The landscape of higher education in the United States is undergoing rapid and profound changes, with significant implications for students, institutions, and state policymakers. In the early months of the current administration, sweeping federal reforms—particularly through the recently enacted One Big Beautiful Bill Act (OBBBA)—have triggered a cascade of policy shifts affecting student aid, research funding, institutional accountability, and civil rights enforcement. These developments present considerable challenges and opportunities at the state level as local leaders strive to stabilise institutions and safeguard equitable access to quality education.

Students are already experiencing tangible effects of federal policy changes. According to Bellwether analysts Christine Dickason and Nick Lee, cuts to the Department of Education’s Office of Federal Student Aid have diminished the availability of expert assistance on federal loans. The replacement of trained personnel with automated chatbots has reportedly caused confusion, while regional offices have been downsized, shifting the burden of student aid navigation onto higher education institutions (IHEs) themselves, where staff burnout is already high. Looking ahead, OBBBA’s 2026 provisions will impose lifetime borrowing caps and eliminate Graduate PLUS loans, likely forcing more students toward private loans. These private lending options typically offer fewer borrower protections, often involving either stricter credit requirements or higher interest rates, exacerbating access and affordability challenges.

A possible positive development is the expansion of Pell Grants into the Workforce Pell program, which aims to improve access to workforce credentials that may enhance economic mobility. However, state and institutional leaders will need to engage heavily in forthcoming rulemaking to ensure the program’s success and adequate advising support, particularly in diverse educational settings and community-based organisations such as American Job Centers.

The impact of federal reforms on institutions extends beyond student aid. Reductions in research funding threaten institutional financial health and the breadth of student services. Institutions are also confronting new accountability rules introduced by OBBBA, such as earnings tests that link federal aid eligibility to graduates' median income compared to high school diploma holders. These provisions risk program cuts in schools unable to meet the criteria, compounding financial pressures amidst declining enrolments and shifting demographics, including an increasingly non-traditional student body with over one-third being aged 25 or older.

Meanwhile, policy fatigue and uncertainty have permeated campuses nationwide, including at institutions like the University of Colorado-Colorado Springs (UCCS). Though located in a conservative region and traditionally viewed as politically moderate, UCCS has not been immune to federal scrutiny and funding cuts. It experienced losses of major federal research grants linked to the administration’s efforts to curtail diversity, equity, and inclusion (DEI) initiatives. University leadership responded with cautious measures such as renaming web content and administrative titles to avoid political friction, reflecting a broader climate of anxiety and self-censorship within higher education.

The federal shake-up also includes significant actions affecting Hispanic-Serving Institutions (HSIs). The administration has signalled legal opposition to a vital grant program for HSIs, labelling it unconstitutional for race-based criteria. This stance, tied to a lawsuit following the Supreme Court’s 2023 decision banning affirmative action in admissions, threatens the future of institutions serving over two-thirds of Latino undergraduates nationally. The Hispanic Association of Colleges and Universities has moved to defend the program, highlighting continuing friction over federal support for diversity in higher education.

Aside from aid and institutional policy, international student policies are under revision. Proposed changes by the Department of Homeland Security aim to limit international student visa durations to four years, a significant contraction from current regulations designed to manage rising enrolment numbers. Such restrictions risk deterring large numbers of international students, whose spending supports US economies and innovation at multiple levels, particularly in states like Massachusetts. This proposal, while framed as a security and misuse prevention measure, has raised concerns about eroding America’s global educational competitiveness.

Within this complex federal environment, Congress’s recent passage of the most comprehensive higher education reform in two decades seeks to curb escalating student debt and college costs. Measures include capping federal borrowing for graduate students and parents, simplifying repayment plans, and imposing an accountability system that risks cutting aid to underperforming programs. Particularly notable is the steep tax increase on wealthy institutions’ endowments, reaching up to 8%, and significant expansions in Pell Grant funding and eligibility for short-term workforce programs. Yet these reforms are unfolding amid administrative capacity strains and political pressures that complicate implementation.

States face a critical moment requiring strategic prioritisation. Bellwether experts urge state leaders to focus first on strengthening data infrastructure and technical capacity, which are essential for informed decision-making and compliance with new federal accountability rules. Equally vital are investments in wraparound supports that address student needs beyond academics—such as food security and healthcare—that have been compromised by cuts to programs like Medicaid and SNAP. Examples of promising state-level action include New York’s scaling of the CUNY ASAP program, Michigan’s College Student Basic Needs Task Force, and expansions of SNAP eligibility in New Jersey and Pennsylvania.

Given federal retrenchment, states must take a more prominent role in ensuring access to affordable, high-quality postsecondary education that aligns with viable career pathways. While state efforts cannot wholly offset federal cutbacks, they can provide necessary stabilisation amid uncertainty. Moreover, the disruption presents an opportunity for systemic innovation. Institutions are encouraged to reconsider service delivery models and cost structures to better meet evolving student needs and preferences, as stagnant enrolment figures signal demands for greater accountability and responsiveness.

In sum, higher education in the United States is navigating unprecedented federal policy flux marked by tightened funding, increased regulatory scrutiny, and shifting demographic realities. While students and institutions face immediate challenges—from reduced aid services to threatened research portfolios—the evolving policy landscape also opens space for transformational state leadership and institutional adaptation aiming to sustain economic mobility and a vibrant, informed citizenry. To hear more about how these shifts impact the choices of international students, join us on December 4th for Nicholas Dillon’s presentation International Students in an International World – Where They Go and Why It Matters.