The Higher Ed Dive Outlook for 2023

The 2023 calendar year is the first since COVID-19 arrived when every higher education trend doesn’t have to be viewed through a pandemic lens.

Effects of the coronavirus crisis linger, but new topics are taking center stage, like potential reworks to the federal financial aid system, as well as fresh scrutiny — and the rejection of — U.S. News & World Report’s highly influential college rankings. 

As Higher Ed Dive looks ahead to the new year, we anticipate keeping you updated on these seven stories, plus whatever else the new year brings.

Efforts to fix financial aid in the limelight

Calls for colleges to be more transparent about their financial aid offers have come from most corners of the higher education world — lawmakers across the political spectrum, associations and consumer-protection advocates.

Students and their families who receive financial assistance often have to decipher a complex web of aid sources, including federal loans, grants and work-study, which can leave them guessing how much they’ll actually end up paying.

The issue seemed to come to a head toward the end of 2022, as 10 higher education organizations late in November said they would convene a task force aimed at standardizing financial aid information. 

Following the associations’ announcement, the U.S. Government Accountability Office, a congressional watchdog, dropped a bombshell report finding that more than 9 in 10 colleges downplay their net price or don’t offer any details about it in financial aid offers. 

Republicans were angry. Rep. Virginia Foxx called the GAO’s findings “egregious and unacceptable.”

Foxx also promoted the College Cost Transparency and Student Protection Act, a Republican-led bill that would call on the U.S. education secretary to establish consistent terms and definitions for financial aid. 

Some experts also expect the U.S. Department of Education to propose financial aid standardization regulations, as the Biden administration has moved to establish several rules thus far that aim to shore up flaws in the student aid system. 

Student loan forgiveness keeps center stage

U.S. higher ed may have gained the widest attention in 2022 for President Joe Biden’s plan to wipe away broad amounts of student loan debt for individual borrowers earning up to $125,000.

Each borrower was set to receive up to $10,000 in debt forgiveness — $20,000 if they got a federal Pell Grant in college. The move intended to assuage Democrats' progressive flank, some of whom had called on the president to cancel more debt. It also acknowledged continued financial pain points from the pandemic. 

However, lawsuits ground the plan to a halt. Rulings in federal lawsuits paused it while raising questions about whether the administration had overreached its authority. Now, debt forgiveness sits before the U.S. Supreme Court, which expedited the case and expects to hear oral arguments in February. 

Legal experts have expressed doubts the conservatives who dominate the high court will back uniliteral debt forgiveness. Conservatives generally argue the debt forgiveness plan is financially reckless and spits in the face of taxpayers who did not attend college.

Meanwhile, Biden extended a pandemic-era pause on loan repayments while the Supreme Court hears the case. The moratorium, which had been scheduled to expire at the end of 2022, will now last until 60 days after litigation is resolved or 60 days after the end of June — whichever comes first.

The attempt at debt forgiveness looks to have ramifications regardless of whether it ultimately succeeds. Foxx in September said she would investigate whether Biden administration officials who worked on the plan would personally benefit from the money.

Race-conscious admissions policies under threat

The Supreme Court will finally decide this year on long-simmering legal challenges to policies at Harvard University and the University of North Carolina at Chapel Hill that consider applicants’ race during the admissions process.

A conservative legal organization taking on the two institutions, Students for Fair Admissions, has a long history of suing over colleges' race-conscious policies. But this time around, court watchers say SFFA seems almost certain to succeed, as the justices' conservative tilt almost certainly give them the votes to strike down these practices.

Those who tuned into oral arguments in 2022 noted several justices’ skepticism toward Harvard and UNC-Chapel Hill’s reasons for defending race-conscious admissions. Colleges that consider race, however, only use it as one metric in admissions decisions and argue diverse student bodies bring strong educational benefits.

Practically, only a small slice of colleges would need to reshape their admissions practices should the court strike down race-conscious policies, as most institutions accept a majority of applicants. Still, college leaders have shared fears that a ruling against race-conscious admissions would signal to historically marginalized applicants that they aren’t welcome in higher ed. They also worry campus diversity would take a significant hit.

Experts have advised admissions offices to talk with other departments early about strategies on messaging in the event of a ruling against race-conscious policies and to develop strategies to continue crafting diverse classes. 

Can U.S. News & World Report rankings recover?

Higher ed officials watched with great interest as Yale University’s law school, and then Harvard University’s, in November announced they would no longer cooperate with U.S. News & World Report’s Best Law Schools rankings, one of the publication's many college lists that carry major clout. 

The rankings, in particular the Best Colleges undergraduate list, have long been the subject of complaints that they preoccupy institutional decision making to the detriment of colleges’ missions. U.S. News’ methodology also often comes under fire for measuring reputation, wealth and exclusivity — and not the actual quality of institutions' education, how accessible it is or how much it changes the lives of the students served. 

