Accountability and Regulation

The new president, rather than pursuing the traditional regulatory revision process, issued a series of executive orders aimed at accelerating policy changes. His administration also made personnel changes involving civil servants and federal board members viewed as misaligned with the administration’s priorities. He froze the income-related student-loan repayment program that President Joe Biden had sought to reform. Federal courts had already struck down Biden’s effort to forgive $400 million in student-loan debt through executive action. The new administration also reversed guidance related to Title IX of the Education Amendments of 1972 that had expanded protections for transgender athletes wishing to participate on women’s sports teams.

Judicial Outcomes

In the courts, the president was expected to rely on the U.S. Supreme Court’s conservative majority to review key executive actions. But the court is an independent and coequal branch of government under the U.S. Constitution and is responsible for determining the scope and limits of presidential authority through its rulings.

Federal courts from the district level to the Supreme Court have played an active role in interpreting the limits of executive authority, regardless of which party controls the White House. Judges have at times expanded judicial oversight in cases where congressional legislation was seen as ambiguous or lacking in implementation details. During the Biden Administration, courts issued rulings that blocked several regulations and executive actions, including those related to Title IX and student loan forgiveness. It remains to be seen how courts will approach similar challenges under the new administration. Questions such as the future of the DACA program continue to be unresolved. In 2019, the Supreme Court, in a 5–4 decision, blocked an earlier attempt by the administration to rescind DACA; however, the composition of the court has since shifted with the retirement and passing of two liberal justices.

Political Intrusion

Long before the outbreak of the current conflict in Gaza and subsequent protests on U.S. campuses, accompanied by a rise in incidents of anti-Semitism, concerns have been raised, particularly among conservatives, that U.S. higher education institutions—especially selective ones—were ideologically unbalanced and not always welcoming to a broad range of viewpoints. Recent protests criticizing Israel’s actions have led to reports from some Jewish students feeling unsafe, drawing additional attention from lawmakers who have expressed broader concerns about the direction of higher education.

Governing boards, presidents, and chancellors face the challenge of upholding the right to free speech—even loud, contentious, and controversial speech—and protecting academic freedom, while not allowing protests to interfere with the essential education mission of their institutions. A growing number of colleges and universities have adopted institutional-neutrality positions of not speaking out on controversial social and political issues.

Federal and State Funding

The financial outlook for colleges and universities over these next two years is uncertain. With Social Security and Medicare—the two largest entitlement programs—largely excluded from proposed cuts, lawmakers might face pressure to reduce spending in other areas to offset the costs of extending the president’s 2017 tax cuts and fulfilling his campaign promise to add new ones. During the president’s first term, Congress did not approve proposed reductions to the National Institutes of Health, which provides significant research funding to universities, but future funding levels remain unclear. At the state level, the ability to sustain or increase their support for higher education is also uncertain. The post-pandemic surpluses in state budgets have now diminished.

One good sign was the continued growth of college and university endowments, which rose 11.2 percent on average in 2024 for the 658 largest endowments. The median endowment at those institutions was just under a quarter-billion dollars, and almost half the money they withdrew from endowments went to student financial aid. However, alongside this encouraging news, there was ongoing discussion in Congress about the possibility of increasing the 1.4 percent excise tax on the earnings of the largest endowments and expanding its scope to include additional institutional endowments.

There was good funding news for public colleges and universities at the state level. The strong economy allowed states to boost support for public higher education institutions by 10.2 percent for fiscal 2024, to $126.5 billion, according to the State Higher Education Executive Officers Association (SHEEO). But the National Association of State Budget Officers forecast that after several “extraordinary years of widespread, substantial surpluses (and) record-setting revenue growth,” states can anticipate only modest growth in their budgets for fiscal year 2025. Higher education systems in California, Maryland, and elsewhere were facing cuts.

While college closures continued apace in 2024, postsecondary enrollment rose 4.5 percent for fall 2024 and now stands above the 2019 pre-pandemic levels. Average tuition and fees were $11,610 at four-year public colleges and universities, $43,350 at four-year private institutions, and $4,050 at community colleges, the College Board reported.

Federal Tax Legislation

With full Republican control of Congress and the White House, a major federal tax package is expected in 2025, likely through budget reconciliation to extend provisions of the 2017 Tax Cuts and Jobs Act and introduce new cuts. The cost of these measures—estimated at up to $7.75 trillion over a decade—has prompted lawmakers to explore offsets, placing higher education tax provisions under scrutiny.

Key proposals include a sharp increase to the 1.4 percent excise tax on large private college endowments and an expansion of its scope. Other proposals would tax all scholarships and fellowships, including Pell Grants, and eliminate education-related tax benefits such as the American Opportunity and Lifetime Learning credits, the student loan interest deduction, and tax-exempt bond interest. A plan to revoke nonprofit hospitals’ tax-exempt status could affect academic medical centers, while additional measures have raised concerns about how institutional activities—such as student group affiliations or international research—could impact institutions’ tax status. Advocates are also pushing to restore a non-itemizer charitable deduction to support small donors and to raise the long-standing $5,250 cap on employer-provided, tax-free education assistance, along with expanding tax exclusions to cover student living expenses.

Intercollegiate Athletics

Institutions small and large are grappling with the upheaval in intercollegiate athletics that has fractured the student-athlete model. The professionalization of big-time college sports—with players’ making thousands from marketing their name, image, and likeness and their ability to switch schools to go to the highest bidder—might have unseen consequences. A pending $2.8 billion settlement between the National Collegiate Athletic Association (NCAA) and past and current Division I players could have a ripple effect on institutions outside the so-called “power” conferences. If such institutions chose to, they could pay players directly and award more scholarships, but they would have to abide by new NCAA roster caps that might lead some to jettison athletics teams that generate less revenue and brand recognition than the major sports. That could hurt colleges that count on strong athletic programs to draw tuition-paying students eager to try out for a varsity team as well as those who never put on a uniform. Sports are essential to many institutions’ identity and often important to successful fundraising.