The recent Moody’s downgrade of the 2025 U.S. higher education outlook is not merely a financial tremor; it serves as a chilling echo of the cyclone that swept Dorothy into the tumultuous Land of Oz—a "tempest of uncertainty" driven by rapid policy shifts and financial pressures, threatening the very foundations of higher education. Moody's current assessment acts as more than a weathervane. It implies that the seemingly bright and picturesque Oz conceals a turbulent storm of uncertainty, particularly for institutions and individuals seeking a society where both fairness and performance matter. This downgrade is not an isolated incident; instead, it is the culmination of destabilizing factors, including funding cuts and the dismantling of diversity, equity, and inclusion (DEI) initiatives, which are transforming the environment surrounding U.S. higher education.
The Land of Oz: Financial Storm Clouds Gather
My career, which has spanned from the Federal Reserve to leading struggling universities, has highlighted the significance of credit agency evaluations. In 2015, I faced a negative credit outlook from Moody's, a challenge that jeopardized the "fresh start" I was brought in to achieve. This experience echoed the precarious journey of Dorothy in the classic MGM film and Stephanie Mills in The Wiz as they navigated a world where established power structures often obscure actual value and potential. Financial storm clouds have gathered, and institutions, particularly those serving communities of color, are encountering unprecedented challenges.
The Precarious Journey: HBCUs and PBIs in a Tumultuous Environment
The convergence of funding cuts, enrollment uncertainty, shifting workforce demands, technological disruption, and the upheaval of DEI-related initiatives creates a highly precarious situation for higher education institutions, including Historically Black Colleges and Universities (HBCUs) and Predominantly Black Institutions (PBIs). Often operating with tighter budgets, these institutions are disproportionately affected by funding reductions, such as the National Institutes of Health (NIH) plan to lower indirect cost recovery to 15 percent, and by the reduction of programs that directly support Black student success, including targeted scholarships and grants from the National Science Foundation (NSF) and NIH. This scenario parallels Elphaba's struggle in Wicked, as she battles against systemic forces that seek to marginalize and suppress. The financial pressure is compounded by the loss of essential support systems, making it increasingly difficult for these institutions to fulfill their mission of providing quality education and nurturing the nation’s future leaders.
A Backdoor Low-Pressure System: Undermining the Nation’s Future Success
Recently, the U.S. Department of Education launched an investigation into 45 universities with graduate schools that partner with the Ph.D. Project, alleging that these institutions may be violating the 1964 Civil Rights Act by restricting eligibility based on race and thereby engaging in "race-exclusionary practices." Founded in 1994, the Ph.D. Project aims to diversify the business world by increasing the number of Black, African American, Latinx, Hispanic American, and Native American faculty members in business schools. In response to the investigation, the University of Iowa, for example, has severed ties with the Ph.D. Project, despite the organization's removal of specific racial criteria from its program participation requirements.
