way colleges have carried out program and job cuts, arguing that faculty must be involved in these decisions.
Credit rating agencies are split in their predictions for college consolidation this year. Moody’s Investors Service has argued state funding and growing tuition revenue will buoy colleges, while S&P Global Ratings has said only highly selective institutions will be insulated from poor economic conditions.
A shaky federal aid system
Policymakers across the political spectrum generally agree the federal student aid system needs some sort of overhaul. However, federal legislators have passed few new policies beside the FAFSA rework, which slimmed down the number of questions students need to complete on the notoriously unwieldy form.
Though the U.S. Department of Education expects the changes will make more low-income students eligible for Pell Grants, administrative difficulties and delays have marred the new form’s debut.
The new FAFSA rolled out in a “soft launch” at the end of December. However, the Education Department only made the form available periodically because of technical issues that the agency is still working to resolve.
The Education Department also won’t send applicant data to colleges until later this month. Institutions will already be under pressure to help students and families through an untested system, even as their financial aid offices often remain overloaded.
The Biden administration is pursuing other initiatives, including student debt cancellation. The Education Department expects to release regulatory proposals this year to provide cancellations for certain borrower groups, such as those whose debt loads eclipse their initial balances.
The administration has also introduced a new income-driven repayment plan, which base borrowers’ monthly payments on their salary.
Meanwhile, Republicans have floated limiting graduate student loans and attempted to halt the new income-driven plan.
More attacks on diversity, equity and inclusion efforts
Republicans nationwide have demonized college diversity, equity and inclusion programming. While DEI offices aim to lift up historically marginalized students, some conservatives argue they are actually stoking division.
They contend colleges have foisted teachings about topics like race and gender equity onto students, who they say have been made to feel guilty for historical events in which young people played no part.
Initially, criticism centered around critical race theory, a decades-old academic framework that teaches that racism is systemic. But those attacks have escalated into a full-out war against DEI initiatives, culminating last year in Florida and Texas banning state spending on public colleges’ diversity programs.
This trend will almost assuredly continue. Oklahoma’s Republican governor, Kevin Stitt, just recently signed an order demanding colleges review all DEI programs.
Complications could arise from DEI bans. Most major accreditors, for instance, evaluate colleges’ diversity work in some fashion. These requirements could set up a potential clash with current and future DEI restrictions.
However, the political environment could tamp down accreditor efforts to promote DEI.
One accreditor, the Southern Association of Colleges and Schools Commission on Colleges, had planned in December to vote on a diversity standard that colleges would have to meet. But SACSCOC representatives never took up the matter, which one college chancellor attributed to political considerations, according to The Chronicle of Higher Education.
DEI also came into the spotlight recently at Harvard University, whose president, Claudine Gay, departed amid a right-wing movement accusing her of plagiarism. Gay’s critics had derided her vocal commitments to DEI.
Harvard alumnus Bill Ackman, a billionaire businessman, and one of those who helped orchestrate the campaign against Gay, insinuated on social media that the former president was merely a DEI hire.
Litigation on Biden administration policies
The Biden administration has achieved most of its higher ed policy changes through executive and regulatory plays, circumventing a gridlocked Congress.
The Education Department has pushed through rules governing oversight of for-profit colleges and the cancellation of loans for defrauded students.
But legal challenges have mounted against several of the president’s key policy proposals. One policy under threat is the Biden administration’s version of the borrower defense to repayment rule, which clears debts of students whose colleges misled them. The program the Education Department developed removes barriers in this process, restoring the ability for borrowers to have their loans automatically discharged, for example.
But that regulation is on hold after an appeals court blocked it last year, in a lawsuit brought by Career Colleges and Schools of Texas, which represents for-profit institutions in the state.
The American Association of Cosmetology Schools also recently sued over the Biden administration’s gainful employment rule, which requires for-profit institutions to prove their graduates earn enough to pay off their student loan debt. The regulation, finalized in September, would cut off federal aid to institutions that continually can’t pass the debt-to-earnings test.
Lawsuits will likely emerge on other issues, including against policies that haven’t been finalized yet.
