Tuesday, December 9, 2025 - As the year comes to a close, Jeff and Michael step back to review some themes from recent episodes. They home in on how to build innovative campus cultures, and how colleges can respond to AI. And they look ahead, offering predictions for higher ed for 2026. This episode is made with support from Ascendium Education Group, Adobe, and Butler University.
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As the year comes to a close, Jeff and Michael step back to review some themes from recent episodes. They home in on how to build innovative campus cultures, and how colleges can respond to AI. And they look ahead, offering predictions for higher ed for 2026. This episode is made with support from Ascendium Education Group, Adobe, and Butler University.
“A Looming Crisis: New Analysis Shows Dozens of Well-Known Colleges Are Near Financial Trouble,”
Michael Horn and Steven Shulman
"The Financially Sustainable University,"
Jeff Denneen and Tom Dretler
0:00 - Introduction
4:22 - A Case for Massive Experimentation
6:30 - Making Shared Governance an Asset
10:00 - Building Innovation Into Campus Culture
11:41 - Lessons From Silicon Valley
13:17 - What Parents Are Asking About AI at Colleges
14:54 - Importance of Experiential Learning
18:40 - How Liberal Arts Can Be Taught Differently in the AI Age
21:11 - Being Creative v. Being a Creator
22:20 - Time for Colleges to Step Back and Strategize About AI
28:00 - New Research Reveals Mid-Size Colleges Could At Financial Risk
33:43 - Understanding the Details of New Student Loan Caps
37:37 - Breaking Down the Latest Enrollment Numbers
40:07 - Michael’s Predictions for 2026
41:56 - Jeff’s Predictions for 2026
Jeff Selingo
You know, as you know, Michael, this past year, I've compared higher ed to a living organism that is now at the end of its conservation cycle, readying for that next cycle when it begins to reorganize.
Michael Horn
And that reorganization, Jeff, we got to start to see the beginnings of that as we took the podcast on the road this fall where we recorded two live episodes. One at Butler, in Indianapolis, and one at Adobe's headquarters, in Silicon Valley, to talk about both AI and innovation.
Now, you and I didn't have a chance to really debrief from those visits, so we'll take some time to do that today.
Plus, there are a few headlines, as usual, to discuss in higher ed.
And hey, we're about to head into 2026. So it's time for some predictions — sure to go wrong. That's all ahead on Future U.
Sponsor
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Located in Indianapolis, Butler University is nationally recognized for hands-on, future-focused learning and a 98% placement rate. With programs that connect classrooms to careers, Butler prepares graduates to lead with purpose. Learn more at butler.edu.
This episode of Future U is sponsored by Ascendium, a mission-driven nonprofit committed to improving learning and training systems to better serve learners from low-income backgrounds. For more information, visit ascendiumphilanthropy.org.
Subscribe to Future U wherever you get your podcasts. And if you enjoy the show, share it with your friends so others can discover the conversations we're having about higher education.
Jeff Selingo
I'm Jeff Selingo.
Michael Horn
And I'm Michael Horn.
Jeff Selingo
Michael, we logged a lot of miles this fall for the podcast. But often, as you know, we were kinda ships passing in the night even if we were together in person because I was either coming or going on the book tour.
So I thought let's take the first half of this show to talk about two of my favorite episodes from this fall, and those were live recordings we did at Butler and Adobe.
Michael Horn
Yeah. Well, I mean, Jeff, it's just great to be on campus in the case of Butler, and then with Adobe, right, we were with all these faculty members who were attending the conference, obviously thinking very deeply about how AI is gonna impact their work. And I thought both conversations were incredibly illuminating.
I actually kinda felt like I got to say a lot of my piece, if you will, out of the Butler University one. But one thing that did strike me that I just wanted to come back to is the amount of energy that that leadership team has around innovation and how clearly they defined the moment that they were facing as a threat when president Danko came into the presidency. Right? And we talked about this on the podcast: dual transformation, Clark Gilbert's work, etc.
But I just think a lot of leadership at a lot of colleges and universities are a bit still in denial right now. We're gonna come back and talk about this a little bit in the second half, but still a little bit in denial about some of the structural challenges that they're facing. And for Butler to say, you know, 'No, we're not gonna be in denial about that. We're gonna face it head on and see it as an opportunity to innovate.’ You know, look, there's still a lot of work I'm sure that they have to do there. Right? That they're launching another strategic plan as we were there, which was neat to be a part of as well. But I think it's refreshing to see a school treat it as it is and then go out and attack it.
