American colleges and universities have had a tough time recently. At the start of 2024, the new Free Application for Federal Student Aid (FAFSA) was rushed online with technical glitches, about three months later than usual, meaning institutions could only send out financial aid notifications on a compressed timeline.

At both the state legislature and congressional levels, policymakers have taken clear stances on college costs, diversity programs, and how campuses have responded to the latest round of the Israel-Hamas conflict. The resurgence of the Middle East war intensified political divisions on campus, and House Republicans also pressured colleges over rising antisemitism.

Meanwhile, federal relief funds from the pandemic era have dried up, prompting colleges nationwide to cut costs. As we examine how economic and partisan forces are shaping the higher education landscape, we expect the following seven major trends to be worth watching in 2024.

1. The wave of mergers continues to accelerate

Colleges cutting academic programs or even closing entirely is nothing new, but the speed and frequency of recent merger announcements among institutions is striking. Facing financial pressures such as declining enrollment and a worsening economic environment, few colleges can remain unaffected.

Even public flagship universities like West Virginia University have undergone massive cuts. The university's board approved eliminating 28 degree programs in September, including all language majors. President E. Gordon Gee said the austerity measures were aimed at closing a budget gap of approximately $45 million.

Private nonprofit institutions are under similar pressure. Christian Brothers University in Tennessee plans to eliminate 12 academic programs to close a $4 million budget gap. Some colleges have even begun laying off tenured professors—a decision typically reserved for the most severe budget crises. But in cases like Dickinson State University, administrators argue that finances haven't collapsed yet, but cutting faculty is still necessary to avoid greater upheaval.

Educator layoffs have drawn and will continue to draw attention from the American Association of University Professors. This major faculty organization has criticized how colleges implement program cuts and layoffs, arguing that faculty must be involved in such decisions.

Credit rating agencies are divided in their predictions for college mergers this year. Moody's Investors Service believes state funding and tuition revenue growth will support college operations, while S&P Global Ratings says only highly selective institutions will be shielded from adverse economic conditions.

2. Turmoil in the federal financial aid system

Policymakers across the political spectrum generally agree that the federal student aid system needs some form of reform. However, apart from the FAFSA overhaul that streamlined the number of questions on the previously lengthy form, federal lawmakers have passed little else in the way of new policy.

Although the U.S. Department of Education expects these changes to make more low-income students eligible for Pell Grants, administrative difficulties and delays have cast a shadow over the new form's debut. The new FAFSA launched in a "soft launch" at the end of December, but due to technical issues, the department has only intermittently opened the application window and is still working to resolve these problems.

The Education Department won't send applicant data to colleges until later this month. Institutions already face pressure to help faculty and students adapt to an unproven new system, and their financial aid offices are often already overwhelmed.

The Biden administration is also advancing other initiatives, including student debt relief. The Education Department expects to issue regulatory proposals this year to provide relief for specific borrower groups, such as those whose debt burden exceeds their original principal. The administration has also launched a new income-driven repayment plan that ties borrowers' monthly payments to their salaries. Meanwhile, Republicans have proposed restricting graduate loans and have attempted to halt this new plan.

3. Attacks on diversity, equity, and inclusion (DEI) intensify

Republicans across the country continue to attack university DEI programs. DEI offices aim to support historically marginalized student groups, but some conservatives argue they actually foment division, accusing colleges of imposing teachings on racial and gender equality on students and making young people feel guilty about historical events they had no part in.

Initially, criticism focused on critical race theory—a decades-old academic framework arguing that racism is systemic. But attacks have escalated into an all-out war on DEI initiatives, with Florida and Texas last year leading the way in passing legislation banning state funds for diversity programs at public universities. This trend is almost certain to continue. Oklahoma Republican Governor Kevin Stitt recently signed an order requiring universities to review all DEI programs.

DEI bans could raise complex issues. For example, most major accrediting agencies evaluate colleges' diversity efforts in some form, and these requirements may conflict with current and future DEI restrictions. However, the political environment may also dampen accreditors' efforts to push DEI. The Southern Association of Colleges and Schools Commission on Colleges (SACSCOC) had planned to vote in December on a diversity standard that colleges would have to meet, but ultimately did not discuss it. According to The Chronicle of Higher Education, one university president attributed this to political considerations.

DEI has also been a focal point at Harvard University recently. President Claudine Gay departed after right-wing movements accused her of plagiarism, and critics had mocked her public commitment to DEI. Harvard alumnus and billionaire businessman Bill Ackman was one of the driving forces behind the campaign targeting Gay, suggesting on social media that the former president was merely a product of "DEI hiring."

