What's Going on With Colleges???
It seems like every day a new announcement comes out about the Department of Education, federal funding for education or research, or other federal actions impacting colleges. What does all this activity mean-- especially for college and college-bound students?
Full disclosure: I'm writing this on Friday with the intent of distributing it on Tuesday. The pace of news releases about the Department of Education and so many other college-related topics is such that it feels a bit like propping a ladder up in the ocean. It's entirely possible that things will have changed directions multiple times between now and then. But I'll give it my best shot.
Changes that are likely to have an immediate impact on colleges and students fall into two primary areas: loss of people and loss of funding.
Let's start with the people: the Department of Education laid off almost half its staff last week. How is that likely to impact students and colleges? Let me count the ways:
Federal Student Aid's technology support staff-- the people who make sure the FAFSA is updated annually and functioning-- was particularly hard-hit, losing entire divisions including product management and technology support. This could make it difficult to update the FAFSA for the next school year or to maintain the system that processes IRS data.
Call centers, including those supporting students and families in completing the FAFSA and those supporting colleges using FAFSA data, have been gutted. Expect longer wait times if you need help with the FAFSA and delays in transferring FAFSA data to colleges so that they can generate financial aid awards.
The School Participation Division, which has regional offices that provide oversight of colleges and financial aid, also lost significant staff with eight of 10 regional offices being effectively closed. This group investigated waste and fraud, provided oversight to ensure that colleges didn't defraud students, and managed eligibility for federal grants, among other responsibilities.
The Institute of Education Sciences, which tracks educational outcomes and provides research support for education policy, lost about 3/4 of its employees. Among other things, the IPEDS data system is part of IES. IPEDS is a mandatory data survey that makes public information about college costs, financial aid, completion rates, and other metrics. Currently that data is available to the public through College Navigator and the College Scorecard.
Other functions handled by people include disbursing federal student aid-- student loans, parent PLUS loans, and Pell grants among others-- to colleges. Lack of staffing could result in delays in releasing these funds. While your initial thought might be "that's the college's problem, not mine" remember that all student funds are disbursed to the college, regardless of what the student intends to use them for. Only once the college is fully paid are funds disbursed to the student. So a student who takes out a student loan in order to pay rent on their apartment might be without rent money for some period of time if funds are delayed.
Today it was announced that the Small Business Administration will take over student loans from the Department of Education. Which might seem helpful given the staffing reductions at Education-- except that yesterday it was announced that Small Business will lose 43% of its staff. Headcount losses on either end could make it difficult for student loan applications (via the FAFSA) to get transferred to the SBA for processing.
That's just a sampling of things people do that might be harder to do without people. So now let's move on to the money.
Federal funding for higher education comes from a number of sources. The two largest are financial aid in the form of student loans, parent PLUS loans and Pell grants; and research grants. For the 2023-24 school year, federal student loan disbursements totaled $82.78 billion; grants were $32.12 billion. In fiscal 2023, federally funded R&D at colleges and universities totaled just under $60 billion.
Delays in loan and grant disbursement could have varying impacts by college, depending on both the length of delay and the degree to which colleges rely on loans for funding. Larger public colleges tend to receive the highest total amounts of student loan dollars, though per-student disbursements are often larger at private colleges. Either way, there's a cost to colleges to have to use their own funds or borrow to cover expenses while awaiting disbursement of federal aid monies.
While research funding might not seem like that big of a piece of the pie-- it's less annually than student loans-- it tends to be concentrated among a smaller number of universities, making those schools at much higher risk when funding is pulled. Research universities are classified in three groups: R-1 institutions spend at least $50 million annually on research and award at least 70 research doctorates; R-2 institutions spend at least $5 million annually on research and award at least 20 research doctorates; and Research Colleges and Universities spend at least $2.5 million annually on research. Among more than 4,000 US colleges and universities, just 187 meet the threshold for R-1. Another 139 are R-2.
Why does the federal government give universities money for research anyway? Coming out of World War 2, the United States decided that it would be more efficient and effective to partner with and fund research at universities than to build up federal labs and staff them with government-employed scientists. The belief was that academic communities were more likely to spark creativity, and academic independence would insulate research from politics. It's hard to argue against the results of this partnership: American leadership in research and development has improved our lives in countless ways, powered our economy, created jobs and solved once-intractable problems. If you saw Oppenheimer, you saw the power of federal research funding combining with academic researchers. Inventions from smart phones and the Internet to drought-resistant agriculture and wildfire suppression to microwave ovens and synthetic fabrics can be traced back to university research. If you or a loved one have survived cancer or premature birth, used IVF or statins, you can thank American universities.
Just over half of R&D funding at universities comes from the Department of Health & Human Services (home to the NIH). The Department of Defense and National Science Foundation make up another 1/4 of the total, with the remainder coming largely from the Department of Energy, NASA and the Department of Agriculture. It's worth noting that federal funds aren't the only dollars behind this research; they make up about 55% of the research budget, with universities kicking in about 25% and states and private sources making up the balance.
Research funds don't just pay for people to stare into microscopes; research facilities are part of the campus and used for instruction. Students get jobs doing research. Materials and learning from research can be repurposed in the classroom. Professors sometimes share in revenues from commercialization of research, making academic incomes more on par with those available in the private sector.
What are some likely outcomes of slashing research budgets? We're seeing some already:
Hiring freezes, layoffs and other cutbacks at major research universities
Cancellation or rescission of Ph.D. admissions
Termination of research projects on cancer, diabetes, Alzheimer's and drug addiction
What might we expect as a result?
Larger class sizes
Tuition, lab fee or tuition differential increases
Less access to faculty and graduate student assistants
Reduced availability of STEM majors
Fewer opportunities to participate in research as an undergraduate
A brain drain of faculty and graduate students as funding lost here is granted in other countries
Less access to campus health facilities
How can families trying to choose colleges navigate the current uncertainty? First off, it's more important than ever to make good financial choices about college. Loan options next year may look very different from what's available this year, for example. Now is a great time to look for outside scholarships if your college budget is already stretched. If your financial aid package includes a research stipend or your intended course of study is research-heavy, check with the colleges you're considering about how that might be impacted. If you use student loans to pay for books or off-campus housing, now is the time to figure out how you might handle a delay in disbursement of your loan.
There will certainly be more changes coming-- and who knows, this blog post may already be obsolete by the time you read it because of them-- so buckle up.