What jumped out to you?
Jeff Selingo
Yeah. So I wanna tell you what jumped out at me, and then I wanna kinda circle back because you were there in the very early days of that Butler transformation. And maybe you could give some thoughts on how you saw it now at the kind of at the midpoint maybe, or near the end, at least, of this first strategic plan.
So there were a couple of things that really struck me during that recording. One was this idea of massive experimentation. You know?
And this is something, by the way, that Georgia State did with Mark Becker when he first got there. Let's just in some ways, it's a lot of what ASU does.
Just let's do a bunch of small experiments that are easy to carry out that are not that expensive. Butler used this $1-million gift to invest in a bunch of ideas. I think it's a great use of a gift like that. And then scale those that work. Right? So they dipped their toe, as president Danko told us, dipped their toe into online education, and then they ended up taking this deeper dive pretty quickly with a few dozen online courses.
And as he said, he said something that was really critical, I think. It really put into the bloodstream, as he said, that change is a good thing. It got the institution used to change. So I think that was one. Experiment, then scale.
The other one was, as he said, hire slowly and fire quickly. And I think that new presidents are often reluctant to put the right team in place. They wanna kind of figure out who their people are first. And as he said, he was told on the way in the door who was working and who wasn't, and he figured that out pretty quickly.
And as he said, you know, get the right people and then empower them. Set them free. I think that a lot of senior leaders are often not empowered to do the things that the president sets out. So I like that one too.
Michael Horn
Just stay on that one. I couldn't agree more with you, Jeff, on that.
I think we said it on the podcast. No one ever said, 'Oh, you know, we fired too quickly.' That just doesn't happen.
But the tendency, I agree, is just to sit on folks. And then you have this messy sort of limbo stage, right, where they're not fully empowered because you don't fully trust them and vice versa. They're not your people, so they're not necessarily executing on the things that you really need to. And the core thing for any leader coming into a presidency is get the right leadership team, the right cabinet around you, I think, is critical.
Jeff Selingo
Yeah. And the other thing I liked, Michael, is that he drew on the expertise of shared governance. I think we hear so many presidents complain and boards complain about shared governance. It kind of is a feature of higher ed, and you kinda have to put up with it, often. But as he talked about, he drew on the expertise not only of the board, but also of the faculty.
And as he said, there were always going to be dissenters among the faculty, but he figured out who among the faculty, who among the deans could be helpful to him and then drew on that expertise.
And then finally, the thing that really stuck with me was what I would call integrity and consistency. You know, going back to that idea of shared governance, as he said, there will always be loud voices of dissent. You kinda have to listen to them and decide a path forward. But there was this tenacity about president Danko that I saw in him, that he was just really committed to the work. We know with many short-term presidents that we've met over the years as they were like looking to grab sort of low-hanging fruit in order to move on to their next job.
But you know, if the campus knows you're gonna do that, they're gonna just kinda wait you out.
Michael Horn
Yeah. Yeah. Yeah. That's a great point.
Jeff Selingo
So I was kinda curious because Melissa referenced it in our second part of that episode where we had the panel, Melissa Beckwith, who's the head of innovation there and strategic initiatives at Butler mentioned, you know, talking to you, while they were putting together this original plan. You so you've seen it come a little bit full circle. She talked about the grade she would give them. I'm kinda curious about what you thought from seeing those early seeds.
Michael Horn
Yeah. Well, I wanna actually relate it to the shared governance point you brought up because I think one of the big things that at the time I was, you know, working with Entangled, we were supporting Butler and Melissa.
And I guess what I would call Jeff is the big thing we were saying is, ‘How do we get shared governance to work for you rather than against you?’ In other words, How do you embed these processes around innovation so you can actually build a deeper culture and rhythm around innovation where, just as you said, like constantly looking at small things, trying it out, sunsetting them if it doesn't work? If the experiments do work, how do we actually invest more in them? And creating process around that.
So actually your shared governance — the processes that everyone complains about, how do you actually build transparent processes so that they aid your innovation and your growth strategies?
And, frankly, you can have a leg up I would argue, on corporate America in this regard. Right? Because in some ways they don't wanna see those processes. Like, it's kinda you know, they would consider that bureaucracy. Actually, that emphasis on process, as long as some of it is explicitly around the creation of new ideas and then not just the creation.
