The Higher Ed Dive Outlook for 2022

Colleges are entering a third calendar year defined by the pandemic.

They had some reason for optimism in 2021, with federal aid and the wide availability of the coronavirus vaccine helping to steady the sector. But the omicron variant threatens their budding stability, meaning some of the operational shifts that emerged early in the pandemic will remain, like campus coronavirus mandates and new admissions policies. Change is on the horizon, however, including possible increases in state support and the Biden administration racing on its regulatory agenda. 

We've identified several trends to watch for 2022, and we'll be keeping you updated on them throughout the year.

Efforts to reverse slumping enrollment

With grim enrollment numbers over the last two years, many colleges outside of competitive private institutions and big-name public schools are looking to fill seats. Undergraduate enrollment as a whole plunged, declining by about 3.5% in fall 2021 from the previous year, according to data from the National Student Clearinghouse Research Center. This figure only reflects about three-fourths of reporting institutions, but aligns with patterns throughout the pandemic.

Drawing students back to college will challenge many institutions. The country's economic wounds aren't healed, and two-year schools and some four-year access institutions will see fewer students who can afford college. The strong market for job seekers may also divert some prospective students from schools like community colleges, which have seen particularly devastating enrollment declines. 

For other universities, there is heightened competition for the traditional pool of high school graduates. The pandemic essentially sped up trends, including an anticipated drop off in traditional-age college students that worries admissions professionals. Reenrolling stopped-out students will prove difficult.

Colleges may be able to build on graduate enrollment, which climbed by more than 2% in the fall. And while the pool of lucrative international students dried up and plummeted in the pandemic-rocked 2020-21 academic year, signs point to their numbers now rising. Higher ed leaders have called for a coordinated strategy from the federal government for improving international enrollment.

Can colleges avoid being drawn into a partisan fray?

Political fights are nothing new in higher ed, but 2022 looks to be a year when lawmakers step into colleges' operations to a rarely seen degree.

Diminishing trust in postsecondary education, particularly among the Republican Party, has GOP lawmakers hammering talking points that argue colleges indoctrinate students to liberal viewpoints and create repressive environments hostile toward conservatives. Policymakers and governing boards that have direct ties to the state leaders who appoint them have started to intervene more heavily.

Numerous examples have made national headlines. There was the tenure fight between Pulitzer Prize-winning journalist Nikole Hannah-Jones and the University of North Carolina at Chapel Hill. And there was the inability of the University System of Georgia to secure a permanent chancellor in a search shaded by partisan overtones.

Public systems have been thrown into turmoil by controversial appointees with close ties to politicians, too.  Jim Malatras in December decided to resign as head of the State University of New York system following revelations he disparaged a woman who accused former New York Gov. Andrew Cuomo, a Democrat, of sexual harassment.

Colleges are gearing up for more of these partisan battles. Late in 2021, Republican lawmakers in South Carolina moved to end tenure systems in the state's public colleges. The University of Florida drew investigations from a congressional panel and its accreditor over allegations it suppresses faculty members' academic freedom following a struggle over whether its professors could testify in lawsuits against the state.

Where federal aid and state budgets go

Much of the federal coronavirus aid designated specifically for colleges has been distributed and is starting to dry up. But other pots of federal coronavirus relief funding could still help buoy higher ed. 

Local and state governments collected a share of the billions of dollars distributed throughout the U.S., and policymakers have fairly wide discretion of how to use this money. 

Higher ed has already benefited from the funding. The governor of South Carolina and the governor of Michigan set aside $17 million and $24 million, respectively, for tuition-free college programs. More recently, North Dakota gave $38 million to Bismarck State College, a public polytechnic school, to open a new learning facility.

Experts said colleges should expect to see similar investments in projects that may not have been possible in normal budget seasons.

And because state budgets are stronger, public institutions will likely be making more expansive funding requests. Alabama's higher ed commission recently asked for $2 billion from the state, which would be more than a 17% increase from the current fiscal year's budget. Louisiana's governing body made a similarly high request.

