President Donald Trump signs an executive order restarting the Presidential Fitness Test in public schools as Secretary of Education Linda McMahon, from left, Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, Vice President JD Vance and professional golfer Bryson DeChambeau watch, Thursday, July 31, 2025, in the Roosevelt Room of the White House in Washington. (AP Photo/Jacquelyn Martin)
Log in to view the full article
President Donald Trump signs an executive order restarting the Presidential Fitness Test in public schools as Secretary of Education Linda McMahon, from left, Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, Vice President JD Vance and professional golfer Bryson DeChambeau watch, Thursday, July 31, 2025, in the Roosevelt Room of the White House in Washington. (AP Photo/Jacquelyn Martin)
As the calendar year draws to a close, higher education leaders are assessing the damage and contemplating an uncertain future fundamentally different from the past.
The Trump Administration’s higher education offensive
No single force reshaped the higher education landscape in 2025 more dramatically than the Trump administration’s aggressive assault on diversity, equity, and inclusion initiatives. Within days of President Donald Trump’s second inauguration in January, executive orders targeting DEI programs sent shockwaves through college campuses nationwide.
The administration launched investigations into more than 50 universities for alleged civil rights violations related to their DEI programs, including prestigious institutions like Yale, Cornell, Georgetown, Rice, Vanderbilt, and the University of Pennsylvania. An additional 45 universities came under federal scrutiny for their partnerships with the Ph.D. Project, a nonprofit that has supported students from underrepresented groups pursuing doctoral degrees in business for three decades.
Education Secretary Linda McMahon moved quickly to implement the president’s directives, removing hundreds of DEI-related guidance documents from the Department of Education’s website and dissolving diversity councils established during previous administrations. By March, the administration had threatened to withhold federal funding from institutions that refused to comply with new anti-DEI mandates, creating what critics called a climate of fear and confusion on campuses.
“They’re feeling beleaguered. They’re feeling overwhelmed,” said Dr. Lynn Pasquerella, president of the American Association of Colleges and Universities, describing conversations with administrators at schools named in federal inquiries. “There’s a deep sense of moral distress.”
The administration’s efforts extended beyond DEI initiatives. In a particularly controversial move, Trump officials cut $400 million in funding to Columbia University in March after demanding changes to policies regarding student protests and the restructuring of its Middle East studies department. Columbia eventually reached a settlement agreement in July, paying the government $200 million over three years to restore access to federal grants.
Federal courts provided some pushback. In April, a U.S. district court judge in Maryland blocked portions of Trump’s anti-DEI executive orders, ruling they were unconstitutionally vague and violated free speech protections. However, the legal battles continued throughout the year, with outcomes remaining uncertain as institutions grappled with compliance demands that lacked clear definitions.
In a paradoxical twist that confused many observers, the Trump administration simultaneously boosted funding for Historically Black Colleges and Universities by $495 million while dismantling DEI programs elsewhere. The one-time investment, announced as a 50% increase over anticipated allocations, drew praise from HBCU advocates even as critics questioned the administration’s motives and consistency. The enrollment cliff arrives
After years of warnings, 2025 marked the arrival of the long-predicted “enrollment cliff”—a demographic phenomenon that saw the number of traditional college-age students begin a projected 15% decline through 2029. High school graduates peaked at approximately 3.9 million before beginning their downward trajectory, the result of plummeting birth rates following the 2008 Great Recession.
This demographic shift hit hardest in the Northeast and Midwest, where population declines due to migration patterns compounded the problem. Small, tuition-dependent private colleges found themselves especially vulnerable, unable to offset enrollment losses with other revenue sources.
The impact was immediate and devastating. At least 20 colleges closed in 2024, and by mid-2025, another nine schools had announced permanent closures, including Birmingham-Southern College in Alabama, which shuttered after failing to secure a $40 million emergency state loan, and Limestone University in South Carolina, which closed after its board failed to raise $6 million needed to continue operations.