And because like, let's be honest, there's tons of innovative faculty members in higher ed doing really cool stuff, but they just stay as islands. There's no institutional way to take the experiments that are really working that would be strategically important to the university in a systematic way and then fund them as they could grow.
And essentially, that's how I see what Butler has created, right, is a process to do that systematically and bank on growth. And so we'll see how that plays out. They're certainly investing a lot in that.
I think there is a question, just to be transparent, as they manage the finances, are they getting the right balance of making sure you're still positive cash flow and investing in these growth initiatives and you're not banking too much one way or the other on that? That balance that I think that they're gonna have to navigate, I imagine, in the years ahead.
So those are my reflections. But I really admire how they built it into the culture itself.
And I'll make one other observation because I've heard you say, well, it's cool to see something that is not about autonomy. Right? It's not a separate thing.
And I think that's right because Butler, the ventures that they've funded are not about reinventing or displacing the business model. They're about leveraging their existing model, and there you don't need full autonomy. It's not like a Southern New Hampshire with Southern New Hampshire Online play. Right?
Or some of the other things we know are happening in the AI universe right now at certain universities. Right? Where they really need to do something separate and keep it separate. I think what they've chosen are largely things that build on what Butler has today. They are not fundamentally about displacing it and we'll see is that the right strategy, but at least they've been coherent and clear about it, I think.
Jeff Selingo
Yeah. And one thing that was cool to me, Michael, is that we tend to talk about, you know, the ASUs of the world, the WGUs of the world, the Southern New Hampshire's of the world. These are huge places. Right? These mega universities.
It was kinda cool for me to see, you know, what is really kind of the backbone of American higher education. These mid-sized colleges and universities — Butler being a private, but there's a lot of regional publics just like that — that it can be done at places like that. And it was, I know, one of the reasons we wanted to go out there. Speaking of cool, by the way, a couple weeks later, we were out in the coolest place on Earth, I guess, right, is, Silicon Valley.
Michael Horn
By definition. They define it. So they're
Jeff Selingo
They define it that way. But to give you a little bit of behind the scenes, we were at the Adobe headquarters in San Jose to record Future U live at Adobe EduMax, which is a big gathering. I think there were 70-plus colleges and universities there, mostly the academic side of the house who use kind of the Adobe Creative Suite in their teaching and learning.
But as soon as you walk into the Adobe headquarters, Michael, as you remember, there was this cool kind of little museum almost of Adobe products. The first Adobe product, of course, being — one of the first Adobe products — being a PageMaker.
Michael Horn
Yeah. We were both reminiscing around that.
Jeff Selingo
Which we were both reminiscing about because both of us got our start in publishing in student newspapers. And I remember seeing that and remember using PageMaker in high school.
Michael Horn
Yeah. High school.
Jeff Selingo
And they had this great you know, they had the original box there, next to an Apple Macintosh computer. And I just felt for a moment there, we were transported back to, you know, our high school and college years. So it was just kinda cool to be there. Of course, we were there for another reason, but I have a nice picture of that, for when I talk about it.
Michael Horn
Love it. Love it. Alright. So what were some of the things that stood out to you? Because that was one we didn't get to debrief at the time. We had an incredible panel, we should say.
Jeff Selingo
So three things here. One is, I will tell you, we focus this episode on AI. You know we've been doing a lot of episodes on M&A. I have a feeling now we're gonna be doing a lot of episodes on AI because I will tell you, at every stop, and I mean every stop on my book tour, I get a question about AI and higher ed.
And you know what? The people, the parents, the high school counselors, the high school teachers, the educators, they're not asking if colleges are policing cheating. They actually really don't care that much about that part of it, which I think is all the focus right now in higher ed on AI.
People are worried about jobs after college, and they should be. Right?
We know from the latest unemployment measures for workers that those between the ages of 20 and 24, it's 9.2%. It's the highest it's been since 2015. And as we heard on that podcast that we recorded at Adobe, we had Simon Kho, who's formerly of KPMG, of Discover, of Raymond James most recently. He was in charge of their early career opportunities and recruiting at Raymond James.
As he said, you know, employers are cutting internships. They're cutting early-career programs because they're so unsure right now of headcount, and those programs are incredibly expensive. But more than that, they don't have an immediate ROI. As he said, it takes 18 months, I think, for a new college hire to really start to pay off. And so, you know, Ryan Craig has been ringing this bell for quite some time now. What are colleges going to do if those early-career rungs are knocked out?