Biden administration plans

Despite not succeeding completely in his legislative priorities, President Joe Biden has progressed on his regulatory policies during his first year in office — although not always at a pace advocates wanted.

The administration started negotiated rulemaking on several policies dealing with the federal student loan system. It also warned for-profit institutions against making false claims to students.

More will come in 2022: The U.S. Department of Education in April plans to release a highly anticipated draft rule governing Title IX, the federal law banning sex discrimination and violence in educational settings. 

Advocates for sexual assault survivors have called for Biden to more quickly dissolve the current regulation issued by former Education Secretary Betsy DeVos, which they say gives license to colleges to ignore reports of sexual misconduct. 

Biden's Education Department will likely look to unravel some of the more controversial parts of the rule, including its mandate that colleges set up a judiciary-style proceeding for evaluating sexual violence cases allowing a survivor and accused student to cross-examine each other through an adviser. 

Further scrutiny of for-profit institutions may also come. Biden named James Kvaal to the top higher ed post in the Education Department. Kvaal was noted for helping guide the Obama administration's approach to tackling abuses by for-profit colleges.

How much will campuses need to scramble because of COVID-19?

With the omicron variant of the coronavirus on the rise at the end of the fall 2021 term, many institutions moved to remote operations again. They canceled in-person finals and end-of-the-term rituals, bringing back memories of the beginning of the pandemic.

In the next year, some colleges will face whatever the pandemic brings with limitations put in by policymakers.

Lawmakers and governing bodies in red states have curtailed mask and vaccine requirements. Institutions are pushing their students to get the shot and booster, but some cannot go beyond encouragement. Biden issued executive orders mandating shots for employees that covered colleges, but they quickly descended into a legal tangle of court decisions and injunctions. It's unclear how they'll fare in the legal system in 2022.

It all shows how unpredictable COVID-19 — and human reactions to it — can be. No matter what, it's highly likely institutions will need to be flexible.

Can ed tech providers build on their momentum?

The last two years have been a massive boon to MOOC platforms. The number of people registered on Coursera, one of the most well-known MOOC providers, swelled to around 92 million in September, up from 77 million in 2020 and 46 million the prior year. Likewise, demand for competitor Udemy surged during the pandemic.

Both companies took advantage of this momentum by going public in 2021. And edX, another high-profile MOOC provider, was recently acquired by ed tech company 2U for $800 million. 

Although some analysts are skeptical these companies' rapid growth trajectories will last, company executives are confident the heightened interest in online education and alternative credentials will continue beyond the pandemic. 

These companies can be seen as competing with traditional higher education providers. But colleges are also working with platforms like edX and Coursera to offer credentials, including degrees, at lower price points than they do otherwise.

Testing in admissions

Wide swaths of colleges are no longer requiring SAT or ACT scores in admissions, all but ensuring that test-optional policies will stick after the pandemic. 

More colleges will likely extend multiyear experiments they started during the pandemic, which closed testing sites and gave test-optional policies a big push.

Harvard University also extended a test-optional policy through the class enrolling in the fall of 2026. The University of California System scrapped entrance exams entirely in 2021. The California State University system may do the same in the coming months. 

A development to watch is whether colleges switch to test-free policies under which they decline to review exam scores at all. Far fewer colleges have tried test-free admissions, but they have still seen growth during the pandemic.

Advocates for restricted use of standardized exams say test-free policies truly provide the more equitable road in admissions that they are seeking. But excising the tests from other parts of higher education — course placement, advising and financial aid — will be trickier than not considering them on applications.

Several major pending lawsuits have the potential to crumble the pillars of long-standing practices in higher education, including whether colleges can consider race in admissions and whether faith-based institutions can be exempt from a federal sex discrimination law. 

Another high-profile case accuses top-ranked colleges of colluding to limit financial aid packages, while still another centers on the messy divorce between Liberty University and its former president, Jerry Falwell Jr. 