Since Yale and Harvard said they wouldn’t send U.S. News the necessary data, a contingent of other law schools — top-ranked and not — have followed suit. 

These law schools generally say the rankings disadvantage institutions that want to lift law students into public service careers. U.S. News opened the new year by announcing changes to its law school ranking methodology. But it wasn’t enough for at least some law deans to buy back into the system.

A major unanswered question is whether law schools' rejection will spur a similar movement among undergraduate colleges. While no undergraduate college has shared that they are revolting against the rankings, some experts wonder if they are biding their time until closer to when the Best Colleges list publishes, typically in September. 

Regardless, the law schools’ actions only add to long-building animus against the U.S. News rankings, which suffered other reputational blows in 2022. The publication booted Columbia University from its Best Colleges rankings after questions about data it submitted were raised by one of the university's mathematics professors. It then kicked several other colleges from its 2022 rankings, alleging they also misreported data.

More college consolidations on the horizon

Experts in higher ed finance predicted the financial stresses early in the pandemic would lead to some low-enrollment colleges’ demise, only for federal pandemic support to somewhat shield institutions.

However, no new federal aid appears to be coming down the pipeline. Some institutions had already turned to austerity measures, as the pool of traditional-age college students starts to run dry.

Among the major closings and consolidations announced in higher ed in 2022 were Lincoln College, a predominantly Black institution in Illinois that shut down after a cyberattack added to already mounting stresses, and Indiana University-Purdue University Indianapolis, which is splitting up into separate operations run by its constituent research universities.

As colleges continue to feel the pandemic’s lingering financial pinch on top of demographic trends placing downward pressure on the sizes of their student bodies, more institutions will likely meet similar fates. 

Enrollment woes continue

As pandemic-related restrictions eased and life seemed to settle more into normalcy, higher ed leaders held out hope a COVID-19-era enrollment decline would rebound.

That doesn’t appear to be the case. Enrollment fell by 1.1% in fall 2022 from the prior year, according to the National Student Clearinghouse Research Center.

Institutions suffered across the board — community colleges, four-year public colleges and for-profits. Less-selective colleges and two-year institutions bore the brunt of these declines.

Some data points, however, should encourage the sector. Enrollment at historically Black colleges and universities rose by 2.5% between fall 2021 and fall 2022. And between fall 2020 and today, enrollment at HBCUs inched up by just under a percentage point. 

Also, undergraduate enrollment at primarily online colleges jumped by more than 3% between fall 2021 and fall 2022.

Skepticism of colleges’ value could push down student counts. And the so-called birth dearth during the Great Recession is arriving for higher education, shrinking the contingent of high school graduates available to enroll in college — and meaning enrollment will likely continue to wane. 

Scrutiny over OPMs grows

Ed tech investors and other observers will be watching closely to see whether online program management companies, or OPMs, will be able to recover from a rocky year marked by layoffs and heightened scrutiny of their business models. 

2U, one of the most prominent OPMs in the U.S., completed across-the-board layoffs last year that led to a 20% reduction in personnel expenses. Coursera, a high-profile MOOC platform with a small OPM business, also announced in November that it was reducing its workforce, though the company did not disclose how many employees were let go. 

But economic headwinds aren’t OPMs’ only trouble. Many of these companies rely on tuition-share agreements, in which they provide upfront capital for online programs in exchange for a cut of their future revenue, often between 40% and 60%. 

Democratic lawmakers asked the U.S. Department of Education late last year to formally investigate whether the agency should continue to allow colleges to enter tuition-share contracts with OPMs that provide recruiting services. They questioned whether these models incentivize OPMs to use aggressive recruiting methods. 

Legal trouble is also brewing. 

A lawsuit brought in December by former University of Southern California students made a similar argument as Democrats. Their complaint focuses on online education programs USC launched with 2U’s help. They allege the university and company worked together to lure students into programs by advertising artificially inflated rankings in U.S. News.

Natalie Schwartz contributed to this report.

College admissions remains volatile in 2023. Massive shifts — like a widely expected ruling by the U.S. Supreme Court that would restrict race-conscious admissions — threaten to stretch an already overworked field.

To keep up with the rapidly changing environment, we posed one question to six experts: What admissions trend do you expect to see in 2023?

Their written responses are below, lightly edited for brevity and clarity.

Pending lawsuits stand to reshape the higher education landscape in the next year. The U.S. Supreme Court, which now has a strong conservative majority, is expected to rule on a handful of cases concerning higher education.

That includes lawsuits over new policies, such as the Biden administration’s attempted plan to forgive broad amounts of student loan debt, and longstanding practices, such as affirmative action in college admissions. 

Legal challenges have also stemmed from controversial borrower defense to repayment regulations, which allow students to have their debts cleared if their colleges misled them. And more lawsuits could be on the horizon as the Education Department implements an ambitious regulatory agenda that attempts to crack down on for-profit colleges and make it easier for borrowers to have their loans forgiven. 