Michael Horn
Yeah. Yeah. It's a huge question.
I actually wanna double click on that before hearing a few other ones that you have, too because Allison and Simon I think both had a great set of reflections on the need for experience in college.
Jeff Selingo
And that's Allison Salisbury by the way for those who may not have heard the episode.
Michael Horn
Yep. Check It out. She's from Humanist. And they had great points about this.
And then I thought Simon had some interesting reflections on the friction of why not just micro-internships, which you referenced, but also internships in general have not always had the impact that perhaps they should because employers, companies have a bunch of factors. Summer break being a low time for the financial services industry as he was talking about. The amount of work it takes to actually stand up a micro-internship to get a student even ready to do something interesting for a few weeks. Right? And he was talking about a lot of the friction.
And this is something I've been puzzling over a lot because you just talked about companies cutting a lot of these early career pre-hire, if you will, experiences. How do you resolve that?
And Allison certainly said, ‘We can use AI for simulations and things like that. That's maybe the first 60% of the answer, but you still need the experiences that are actually real and building social capital and the like.’
One thing I've been wondering after that episode about was, ‘Could you imagine university students or in a class, right, sort of with a particular employer, maybe a local government, whatever it is, sort of taking on problems that are not urgent and immediate, but are important to solve and doing projects around them?’
So you can imagine water usage, for example, in a town. It's maybe not something we have to deal with today, but in two or three years we can see where this is going. Could you imagine three check points with a manager from the town coming into a particular class and students getting a sense of the picture, building a little bit, learning the knowledge, etc. Midpoint, you know, getting some feedback about why their solutions are not in-depth enough, and then a pitch day, right, at the end of the semester almost. Things like that would build connection, real-world experience connected to real meaningful things, but also give students some of that exposure and ability perhaps to interact in the corporate environment.
I'm just wondering how much can universities sort of be creative with creating these experiences, Jeff? Because it seems to me like a really important part to really get these things to launch.
Jeff Selingo
Well, and I think this brings up a good point about how this happens. And as you know, speaking of Ryan Craig, he's been a big fan of the intermediaries that need to be created. You know, things like Riipen and other intermediaries. You know, we also have things like Podium Education. All these things are kind of these intermediaries.
It was interesting the other day, Stephen Moret, who's head of, the president CEO of Strada Education Foundation, texted me. We were talking about what's happening with internships right now, and he mentioned this need for intermediaries because employers don't wanna deal with this. We heard that from Simon on the podcast.
Colleges and universities, really as Ryan always points out to me, you know, the front door to colleges and universities around careers or career centers, they're not on the academic side. You're talking about doing these, you know, mini-projects, sprint projects within courses. Who's gonna actually do that? Is it the provost? Is it the dean? Is it individual faculty members? You know, who as Ryan says, who is the employer gonna go knock on the door of? And by the way, employers don't really wanna deal with that, and this is where I think intermediaries come in.
Michael Horn
It's a great point. I wanna stay on that for another reason because we all got very excited about the liberal arts on this episode at Adobe. And as you know, I have been arguing for a few years now that I think we've over-indexed on STEM at the expense of liberal arts. But I thought Allison made a very interesting point as the Davidson grad, which was liberal arts, but perhaps not taught as we have always known it.
And I got to thinking about that because often when we talk about the skills you get in the liberal arts and everyone will quickly name, you know, critical thinking, communication, blah blah blah. Those skills though don't exist in the wild, independent of domain, the way people think that they do.
So when we talk about critical thinking, for example, which itself is a basket of skills. Right? It's not just one thing. And say you learn it in a history class. Well, you've been trained to do it as a history academic then. That doesn't necessarily port into the workplace. And so the redesign of liberal arts courses, I think, to actually make those skills more transferable into the world of work, that's no small task as we think about how to do this.
And so one of the big things I kept thinking about was structurally, wow. Like, I love that we're asking faculty, 'How are you using AI? How would you offload things that you don't wanna do anymore?' Those are important questions. But I just think structurally, we need a lot more space, frankly, for universities to bring in different combinations of teams internally into their existing programs to really rethink some of these courses and not just courses, majors, course requirements, credit hours, and things of that nature to really get from here to there.
And I'll say, Simon talked about this decoupling that's happening where at the very moment we need students to get more experiences in their college education. Frankly, the employers are coming to campus less and less sort of brand conscious, if you will, or relationship conscious because he named that they're using all these tools to just virtually recruit students. And in some ways, Jeff, I think that's a very dangerous decoupling if I'm a college. Like, I want to be more integrated and connected with companies right now. If they're not even coming to my campus, I get the efficiencies, but I think that's dangerous.