4. Biden administration policies face lawsuits

The Biden administration, bypassing a gridlocked Congress, has pursued higher education policy changes primarily through executive and regulatory means. The Education Department has pushed forward rules regulating for-profit colleges and provisions for canceling loans for defrauded students.

But several of the president's key policy proposals face legal challenges. One threatened policy is the Biden administration's version of the "borrower defense to repayment" rule, which can discharge debts of students misled by their institutions. The department's plan removed obstacles in the process, such as restoring borrowers' eligibility for automatic loan discharge. But the rule was blocked last year by an appellate court, following a lawsuit filed by the Texas Association of Private Schools and Colleges, which represents for-profit institutions in Texas.

The American Association of Cosmetology Schools recently also filed a lawsuit over the Biden administration's "gainful employment" rule. The rule, which requires for-profit institutions to prove their graduates earn enough to repay their student loan debt, was finalized in September and would cut off federal funding for institutions that persistently fail the "debt-to-income test."

Lawsuits on other issues could also emerge, including over policies not yet finalized. The Education Department plans to issue in March two highly anticipated regulations under Title IX—the federal law prohibiting sex-based discrimination in federally funded schools. One rule would dictate how colleges investigate and potentially punish sexual violence; the other would prohibit colleges from outright banning transgender students from participating in sports consistent with their gender identity, but would allow colleges to remove transgender athletes from teams in certain cases, such as for fairness or safety reasons. Republicans are particularly opposed to the latter. Conservative state attorneys general have said they will sue to "protect women's sports" even before the department has released a draft of the rule.

5. Gloomy outlook for education technology

For online program management companies (OPMs), layoffs, financial pressures, and calls for increased federal regulation have defined the past two years. 2U, one of the most well-known OPMs, is facing serious cash flow problems, according to a recent analysis by education technology consultant Phil Hill. 2U holds nearly $1 billion in debt, with at least $380 million due by early 2025. Hill noted in his analysis that the company doesn't have enough effective revenue to do so, and he believes the only path to survival for 2U is renegotiating or refinancing its debt.

Financing costs have become higher since the Federal Reserve raised its benchmark interest rate 11 times since March 2022. 2U's troubles have been piling up—in November, the company replaced longtime CEO Chip Paucek with Chief Financial Officer Paul Lalljie and announced it would end most of its program partnerships with the University of Southern California, one of its oldest and most prominent clients.

The Biden administration has also said it will issue final guidance on third-party servicers. These entities help administer colleges' Title IV programs and are subject to stricter regulatory requirements. Early last year, the department announced plans to significantly expand its definition of "third-party servicer"—a move that would impose more regulation on OPMs. But after widespread opposition, the agency indefinitely postponed implementation of the new guidance. The Biden administration's regulatory agenda shows it now intends to engage in rulemaking on third-party servicers.

6. Artificial intelligence accelerates its penetration

Despite numerous predictions, higher education has yet to truly figure out how the rise of ChatGPT and similar generative AI will affect colleges. While commentators worry such services will facilitate academic misconduct, scholars who study related issues believe cheating has not surged as AI has gone mainstream.

Many predictions focus on AI's use in admissions—will students submit large volumes of ChatGPT-written essays to admissions offices? If AI replaces human review, will the role of application readers be severely diminished? Answers to these questions are not yet fully clear, and few institutions have publicly stated their stance on applicants' use of AI.

Georgia Tech, a well-known institution, has posted a statement on its website saying AI is a "powerful and valuable tool" in undergraduate admissions. The school prohibits directly copying and pasting ChatGPT-generated essays but encourages applicants to use it as an "echo chamber" to spark ideas. Similar views emerged last year at a gathering of top college presidents, including those of Colorado College and Bucknell University. One president said at the meeting that colleges should embrace rather than fear AI to help students learn to use it appropriately. Companies are also getting involved in AI, developing products that could benefit admissions offices.

7. Aftermath of the Supreme Court admissions ruling

In a widely anticipated ruling, the U.S. Supreme Court in June ended race-conscious admissions practices at Harvard University and the University of North Carolina at Chapel Hill. The anti-affirmative action group Students for Fair Admissions (SFFA) successfully argued that such policies are discriminatory.

Higher education prepared for this ruling, with legal and admissions experts urging colleges months in advance to begin analyzing how to respond and communicate with students. But the full impact of the ruling is still unfolding. Commentators predicted colleges and states might overreact by eliminating scholarships and other programs designed to help minority students. However, the ruling applies only to admissions.

Now, what college leaders feared has come to pass. Shortly after the ruling was announced, the University of Missouri System dropped racial and ethnic considerations from its scholarship programs.