Universities are modeling severe revenue impacts from the loss of Grad PLUS and federal funding uncertainties.

Trump Administration’s Impact on Higher Education (Chronicle Webinar)

by ChatGPT-4o

Overview
The Chronicle hosted a session to examine the Trump administration’s policies and their sweeping impact on U.S. higher education. Moderated by Sarah Brown and Rick Seltzer, the webinar focused on federal investigations, leadership pressures, diversity policies, free speech, student loans, and the recently enacted tax and spending bill. Panelists included Liz Clark (NACUBO) and Lesley Turner (University of Chicago).

Key Developments in Higher Education

1. Federal Pressure on University Leadership

   • University of Virginia’s President Jim Ryan resigned under federal pressure, citing risk to funding and jobs.

   • George Mason University is under investigation for diversity hiring initiatives. President Gregory Washington has refused to step down, creating a high-profile test of federal intervention versus state policy.

2. Free Speech Concerns

   • Carnegie Mellon University temporarily censored its long-standing free speech landmark ("the fence") ahead of a Trump visit, signaling institutional self-censorship.

3. DEI Rollbacks

   • Even institutions like Harvard, known for resisting Trump policies, are scaling back DEI initiatives due to funding threats.

4. Litigation and Federal Funding Disputes

   • Harvard is challenging a $3B research funding cut linked to alleged antisemitism. Early court hearings suggest judicial skepticism of federal arguments.

   • Federal grant terminations targeting DEI-related research were deemed discriminatory by a federal judge, leading to some reinstated funding.

5. International Students and Speech Restrictions

   • The administration is scrutinizing international students’ political speech as a visa condition. Visa processing delays and social media vetting have caused disruptions.

Major Policy Changes in the “Big Beautiful Bill”

• Student Loan Reforms:

  • Grad PLUS loan eliminated. Graduate students now face annual caps of $20,500 ($100,000 lifetime) or $50,000 ($200,000 lifetime) for professional programs.

  • Loan repayment options reduced to two: a fixed-term “mortgage” plan and an income-driven plan with 30-year forgiveness.

  • Lesley Turner’s research confirms that Grad PLUS loans inflated graduate tuition without increasing diversity.

• Accountability Framework:

  • Programs must meet graduate earnings benchmarks or risk losing federal loan access.

• Workforce Pell Expansion:

  • Pell Grants now apply to short-term (8+ week) accredited workforce programs, benefiting community colleges and vocational training.

• Tax Changes:

  • Reduced endowment tax exposure for smaller institutions but higher rates for remaining impacted universities.

  • Employer education support under Section 127 (up to $5,250) made permanent, including student loan repayment.

  • Charitable giving incentives adjusted, potentially affecting institutional fundraising.

• Energy & Infrastructure Impact:

  • Rollback of renewable energy tax credits threatens campus sustainability projects.

Institutional Financial Pressures

• Universities are modeling severe revenue impacts from the loss of Grad PLUS and federal funding uncertainties.

• Community colleges may benefit from Workforce Pell, while research universities face heightened risks due to cuts in federal research grants.

• Budgeting strategies include vacancy freezes, targeted program cuts, and revisions to employee benefits. Liz Clark emphasized “scalpel-like” precision over across-the-board cuts.

Outlook and Key Risks

• Implementation Challenges:
  The Department of Education, now operating with half its prior staff, may struggle to execute new accountability measures and loan systems.

• State Budget Pressures:
  Medicaid funding shifts may reduce state appropriations to public universities.

• Science Funding:
  Congress appears less willing to cut federal research funding than the administration, but appropriations for FY2026 remain uncertain.

Conclusion
The Trump administration’s higher education agenda represents the most significant policy overhaul in decades, reshaping federal funding, student loans, DEI programs, and institutional governance. While Workforce Pell offers new opportunities, most changes increase financial and operational risks for colleges. Institutions must prepare for tighter funding, regulatory uncertainty, and legal battles while seeking innovative revenue strategies.