Jeff Selingo
Yeah. I do too, Michael. And just two other thoughts here before we go — at least my thoughts before we go into break — on the Adobe AI conversation that we had. One was from Allison Salisbury's take on being creative versus being a creator. Right? She was very specific in the difference between them.
As she said, being a creator is actually bringing the activation energy and the motivation to bring something into the world and then the skill set to do it. So it's, you know, the taste to know what matters. It's the activation energy to do that. It's the problem identification on what's even building, you know, on what you're even building. That takes kind of this idea of being a creator, not just being creative and letting someone else run the show.
And then finally, Jennifer Sparrow from NYU — so that was our whole panel, Simon, Allison, and Jennifer. She noted that, you know, even now, 60% to 70% of faculty in many places still aren't using AI in their own work.
Michael Horn
That was shocking to me, Jeff.
Jeff Selingo
While students are. Right? And we see this in survey after survey after survey. I would be interested, by the way, if I was running a college right now, to do a survey on my own campus just to see what its uses are. You know, we have all these national surveys, but if I were running a college, I would wanna know what's happening on my campus.
And by the way, I mentioned this on a previous show as well. If I were running a college I keep saying that, by the way. I'm kinda glad I'm not. Because I could also say these things. Right? I would take the next year to essentially run a sprint of a strategic plan around AI. What are we going to do around AI?
Because I think there's just so much distraction right now, around what's happening with the Trump administration, what's happening with the economy. There's just the normal distractions of every day around colleges and universities. I think you have to kinda stop the clock for a minute, and you really can't, obviously. But the way you can do that is to say, 'Okay. We're gonna send off this mini group. We're gonna give you x number of months, not a lot of time, to figure out, ‘What is our institutional strategy at least in the short term going to be around AI?'
Michael Horn
Jeff, let's double click on that because I heard a lot of folks say, let's have a thousand flowers bloom and just come up with ideas. But I think as long as they're in their functional silos, they're just gonna come up with ideas that serve the existing silos, departmental structures, credit hours, course distribution requirements, etc. I think what you just said is really important.
So I'm gonna geek out for one moment. Steve Wheelwright, Kim Clark, academics, and actually both led different campuses of the BYU broader university system at different points. They had this set of ideas around depending on the level of structural change depends on the kind of team you need to bring to make those changes.
So, like, functional teams are our departments. Right? Lightweight teams are when you're bringing multiple people from different departments and they're coordinated in nature, but they're not rethinking the enterprise. What you're talking about is what they would call a heavyweight team where they actually can rethink what are the resources and processes itself that we do in the university.
And I think that is really important right now, when addressing this question because I want people bringing their functional expertise to the table, but not the loyalty to the way it's always been done and be able to question some of those sacred cows, if you will, as they ask these questions. And I think they really ... This isn't business model reinvention. So I don't think it's autonomy. I think it's within the existing institution. But I think they need that space so that they can get out of silos and ask these bigger questions that you just highlighted.
One other quick nitpick, I thought Allison's point around moving creativity to creator was great. My nitpick will be, I think occupational identity is a very dangerous thing in the world of which AI could be changing whole occupations pretty severely. And I would rather us focus on what are the tasks or the things you really like doing? When are you in flow? And like help individuals start to see lots of different places in the world of work where they can show up and do those sorts of things to give them a little bit more adaptability. But that's all I got out of the Adobe episode.
Jeff Selingo
Well, Michael, we have a lot more to get to on this episode of Future U. And when we come back after this break, we're gonna hit some of the big headlines that have been coming up the last couple weeks and get to our predictions for the new year ahead. We'll be right back.
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This episode of Future U is sponsored by Ascendium, a mission driven nonprofit committed to improving learning and training systems to better serve learners from low-income backgrounds. Ascendium envisions a world where low-income learners succeed in post secondary education and workforce training as paths to upward mobility. Ascendium's grantees are removing systemic barriers and helping to build evidence about what works so learners can achieve their career goals. For more information, visit ascendiumphilanthropy.org.
Jeff Selingo
Welcome back to Future U, and we wanna get to some of the headlines that have been coming up the last couple of weeks, Michael. And there's one that, in some ways, you created a few weeks ago by working with Steve Shulman. And you previewed it for me this summer, and I really wanna talk about this. So I'll let you give the headline, but maybe for our listeners also tell us who Steve is.