The King’s College in Manhattan, which had suspended classes in fall 2023, officially closed its doors permanently in July after failing to present New York’s education department with an adequate plan to resume operations. Fontbonne University in Missouri, Bluffton University in Ohio, and Eastern Nazarene College in Massachusetts joined the growing list of institutions unable to sustain operations.
Federal Reserve Bank of Philadelphia researchers projected that as many as 80 additional colleges could close between 2025 and 2029 in a worst-case scenario. Each closure carried significant economic consequences, affecting an average of 265 jobs and eliminating $14 million in labor income for communities that often depended on their local institutions for economic stability.
Mergers became an increasingly common survival strategy. Penn State University’s board voted to consolidate several commonwealth campuses, reducing their number from 19 to 13 by spring 2027. In New Jersey, financially struggling New Jersey City University announced plans to merge with Kean University, transforming into “Kean Jersey City.” Similar consolidations occurred across the country as institutions sought economies of scale.
Student loan policy upheaval
The federal student loan system underwent seismic changes in 2025, creating confusion and anxiety for millions of borrowers. The landmark One Big Beautiful Bill Act, signed by President Trump on July 4, fundamentally restructured how Americans finance higher education.
The legislation eliminated the Grad PLUS loan program, which had allowed graduate and professional students to borrow up to their full cost of attendance. New lifetime borrowing limits capped most graduate students at $100,000 and professional degree students at $200,000. For undergraduates, the maximum total borrowing increased from $31,000 to $50,000, though subsidized loans were eliminated entirely.
The law consolidated multiple income-driven repayment plans into just two options and created a new Repayment Assistance Plan scheduled to launch by July 2026. Meanwhile, the Trump administration temporarily paused student loan forgiveness under several existing income-driven repayment programs, citing court injunctions against the Biden administration’s SAVE plan as justification.
After facing legal challenges from the American Federation of Teachers and advocacy groups, the Department of Education agreed in October to resume processing loan forgiveness applications and clarified that borrowers receiving debt relief in 2025 would not face federal taxes on forgiven amounts.
Perhaps most controversially, the administration finalized new regulations restricting Public Service Loan Forgiveness eligibility. Effective July 2026, employees at organizations deemed to have “a substantial illegal purpose” would no longer qualify for PSLF. Critics warned the vague language would allow presidents to weaponize the program based on ideological preferences, potentially excluding workers at civil rights organizations, immigration advocacy groups, or reproductive health providers.
International student crisis
The Trump administration’s immigration crackdowns dealt another devastating blow to higher education’s financial stability. New policies including a $100,000 fee for H-1B visa holders and temporary disruptions to student visa processing contributed to a projected 30-40% drop in new international students for the 2025-26 academic year.
NAFSA: Association of International Educators estimated the decline could result in approximately 150,000 fewer international students enrolled, representing a 15% decline in total international enrollment and nearly $7 billion in lost economic impact. For institutions that had integrated international students into their enrollment strategies and relied on their typically full-tuition payments, the drop threatened institutional viability.
Florida Governor Ron DeSantis escalated the anti-immigrant rhetoric, directing the state’s public universities to stop hiring foreign employees and “pull the plug” on H-1B visa workers. The policy directive, mirroring the Trump administration’s restrictive immigration stance, prompted fierce backlash from higher education groups that argued international talent performed vital research and teaching roles. Small and mid-tier institutions found themselves especially exposed.
“International students have been integrated into their enrollment strategy and their viability,” explained Chris Glass, a higher education specialist at Boston College. For schools already struggling with the demographic cliff and budget pressures, losing this revenue stream pushed some toward closure.
Accreditation under siege
Trump’s campaign promise to make accreditation his “secret weapon” against perceived ideological bias materialized through executive actions aimed at fundamentally restructuring the higher education gatekeeping system. In April, the president signed orders directing the Department of Education to recognize new accreditors to encourage competition and hold institutions accountable for “ideological overreach.” The administration sought to prohibit accreditors from mandating colleges adopt DEI policies, potentially eliminating what some state legislators had viewed as a guardrail preventing the most extreme anti-DEI legislation. Critics warned that removing accreditors’ oversight role would open the door to politicized attacks on academic freedom and institutional autonomy.
