Trump Policies May Worsen Higher Education’s Financial Crisis, Says Forbes
The Covid-19 pandemic caused severe financial setbacks for colleges and universities across the U.S., resulting in billions of dollars in lost revenue.
Many institutions were forced to make drastic budget cuts, lay off staff, and shut down academic programs. As reported in an article by Michael T. Nietzel, shared by Forbes, the financial strain was immense, with some estimates placing the cumulative lost revenue at over $100 billion. However, the policies enacted during the Trump administration could end up worsening these financial challenges in ways that the pandemic itself may not have.
The Long-Term Effects of Trump’s Policies
While the pandemic’s impact was felt most strongly between March 2020 and May 2023, with a significant dip in college enrollments and funding, the Trump administration’s policies are likely to exert a more prolonged effect. Nietzel’s Forbesarticle suggests that, unlike the temporary crisis caused by the pandemic, these policies could continue to affect college budgets for years, coinciding with the decreasing number of high school graduates—the primary source of new college enrollments.
No Federal Bailouts: The Absence of Financial Support
During the pandemic, the federal government provided vital financial assistance through the Higher Education Emergency Relief Funds (HEERF), totaling nearly $77 billion, helping institutions stay afloat. As highlighted by Michael T. Nietzel in his Forbes article, the lack of a similar financial rescue from the Trump administration means that institutions are now left vulnerable. With little indication that the government is interested in providing future financial support, colleges face a tough road ahead, especially as other federal policies push them into financial hardship.
New Tax Proposals and Their Impact on Universities
As part of President Trump’s legislative priorities, Congressional Republicans have proposed increasing taxes on university income, particularly on endowment earnings. The proposal, mentioned in Nietzel’s Forbes article, would hike taxes on wealthy institutions with large endowments, such as those with over $2 million per student. This change, along with other provisions, could result in substantial reductions in funding for these schools, further impacting the higher education sector.
Cuts to Research Funding: A Growing Concern
Under the Trump administration, federal research funding has already been slashed, with the National Science Foundation and other key agencies seeing their budgets drastically reduced. According to Nietzel’s article in Forbes, this has led to a significant decline in research grants and contracts, particularly for leading research universities. Proposed future cuts could lead to even greater financial strain, with estimates showing that a reduction in research funding could shrink the economy and the federal tax base.
The Medicaid Cuts and Their Ripple Effect
Another major factor contributing to the financial strain on higher education is the proposed cuts to federal Medicaid funding, which could exceed $600 billion. As noted in Forbes by Michael T. Nietzel, these cuts would put additional pressure on state budgets, forcing states to make tough decisions that could impact higher education funding. Given the ongoing trend of increasing Medicaid expenditures, higher education may continue to face significant budget reductions.
A Negative Outlook for Higher Education
As Forbes article by Michael T. Nietzel highlights, the Trump administration’s fiscal policies, along with the declining state support for universities, have led Moody’s to downgrade the outlook for the higher education sector. The downgrade reflects the many challenges facing colleges and universities, with cuts to research funding, new taxes, and lack of federal support combining to create a tough financial future.
Kosta Gushterov
Reporter at Coindoo
Kosta has been a part of the team since 2021 and has solidified his position with a thirst for knowledge, incredible dedication to his work and a “detective-like” mindset. He not only covers a wide range of trending topics, he also creates reviews, PR articles and educational content. His work has also been referenced by other news outlets.