Below, we rounded up six key cases that we'll be watching in 2022 and beyond for the impact they will have on individual colleges and the higher ed sector as a whole. 

Students for Fair Admissions v. Harvard University

Race-conscious college admissions may be facing one of its greatest threats yet. Students for Fair Admissions, an anti-affirmative action group, asked the U.S. Supreme Court to review a case involving Harvard University's policies. And the court took up the case, combining it with a similar one SFFA filed against the University of North Carolina at Chapel Hill.

SFFA contends Harvard unfairly considers race in admissions, which it says hurts Asian Americans' chances of attending the Ivy League university. A federal appeals court ruled in late 2020 that the university's policies don't violate the Constitution or intentionally discriminate against Asian Americans. 

But legal experts say the Supreme Court's conservative majority could be more receptive to arguments against affirmative action than the court has been in the past.

Henry et al. v. Brown University et al.

A group of former college students is suing 16 top-ranked colleges, including several Ivy League schools, alleging they've been illegally colluding on their financial aid formulas and driving up the price of college. 

Federal law allows colleges to collaborate on their methodology for determining financial aid awards, but only if they're need-blind institutions, meaning they don't factor in a student's ability to pay for college when making admissions decisions. 

The lawsuit says that nine of the named universities aren't truly need-blind because they prioritize children of past donors or potential future donors or engage in other practices that give an advantage to wealthy applicants. Therefore, these schools aren't eligible for the exception that federal law provides, it argues. 

The schools named in the lawsuit include Yale University, Georgetown University, Massachusetts Institute of Technology and 13 others. All the universities named are current or former members of the 568 Presidents Group, a collective of colleges formed in 1998 to craft a shared financial aid methodology. 

While the lawsuit doesn't say whether the other seven universities are truly need-blind, it asserts they also aren't eligible for the exemption because they've colluded with the other colleges on the methodology.

Spokespeople for some of the institutions, including Brown University, the California Institute of Technology and Yale, defended their policies after the lawsuit was filed in the U.S. District Court for the Northern District of Illinois. 

Elizabeth Hunter, et al. v. U.S. Department of Education

Around three dozen people who attended or considered attending religious colleges filed a lawsuit early last year against the U.S. Department of Education that could shake up gender and sexuality discrimination policies at faith-based schools nationwide.

Federal law bars colleges that receive federal funds from discriminating on the basis of sex, which includes sexual orientation and gender identity. But it carves out an exemption for faith-based schools that adhere to religious beliefs that conflict with these requirements. 

The lawsuit, filed in the Oregon U.S. District Court, seeks to end those institutional protections. It alleges that students attending certain faith-based colleges have been subject to harmful and discriminatory practices, including being sent to anti-gay counseling.  

A federal judge granted motions to intervene from three Christian institutions — Corban University in Oregon, William Jessup University in California and Phoenix Seminary in Arizona — as well as the Council for Christian Colleges and Universities. The three institutions and the council have all asked the judge to dismiss the lawsuit.

Houston Community College System v. David Buren Wilson

The Supreme Court agreed to take up a case last year that could impact the First Amendment rights of college governing board members. The lawsuit centers on David Wilson, who won a seat on Houston Community College System's board in 2013.

Wilson voiced concerns during his tenure that the trustees were violating their own bylaws, filing two lawsuits against the board for alleged infractions and hiring a private investigator to look into the board and one of the members. 

In 2018, the trustees voted to publicly censure Wilson for acting counter to the board's best interests and violating its code of conduct, according to court documents. As a result, Wilson couldn't hold leadership positions on the board or be reimbursed for travel related to his position, The Chronicle of Higher Education reported.

The Supreme Court heard oral arguments for the case in November, and a decision is expected this year.  

Madilyn Short, et al. v. Gov. Michael Dunleavy, et al. 

Four college students are suing Alaska and the state's governor to protect a higher education fund that pays for scholarship programs. 