Michael Horn
Yeah. So Steve, an entrepreneur for the first half of his career, he's now retired in his eighties. And the second half of his career, he created essentially software that could financially support or consult two higher ed institutions. So spent the whole second half of his career really advising and supporting colleges. Big brand names you'd know, Yale, Dartmouth, etc.
And he saw about a year ago when Brandeis did some pretty high-profile layoffs that got a lot of attention in the Boston Globe, and then the president was out of a job and replaced by our friend Art Levine. And he basically looked at this and said, 'Woah. If that could happen to my alma mater, he went to Brandeis, how many other colleges are in trouble?'
And so he started looking in very close detail at 44, in specific, midsize institutions in New England, enroll 1,000 to 8,000 students. They're tuition-dependent, private, as you said, you know, similar in many ways to Butler. And he went deep on the finances, and he was like, 'Wow.' Based on his analysis, dozens of these pretty well-known colleges that are bigger than the target that I've tended to look at, you know, in my predictions, I've tended to look at sub-1,000 enrollment colleges, right, or for-profit institutions with shaky value propositions, or frankly, the regional publics that you and I have written about and the merger and consolidation questions there.
But he looked at these mid-sized colleges, universities with pretty big brand names and said, like, dozens of them are in financial trouble now. And if enrollment declines at all with what's been projected, many more could be in severe liquidity crisis over the next few years.
And so, given the enrollment and demographic challenges we know are hitting, it's a precarious time for many more institutions than I had realized, Jeff. I think that's the headline.
I can give you a little bit more color, but already 15 of the 44 schools that he studied are already facing serious liquidity challenges at their current levels of enrollment, and six are already pulling down over 12% from their unrestricted endowment. So over double, right, what you should be doing. So they're in the red in their operating budgets and pulling in quasi endowment basically to sustain.
And he does these projections then of baseline staying power and then max staying power. Right? Like, how long can you keep playing this game without invading illegally the restricted endowment dollars in effect or making some major changes. Right? So it's not a prediction of closure, per se, because yes, colleges could get big grants, they could do massive downsizing, they could sell off big buildings. But it does seem like 38 of the 44, Jeff, said growth was their primary strategic objective and of traditional-age students.
Jeff Selingo
Yeah, it's always easier to say, Michael. Right? That it's you're gonna make more money rather than save money.
Michael Horn
Exactly. It's just we know it's not gonna work. And so getting ahead of this with, frankly, I think it's a theme, you know, we referenced you. You talk about the end of comprehensive U. This is the evidence for it.
You know, Steve just modeled out what if you took advantage of natural attrition year over year in staff, like, what would that do to your cost basis? And it would save a ton of money for these schools. And then I said, well, what if you did that coupled with a strategic focus? Because I don't think you can just sort of do across the board, you know, cuts that are not strategic in nature, but really said this is who we are. We're gonna focus here and we're gonna downsize to where we think enrollment is going to be as opposed to trying to hope that we maintain or grow.
And frankly, a lot of the enrollment declines are already baked in because they've already declined in a lot of these New England schools. They're not rebounding. Maybe they're holding steady. But as that ripples over four years of four successive classes at that level, that's a huge enrollment drop that's hitting these schools. And I just ...
My takeaway is that many of them are not prepared for what's hitting at them. And it's quite striking, I think.
Jeff Selingo
Yeah, Michael. I mean, just two quick thoughts, and then I think something that will even make it worse.
And by the way, we'll put a link in the show notes to this analysis that you've written about. But one is that, as you know, I worked on that Bain issue brief on the Financial Sustainable University way back in 2012 when we knew that a lot of institutions were not on a sustainable financial path. I think many institutions kinda wasted the ten years.
Last decade was pretty good in terms of enrollment, in terms of stock market returns, and then by the way, there was all that COVID money at the end of the decade.
So what's interesting to me is that you're seeing these structural deficits that have happened at these colleges and universities dipping into their endowments at a time when things were pretty good in higher ed. And now things, as we know, not only the demographic cliff, you mentioned, you know, they think they're gonna get more students, traditional students, and they also think graduate programs, online programs are gonna deliver that.
