Seven Major Trends in Higher Education for 2023

2023 was the first year since the onset of the COVID-19 pandemic that trends in higher education were no longer necessarily viewed through a pandemic lens.

Although the pandemic's effects persist, new issues are increasingly taking center stage, such as potential reforms to the federal financial aid system and external scrutiny and pushback against the influential college rankings by U.S. News & World Report.

Looking ahead to the new year, we will continue to monitor the following seven trends and report on any other major developments that may arise.

1. Financial Aid Transparency Reform Takes Center Stage

Calls from various sectors of higher education—including lawmakers from different political parties, industry associations, and consumer protection advocates—are demanding greater transparency from colleges in awarding financial aid.

Students and their families who receive aid often have to decipher a complex web of financial aid sources, including federal loans, grants, and work-study programs, which frequently makes it difficult for them to estimate the actual costs they will need to pay.

This issue seemed to reach a peak in late 2022. In late November, ten higher education organizations announced they would form a working group aimed at standardizing financial aid information. Subsequently, the Government Accountability Office (GAO), the congressional watchdog, released a scathing report finding that over 90% of colleges downplayed or omitted net price information in their financial aid offers.

Republicans expressed outrage. Rep. Virginia Foxx, a leading candidate for the new chairmanship of the House Education Committee, called the GAO findings "egregious and unacceptable." Foxx also advanced the "College Cost Transparency and Student Protection Act," a Republican-led bill that would require the U.S. Secretary of Education to establish uniform financial aid terminology and definitions.

Some experts also anticipate that the U.S. Department of Education will propose regulations on financial aid standardization, as the Biden administration has so far enacted several rules aimed at addressing flaws in the student aid system.

2. Student Loan Forgiveness Remains in the Spotlight

In 2022, one of the most closely watched events in U.S. higher education was President Joe Biden's student loan forgiveness plan, which provided substantial debt relief to borrowers earning no more than $125,000 annually.

Each borrower was originally eligible for up to $10,000 in debt cancellation, or $20,000 if they had received a federal Pell Grant. The move aimed to appease progressives within the Democratic Party, some of whom had called on the president to cancel more debt, while acknowledging the ongoing economic strain of the pandemic.

However, multiple lawsuits stalled the plan. Federal court rulings paused its implementation and questioned whether the administration had overstepped its authority. The debt relief case has now reached the U.S. Supreme Court, which has expedited review and is expected to hear oral arguments in February.

Legal experts are skeptical that the conservative-majority Supreme Court will uphold unilateral debt cancellation. Conservatives generally argue that the plan is fiscally reckless and unfair to taxpayers who did not attend college.

Meanwhile, Biden extended the pandemic-era payment pause during the Supreme Court proceedings. The pause, originally set to expire at the end of 2022, will now continue until 60 days after the litigation concludes or 60 days after the end of June, whichever comes first.

Regardless of the final outcome, the debt forgiveness attempt could have far-reaching implications. Foxx said in September that she would investigate whether Biden administration officials involved in the plan could personally benefit from it.

3. Race-Conscious Admissions Policies Face Challenges

The Supreme Court will issue a final ruling this year on long-standing legal challenges to the consideration of race in admissions at Harvard University and the University of North Carolina at Chapel Hill.

The conservative legal organization Students for Fair Admissions (SFFA) has long sued colleges over race-conscious policies. But this time, court observers believe SFFA is almost certain to win, as the justices' conservative leanings almost guarantee they will have the votes to strike down these practices.

During oral arguments in 2022, several justices expressed skepticism about the justifications Harvard and UNC-Chapel Hill offered for race-conscious admissions. However, colleges that consider race use it only as one factor in admissions decisions and argue that a diverse student body yields significant educational benefits.

In reality, if the Court strikes down race-conscious policies, only a small number of colleges would need to adjust their admissions practices, as most institutions admit the majority of their applicants. Nevertheless, college leaders worry that a ruling against race-conscious admissions would send an unwelcoming signal to historically marginalized applicants and could severely harm campus diversity.

Experts advise admissions offices to communicate early with other departments to develop a post-ruling messaging strategy and continue methods for building diverse classes.