As a result of budgetary battles in the state legislature, the Alaska Higher Education Investment Fund is set to lose more than $410 million. The fund finances merit-based and need-based aid for undergraduates as well as loan forgiveness for certain medical students. 

The money is under threat of being permanently swept into Alaska's Constitutional Budget Reserve, which acts as a savings account for the state. If lawmakers borrow money from the Constitutional Budget Reserve, other state funds automatically replenish the account unless three-quarters of lawmakers vote to stop the process. A vote to halt the replenishment didn't pass last year. 

The $410 million-plus was presumably swept into the CBR in mid-December, according to court documents.

"If this funding weren't available to students anymore, I think the University of Alaska System would see a significant decline in enrollment amongst Alaskan students," plaintiff Riley von Borstel told KTOO.

University of Alaska President Pat Pitney recently voiced support for the lawsuit, KTUU reported. A university spokesperson told the station the lawsuit is being funded from a private account that Pitney directs. 

Lawyers for both parties have asked the Alaska Supreme Court to issue a ruling by late February, before lawmakers finalize a state budget. 

Liberty University v. Jerry Falwell Jr. 

After Jerry Falwell Jr. resigned amid controversy in 2020 from Liberty University, the evangelical college his father founded, the institution sued him for more than $40 million in damages. Liberty alleges the former president breached his contract and fiduciary duty to the university. 

Falwell made headlines in 2020, when he posted a photo to Instagram showing his pants partially unzipped while his arm was around a Liberty employee. After he resigned, he told The Washington Examiner that he was being extorted by a man with whom his wife had an affair. That man, Giancarlo Granda, had been threatening to expose the relationship since 2014, Liberty's lawsuit says. 

Granda told Reuters that he and Falwell's wife "developed an intimate relationship and Jerry enjoyed watching from the corner of the room." The Falwells have denied those allegations. 

The lawsuit alleges Falwell took steps to cover up the extortion attempts instead of sharing the scheme with Liberty's governing board. It also says he manipulated the board's executive committee into adding a higher severance payout if Liberty terminated his contract without cause. At the time, he said this would protect the school if his support for then-President Donald Trump harmed the school's reputation. 

The matter is pending in a Virginia circuit court. Falwell has filed his own lawsuit against Liberty alleging defamation.

For-profit colleges appear to have a tough road ahead in 2022, with stricter regulations and other challenges likely coming down the pike. 

Some tailwinds appear to have turned into headwinds. Although for-profit colleges saw an enrollment boom during the pandemic’s first year, new enrollment figures show that trend didn't carry over into 2021. 

The U.S. Department of Education is also poised to carry out President Joe Biden's promised crackdown on the sector after laying groundwork during his first year in office, when pandemic-related relief for colleges grabbed headlines. 

The Education Department kicked off 2022 by conducting negotiated rulemaking, in which the agency convenes a group of stakeholders to offer recommendations on new regulations before they're issued. Ed Department officials are discussing a host of issues that could heavily impact the for-profit sector, including rules with potential to influence which students colleges recruit and whether their programs are eligible for federal funding. 

Below, we rounded up and answered four questions that are top of mind for the proprietary sector in 2022.

What will the Biden administration's gainful employment rule look like?

The Biden administration has vowed to reinstate some version of the gainful employment rule, an Obama-era regulation that threatened to cut off federal student aid from career training programs whose graduates had high student debt payments relative to their incomes. 

Just weeks before former President Donald Trump took office, the Ed Department released the first debt-to-earnings ratios for career education programs. They showed more than 800 programs failed the rule's standards, and the vast majority of those were offered by for-profit colleges. 

However, the Trump administration repealed the rule two years later, with then-Education Secretary Betsy DeVos arguing the regulation unfairly targeted the for-profit sector. 

The Biden administration is planning to craft a similar rule through the negotiated rulemaking process. But it's unclear how closely Education Department officials will hew to the Obama-era rules. 