And I think the other headline I wanted to talk about was the impact on finances, both institutional and students, in the outcome of this negotiated rulemaking that was on the One Big Beautiful Bill. You know, the Big Beautiful Bill, we've talked about this before, signed this summer, passed and signed this summer by president Trump. It included, as probably many of our listeners know, these new lifetime loan limits on professional and graduate degrees. So $200,000 for professional degrees, $100,000 on graduate degrees. Those are the lifetime limits. There's also annual limits on those, as well.
Now what's interesting about this, this really gets into the nerdiness of federal policymaking, but, you know, congress passes the bill. They don't really get to decide on all the particulars of it. That happens into you know, that happens during this thing called negotiated rulemaking where they put a committee of people together to decide, ‘Okay, how are we actually going to implement this law?’
And a few weeks ago, the committee charged with this very important task, by the way, that I think has been lost on most colleges of delineating between the programs that are graduate programs and those that are professional degrees. And why is that delineation important, Michael? Because one has a $200,000 cap and one has a $100,000 cap.
You know, a number of outside organizations urged the department, of course, to extend the higher loan cap for careers outside of health care, such as architecture, accounting, education, social work. Right? They wanted those bigger loan caps. But at the end of the day, only 11 programs made it. Right?
You know, obviously medicine, pharmacy, dentistry, osteopathic medicine, law, theology made it, which is always interesting to me. But the list actually excludes things like, you know, physician assistants, nurse practitioners, physical therapists, audiologists, which are all fast-growing programs at colleges and universities.
I spoke to that group that represents them a couple of weeks ago in Indianapolis, and this was all the deans can talk about. Yeah. Because those are now gonna be considered graduate degrees subject to that lower loan cap. Now Robert Kelchen, who we both know, thinks this is all gonna end up in court. But in the meantime, you know, schools are looking at their current students. They're trying to estimate what percentage would be above that loan cap.
And I think then the question becomes, do we shrink these programs, or do we lower costs, or does the private market enter? And I think everyone thinks, well, the private market will just take care of this. But as I think we've talked about before, the private market was kinda put out of business in the loan market back when, you know, the Obama administration went to direct lending. There's not a vibrant loan market right now in this area, and you can't just create one overnight, I don't think.
Michael Horn
Yeah. Yeah. Look. Clearly part of the answer is gonna be restarting that, and that's clearly gonna be a multiyear process to your point. Right? Number one.
Number two, I think it speaks to, again, the study that I wrote about in Substack and Forbes, which is I think the big change that we made in this or the contribution we've made, right, is a lot of folks have looked at the financial challenges through the eyes of net assets and things of that nature. We're looking just at cash.
It's like really just a cash calculation. At the end of the day, can you keep the lights on?
And these limits, right, directly impact the cash you can bring in in the absence of a robust private student loan market. And so there's gonna be an immediate hit.
Now I think this will be good in the long run for higher ed in the reorganization, but in the short run, it's gonna be really brutal, I think. It's gonna be really difficult.
Now before everyone says you're all Debbie Downer guys, there was some good news. Right? I mean, so there was some good news, which in the latest enrollment stats from the National Student Clearinghouse, you're always tracking those. What do they say?
Jeff Selingo
Yeah, I always really look at these numbers. These are early numbers for the fall, but total enrollment is up 2% this fall over last year with undergraduates driving most of those gains.
Community colleges were way up, 4%, but as you've noted and as we've noted on this podcast, and I'm sure Phil Hill will have an analysis of this pretty soon, most of that was in in dual enrollment. Certificate programs, by the way, which we are gonna be talking about this year on the podcast because sometimes those are dubious in terms of their outcomes — their salary outcomes, they went up 6.6%.
Master's degrees are the only ones that are falling, a little bit under 1% drop.
Enrollment, just the changing demographics of higher ed, by the way, Hispanic, black, multiracial students continue to climb. White undergraduate students continue to fall, almost 4%.
Is looking at the majors, I'm always interested. You know, engineering is up, Michael, but you know what's way down? Computer science, dropped 7.7% this fall, down 5.3% since 2023, which is a kind of an interesting pullback in a field that, by the way, colleges really once banked on, just for nonstop growth.
Michael Horn
So stay there, Jeff, because I think what that signals is that families are wisening up to the fact that the biggest unemployment, computer science majors, right, who graduated.
Jeff Selingo
Yeah. AI could do it.
Michael Horn
So they quickly figured it out. Right? And so it's not that there won't be any computer scientists, but fewer than needed before. So that's one.