The Education Department intends to release two highly awaited regulations in March concerning Title IX, the federal law banning sex-based discrimination in federally funded schools.
One of the administration’s rules would dictate how colleges must investigate and potentially punish sexual violence.
The other would prevent them from blanket banning transgender students from participating in athletics aligned with their gender identities. In some cases, it would permit colleges to remove transgender athletes from teams for reasons like fairness or safety.
Republicans have objected to the athletics-focused one especially.
Conservative attorneys general have said they would sue to safeguard women’s sports, even before the Education Department issued a draft version of the rule.
A rocky outlook for ed tech
For online program management companies, or OPMs, layoffs, financial stress and calls for greater federal oversight have defined the past couple of years.
2U, one of the most prominent OPMs, is dealing with a dire cash flow problem, according to a recent analysis from ed tech consultant Phil Hill It holds almost $1 billion in debt, a significant chunk of which — $380 million at minimum — must be paid off by early 2025.
And it doesn’t have enough meaningful revenue coming in to accomplish that, Hill said in his analysis. Hill wrote the only way he saw 2U surviving was if it renegotiated or refinanced the debt.
This has become more expensive, as Federal Reserve officials raised its benchmark interest rate 11 times since March 2022.
The company’s troubles have piled up — in November, it replaced longtime CEO Chip Paucek with Paul Lalljie, its chief financial officer, and lost one of its oldest and most high-profile clients, the University of Southern California.
The Biden administration has also said it intends to release final guidelines for third-party servicers, entities that help administer colleges’ Title IV programs and are subject to stricter regulatory requirements.
Early last year, the Education Department announced plans to vastly expand what it considers a third-party servicer — an action that would impose greater oversight on OPMs. But the agency indefinitely pushed back the implementation of those new guidelines after they drew widespread objections.
Now, it intends to pursue rulemaking on third-party servicers, the Biden administration’s regulatory agenda indicates.
Artificial intelligence picks up pace
Despite a lot of prognosticating, the higher ed world really hasn’t figured out how the rise of ChatGPT and similar generative AI will affect colleges.
Though pundits have fretted about such services facilitating academic dishonesty, scholars who study such issues have argued cheating hasn’t skyrocketed as AI has gone mainstream.
Many predictions focus on AI in admissions — will students flood these offices with ChatGPT-written essays? Will the role of application reader be severely diminished if AI reviews them instead?
The answers to those questions haven’t fully been fleshed out, and few institutions have publicly discussed their stances on applicants’ use of AI.
One big-name college, the Georgia Institute of Technology, posted a statement to its website describing AI as “powerful and valuable tools” in undergraduate admissions.
Georgia Tech prohibited copying and pasting essays directly from ChatGPT but urged applicants to use the service as a sounding board to sharpen ideas.
A similar sentiment was raised at a gathering of presidents of top-ranked colleges last year, including those from Colorado College and Bucknell University. One leader told the room that colleges should embrace rather than fear AI to help students learn how to appropriately use it.
Companies have also jumped into the AI fray, creating products that could benefit admissions offices.
Fallout from Supreme Court admissions decision
In a widely anticipated decision, the U.S. Supreme Court in June put an end to race-conscious admissions practices at Harvard University and the University of North Carolina at Chapel Hill. Anti-affirmative action group Students for Fair Admissions, SFFA, successfully argued such policies are discriminatory.
The higher ed landscape prepared for this ruling, with legal and admissions experts urging colleges months before the decision to start dissecting how they should respond and communicate with students about it.
But the decision’s full effects are still being realized. Pundits predicted colleges and states might overcorrect by dropping scholarships and other programs designed to help racial minority students.
However, the decision only applied to admissions.
Now, what college leaders feared has come to pass. Shortly after the ruling dropped, the University of Missouri System abandoned race and ethnicity as factors in scholarships.
And an institution near Chicago, Western Illinois University, initially rescinded a race-based scholarship, citing the decision. The university later reinstated the program.
The legal drama hasn’t concluded.
SFFA is pursuing lawsuits against two U.S. military academies — the U.S. Naval Academy and the U.S. Military Academy at West Point. The high court exempted military academies in its ruling, writing that they might have “potentially distinct interests” from other colleges.