Julie Peller, executive director of the student outcomes-focused nonprofit Higher Learning Advocates, said the organization is hoping the Education Department will view the Obama administration's regulation as a starting point. Its first version, which courts later struck down, looked at both earnings and repayment to measure a program's value. 

"I hope that in focusing on gainful employment, the Biden administration will think about multiple measures of how to define, 'What is a bad program?'" Peller said. 

Peller anticipates the discussion to focus on which college programs should be subject to the rule. 

"I expect that there will be a desire by the for-profits to broaden the conversation to include more programs at nonprofit institutions and a desire by the nonprofit institutions to keep it as narrow of a scope as possible," she said.

What will 90/10 regulations look like?

Negotiated rulemaking is also addressing the 90/10 rule, which mandates that for-profit colleges receive no more than 90% of their revenue from Title IV federal student aid funds or risk losing access to them. 

Historically, military education funds — such as those from the GI Bill — haven't been included in the 90% tally, which some policy experts argue has created an incentive for for-profit colleges to heavily recruit veterans. Indeed, proprietary schools have received an outsized share of GI Bill benefits, according to a 2019 report from the Government Accountability Office. 

But lawmakers closed that loophole last year, when they changed the statutory language to include all "federal education assistance funds" rather than just Title IV funds. The tighter restrictions take effect in 2023. 

In the meantime, higher education associations are asking the Education Department to carefully consider which sources of funding will fall under the new definition. 

Some think tanks and advocacy groups have been urging the agency to not create any new carve-outs or exceptions in regulatory language, while Career Education Colleges and Universities, which represents for-profit schools, has been advocating for a narrow interpretation of the rules. 

In a public comment submitted to the Education Department, CECU urged officials not to include federal job training funds and training contracts with the U.S. Department of Defense and other agencies. 

While regulatory language is still being hammered out, for-profits are likely taking a close look at the new statute's requirements to understand whether they might need to make changes, said Kevin Kinser, a higher education professor at Penn State University. 

"Some of the institutions that do a lot of military preparation are looking at this very, very carefully," Kinser said. 

Will the fight over Pell increases continue?

Biden's signature legislative proposal, Build Back Better, was dealt a bruising blow late last year when Sen. Joe Manchin, a Democrat from West Virginia, went on Fox News to say he couldn't support it. 

However, the Biden administration plans to revive talks on the $1.75 trillion spending package by paring down items like the child tax credit, Reuters reported. And Biden has said he believes he could pass chunks of the bill. 

The proposal also includes a $550 increase to the federal Pell Grant, raising the maximum amount to $7,045. Yet for-profit colleges would be excluded from the increase — even though Pell awards have traditionally been the same across all sectors. Some higher education experts said this change could make it harder for students to know how much aid to expect because it would differ depending on which institution type they selected. 

For-profit colleges have vociferously opposed their students being ineligible for the increase. 

"We feel that that is an injustice," said CECU President Jason Altmire. "It's just a matter of equity — that the Pell Grant program is designed to be portable."

Seventeen Democratic lawmakers wrote to Congressional leaders in November, urging them to revise the proposal's language so that for-profit colleges aren't excluded. 

"We need to do more to bring accountability to all sectors of higher education; however, punishing students does not accomplish that objective," they wrote. 

Will for-profit colleges turn around flagging enrollment? 

Enrollment woes have mounted in the for-profit college sector for years. But during the early days of the pandemic, some predicted the health crisis and ensuing economic downturn would drive students to proprietary schools. 

"There was some talk last year that for-profits are well-positioned to be the institutions of choice for people in this economy," Kinser said. These institutions view themselves as being more nimble than public colleges, Kinser said. 

Enrollment in four-year for-profit colleges increased 5.3% year over year in fall 2020, a reversal from a decade of declines. But that upswing didn't last long, with enrollment in these schools tanking 9.3% in fall 2021, according to final figures from the National Student Clearinghouse Research Center. 

Eyes will be on the sector this year to see if enrollment improves. 

"Is that just a see-saw?" Kinser asked. "Or is this representing more of a long-term effect?"