4. Can U.S. News Rankings Regain Trust?

Higher education officials are closely watching the announcements by Yale Law School and Harvard Law School in November that they would no longer participate in U.S. News & World Report's "Best Law Schools" rankings—one of the publication's many highly influential college lists.

These rankings, especially the "Best Colleges" undergraduate list, have long been criticized for steering institutional decisions away from their missions. U.S. News's methodology is also often attacked for measuring reputation, wealth, and exclusivity rather than educational quality, accessibility, or impact on students' lives.

Since Yale and Harvard announced they would no longer provide necessary data, a wave of other law schools—regardless of ranking—have followed suit. These law schools generally state that the rankings disadvantage institutions seeking to guide students toward public service careers.

U.S. News announced adjustments to its law school ranking methodology at the start of the new year, but this was not enough, at least for some law school deans, to prompt their re-engagement.

A major open question is whether the law school boycott will spark a similar movement among undergraduate institutions. While no undergraduate colleges have announced a boycott of the rankings, some experts speculate they may be waiting for a time closer to the release of the "Best Colleges" list, typically in September.

In any case, the law schools' actions have intensified long-standing hostility toward U.S. News rankings. The publication also suffered other reputational blows in 2022: after a Columbia University math professor challenged its submitted data, U.S. News removed Columbia from its "Best Colleges" ranking, and later dropped several other colleges from its 2022 rankings over suspected data misreporting.

5. Wave of College Mergers May Intensify

Higher education finance experts had predicted that the financial strain early in the pandemic would lead to closures of some low-enrollment institutions, but federal pandemic aid provided some protection for these colleges.

However, new federal aid does not appear to be forthcoming. As the pool of traditional college-age students gradually shrinks, some institutions have turned to austerity measures.

Major closures and mergers announced in 2022 include: Lincoln College in Illinois, a predominantly Black institution, closed after a cyberattack compounded already heavy pressures; and Indiana University-Purdue University Indianapolis (IUPUI) plans to split, with the two parent research universities operating separately.

As colleges continue to feel the lingering effects of the pandemic and demographic trends putting downward pressure on enrollment sizes, more institutions may face similar fates.

6. Enrollment Challenges Persist

As pandemic restrictions eased and life seemed to return to normal, higher education leaders had hoped that pandemic-induced enrollment declines would rebound.

But that was not the case. According to the National Student Clearinghouse Research Center, fall 2022 enrollment fell 1.1% from the previous year. All types of institutions were affected—community colleges, four-year public universities, and for-profit colleges. Less selective institutions and two-year colleges bore the brunt of the impact.

However, some data points should be encouraging for the industry. Enrollment at Historically Black Colleges and Universities (HBCUs) rose 2.5% between fall 2021 and fall 2022. From fall 2020 to now, HBCU enrollment has increased by just under one percentage point.

Additionally, undergraduate enrollment at primarily online universities grew by more than 3% between fall 2021 and fall 2022.

Skepticism about the value of college may be suppressing student numbers. And the "birth dearth" during the Great Recession is now hitting higher education, reducing the number of high school graduates, which means enrollment may continue to decline.

7. Increased Scrutiny of Online Program Management Companies

Ed-tech investors and other observers will be watching closely whether online program management companies (OPMs) can recover from a turbulent year marked by layoffs and scrutiny of their business models.

2U, one of the most well-known OPMs in the U.S., completed sweeping layoffs last year, cutting personnel costs by 20%. Coursera, the high-profile MOOC platform with a smaller OPM business, also announced layoffs in November, though it did not disclose specific numbers.

Economic headwinds are not the only issue facing OPMs. Many of these companies rely on tuition revenue-sharing agreements, where they provide upfront funding for online programs in exchange for a portion of future revenue, typically 40% to 60%.

Democratic lawmakers at the end of last year asked the U.S. Department of Education to formally investigate whether colleges should continue to be allowed to enter into tuition revenue-sharing contracts with OPMs that provide recruitment services. They questioned whether these models might incentivize OPMs to use aggressive recruitment tactics.

Legal disputes are also brewing. In December, a lawsuit filed by former University of Southern California students raised arguments similar to those of the Democrats. The lawsuit focuses on USC's online education programs launched with the help of 2U, alleging that the university and company conspired to attract students by promoting inflated rankings in U.S. News.

Natalie Schwartz contributed to this article.