“Trump’s goal is to manipulate accreditors in order to force colleges and universities to do his bidding and punish them when they resist,” said Dr. Todd Wolfson, president of the American Association of University Professors.
The proposed changes generated concern that accreditation could become weaponized, with institutions facing loss of federal financial aid eligibility based on political considerations rather than educational quality. For an industry where few colleges can survive without access to federal student aid, the stakes could not be higher.
Financial exigency becomes commonplace
Financial crisis became the defining reality for a growing number of institutions in 2025. Beyond outright closures, dozens of colleges declared financial exigency — emergency conditions that granted boards extraordinary powers to cut programs, reduce faculty, and restructure operations without following normal governance procedures.
William Jewell University in Missouri declared financial exigency, enabling “reallocation of resources, restructuring of academic programs and scholarships and significant reductions in force.” Tennessee State University faced a $46 million deficit by fall, acknowledging that its financial condition had reached crisis levels. Even elite institutions felt the pressure — Brown University grappled with a $46 million deficit projected to grow beyond $90 million. The University of Nebraska-Lincoln announced plans to slash $27.5 million from its budget amid enrollment declines and insufficient state aid. Harvard University’s president called fiscal 2025 “extraordinarily challenging” even by the Ivy League institution’s centuries-long standards. The University of Southern California’s interim president warned that a transformed operating model was needed to address lower federal research support and growing shortfalls. Budget pressures manifested in widespread layoffs and program eliminations. During a government shutdown that stretched into fall, the Education Department’s Office for Civil Rights laid off at least 240 employees, many of them attorneys who investigated discrimination complaints. Faculty positions disappeared as institutions cut costs, with some universities reducing Ph.D. program admissions by more than half.
Research funding in jeopardy
The Trump administration’s budget cuts threatened the foundation of American research universities. Funding for government-sponsored research faced dramatic reductions, putting at risk medications that prevent HIV, shrink tumors, and treat seizures — innovations invented with government funding at research universities.
The administration’s termination and suspension of federal grants, often tied to DEI compliance investigations, created chaos for researchers mid-project. Columbia University saw hundreds of millions in research funding frozen before reaching its July settlement. Other institutions watched nervously as the administration wielded funding threats as leverage to force policy changes.
Nine universities — including MIT, Stanford, and other elite institutions — were offered “preferential funding treatment” in exchange for agreeing to adopt conservative priorities and policies through a controversial “compact.” Six immediately rejected the offer, with MIT joining other schools in refusing to compromise academic independence. The institutions that declined saw record-breaking donations from alumni and supporters who celebrated their resistance.
Emerging from the rubble
As 2025 draws to a close, the higher education sector faces an uncertain future fundamentally transformed from its past. The convergence of federal hostility, demographic decline, financial distress, and declining public confidence has created what many observers describe as an existential crisis.
Yet amid the turmoil, signs of resilience and adaptation emerged. Institutions that successfully recruited adult learners and non-traditional students demonstrated pathways through the enrollment crisis. Schools that diversified revenue streams beyond tuition proved more resilient than their tuition-dependent peers. Regional variations showed that geography remained destiny, with Texas and Western states experiencing enrollment growth even as Northeastern and Midwestern institutions contracted.
The year revealed that American higher education’s challenges stemmed not from a single cause but from the collision of long-brewing trends: rising costs, mounting student debt, shifting public perceptions of educational value, demographic changes, and political polarization. The Trump administration’s interventions accelerated and intensified these pressures rather than creating them from whole cloth.
As college leaders contemplate 2026, the questions loom large: How many more institutions will close? Will courts constrain federal overreach? Can colleges rebuild public trust while maintaining academic freedom? Will the enrollment decline prove as severe as projections suggest?
One certainty emerged from 2025’s chaos: the American higher education system that emerges from this crucible will look dramatically different from the one that entered it. Whether that transformation strengthens or weakens the sector’s ability to serve students and society remains to be seen.