Below, we rounded up five lawsuits to keep tabs on throughout the year. 

The state of Biden’s student loan forgiveness plan

Shortly after the Biden administration unveiled a plan to forgive large amounts of federal student loan debt for most borrowers, the program drew a flurry of lawsuits. Federal courts have blocked the administration from carrying out the program, which would forgive up to $10,000 for borrowers who earn up to $125,000 annually and $20,000 for those who received Pell Grants. 

So far, the U.S. Supreme Court has agreed to weigh in on two cases. 

In one, six conservative states argue that the debt forgiveness plan oversteps the Biden administration’s authority and could rob some of them of their future tax revenue. In another, two college graduates have contended that the plan arbitrarily boxes out some borrowers and that the Biden administration didn’t follow required regulatory steps. 

The Supreme Court plans to hear the cases in February. It also declined to lift the court orders blocking student loan forgiveness. 

Will the Sweet settlement hold up?

In November, a federal judge approved a whopping $6 billion settlement agreement between the U.S. Department of Education and borrowers who say the agency improperly handled their borrower defense to repayment claims. The borrower defense rule allows the Education Department to wipe away debts for students who’ve been misled by their colleges. 

Under the agreement, the Education Department will automatically clear the debts of around 200,000 borrowers who attended one of 150-plus institutions, most of which are for-profits. The agency also agreed to streamline borrower defense decisions for another 64,000 borrowers.

However, the settlement will have to survive appeal efforts. Several colleges on the Education Department’s list of institutions opposed the settlement, saying it denies them their due process rights and harms their reputations. 

The settlement was set to take effect if an appeal wasn’t filed by Jan. 17, according to the Project on Predatory Student Lending, a group that represented borrowers in the class-action lawsuit. But several institutions said that month that they were appealing.

The fate of race-conscious admissions

The U.S. Supreme Court will likely decide the fate of race-conscious admissions this summer, when it issues opinions on major cases heard this term. The justices are weighing the merits of separate lawsuits challenging admission practices at two institutions — Harvard University and the University of North Carolina at Chapel Hill. 

Both lawsuits were brought by the anti-affirmative action group Students for Fair Admissions. Although the details of the cases differ, they target the colleges’ race-conscious practices, arguing they unfairly disadvantage certain students while favoring others. 

During oral arguments in October, the conservative justices appeared skeptical about whether affirmative action policies should continue. They repeatedly asked when race-conscious admissions can end, citing a landmark 2003 opinion that preserved affirmative action in higher education but predicted such policies would be unneeded in 25 years. 

Given the Supreme Court’s conservative majority, legal experts believe colleges should prepare now for race-conscious admissions to end. 

The case will affect only a sliver of selective colleges, as most institutions accept most of their applicants. But it's still important for higher ed and beyond, because the potentially affected institutions tend to be wealthy and give students an inside track to powerful positions in business and government.

DeVry’s lawsuit against the Education Department

DeVry University, a large for-profit college, sued the Education Department in October to try to stop the agency from recouping more than $23 million to cover the cost of debt discharges for students who filed borrower defense claims against the institution. The case could affect how the Education Department applies the borrower defense regulations. 

That’s because the lawsuit stems from the Education Department announcing in February that it was discharging debt owed by roughly 1,800 former DeVry University students under the borrower defense rule. It marked the first time the department granted this type of relief to students who attended an institution that is still open and continues to access federal financial aid. 

In August, the Education Department attempted to recoup some of those costs from DeVry. The university argues that recoupment is unlawful because the department didn’t say whether it looked into the details of each borrower defense claim and handled the applications as a single group. 

“There is no lawful basis for such an act,” the university argued in court filings. 

The future of DACA

The fate of Deferred Action for Childhood Arrivals — a program that protects immigrants from deportation if they were illegally brought to the U.S. as children — is once again uncertain. Higher ed officials have been closely watching whether DACA survives, as many of their institutions enroll those children once they reach college age. 

In October, a federal appeals court agreed with a district court in Texas that DACA’s creation in 2012 was illegal. However, the three-judge panel has opted to preserve DACA while a lower court considers a new Biden administration rule implemented last year to save the program. 

The ruling halted new applications for DACA, affecting roughly 93,000 people, the Texas Tribune reported. But people who already have protections under DACA, which authorizes participants to study and work in two-year blocks, will be able to apply for renewals. Over 800,000 people have been approved for the program in the time it's existed.

In the meantime, the appeals court tasked the lower court, a federal district court, with reviewing the differences between the 2012 executive order that created the program and the 2022 rule that seeks to preserve it. 

Attorneys general from nine conservative states have formed a coalition to challenge the Biden administration’s attempt to keep the program, contending that the new version is also unconstitutional.