And two, fascinating to see these credential or certificate programs continue to rise. I mean, this is like a many-year trend at this point, but often they pay less, right, in terms of to college coffers than the degree programs and these master programs that have really buoyed a lot of institutions that we were talking about getting undercut by those loan limits. Frankly, the 44 colleges that I was talking about, I suspect a lot of them had online masters, right, as one of the things that they were considering to hold themselves up. That looks like that is increasingly slipping away and I suspect will drop even faster once these loan limits are actually in place because this is still before, you know, this was before the negotiated rulemaking and the bill had even passed. Right, Jeff?
Jeff Selingo
Yeah. So Michael, as we head into the end of the episode here, it's almost 2026, so let's do some of our predictions. We're gonna do this rapid fire mainly because maybe if the less information we give, maybe people won't hold us to these in 2026.
Michael Horn
Good.
Jeff Selingo
Because you know, what happens with predictions, often. So I'm kinda curious. What are your quickly, what are your two or three predictions for higher ed?
Michael Horn
You sprung this on me. You sprung this on me, Jeff. I wasn't ready.
But okay. Here I go.
Number one, I think no institution signs the initial version of the Trump compact for higher ed. I think no one signs it. I do think that compact keeps morphing in 2026. We'll see if anyone gets to a place where they could actually sign it though.
Secondly, I do think Harvard and Trump will come to a settlement in 2026, but I think they'll, you know, just like with the ceasefire and everything else it seems that Trump touches, there'll be continued noise as Harvard will dig some holes and then they'll get some rounds of ire from Trump.
And then third, we've seen just as we're recording this a huge amount of reshuffling where no, they haven't closed the Department of Education, but they've moved whole functions to the Department of Labor and elsewhere and so forth. I'm not sure that is actually going to change that much in the day-to-day of colleges when it's all said and done. But I do think it's gonna create a lot more cost and confusion in the short run because who the heck do you go to when something goes awry or you have a question around a reg that, Jeff, didn't actually change just because it changed into a different department. Turns out you're not actually changing that much.
Jeff Selingo
Well, and it seems like you're just reorganizing oh, this is deck chairs here.
Michael Horn
Oh this is Titanic deck chair 101.
Jeff Selingo
Right. And by the way, the department will still be there in a couple of years. So I'm not quite sure what this is really achieving in the long run.
Michael Horn
I agree. Alright. What are your predictions?
Jeff Selingo
So, one, we are going to see a lot more M&A in 2026, and it's not just because we probably want to record more episodes about it or maybe our listeners don't want us to record any more episodes about it. But I think what you just laid out around finances means that I think a number of institutions will be much more serious about it.
This will go beyond a thing that, like, Northeastern is not gonna be buying up more universities. I think we're gonna see a lot more of the types that we saw with Gannon University, for example. Smaller colleges merging and acquiring other colleges in their backyard or nearby. So that's one thing.
Second, in two pieces of surprise news here, I think one is, Jim Ryan goes back to UVA.
Now I don't know if that will actually happen because he actually did say that he was planning on retiring anyway. But wouldn't that be fun where he in the spirit of, you know, Theresa Sullivan who did the same thing where she was fired by the board and then came back as president.
As you know, Virginia is getting a Democratic governor, and there's been a little tussle between her and the current Republican administration in Virginia that she thinks the board should wait until she gets to appoint new members of the board to appoint a new president there. Wouldn't it be fascinating to see Jim Ryan come back to UVA as president?
And then finally, speaking of political tussles, I have a feeling that after a year of Trump, Trump, Trump in higher ed, I have a feeling there's gonna be other villains for him in 2026. He tends to move on to other issues. And I think he feels like he has gotten all the squeeze he can out of higher ed. He's gotten all the news he can out of higher ed. And I think they're gonna move on to other villains, and I think higher ed will not be in the news as much when it comes to the Trump administration.
Michael Horn
So he's gonna spike the proverbial football and say, 'I did what I set out to do and let's move on.' Alright.
Jeff Selingo
Moving on. I think that will happen. I'm sure higher ed will be happy, if that does happen, but who knows who the next villain will be.
Michael Horn
Oh, well we'll stay tuned for all of it because the news cycle will definitely keep us informed.
So with all that said, a huge thank you to all of you, our listeners, over this first half of our season.
And we look forward to talking to you, seeing you in 2026 as you hold our feet to the fire on these predictions and more. Well, we've got a ton of great episodes coming up, and we can't wait to continue to talk to you about the future of higher education and our own learning journeys through it.
We'll see you next time.
