2025 may be remembered as a turning point in American higher education, not because of any one policy shift, but because of a broader federal campaign to rein in the autonomy of colleges and universities, including the nation’s most elite institutions. What began as isolated investigations has evolved into a full-blown reordering of how all colleges, including private schools like Harvard, Columbia, and Brown, engage with federal authority. These developments, quietly unfolding across all three branches of government, are reshaping the legal and financial boundaries of higher education, and corporate leaders would be wise to take notice.
At the legislative level, Congress has increased the tax on the investment income of university endowments. While this may appear as a technical adjustment, the burden falls squarely on a handful of institutions with large endowments: MIT, Yale, and Princeton among them. These schools may now owe hundreds of millions more annually, funds historically directed toward financial aid, research, and student services. As elite institutions reassess their budgets, students from low- and middle-income backgrounds may find fewer grant-based supports, potentially increasing their reliance on student loans and limiting access to top-tier education.
More aggressively, the executive branch has deployed multiple federal agencies to investigate (or sanction) colleges over alleged failures related to immigration compliance, antisemitism, and diversity, equity, and inclusion (DEI) practices. This includes threats to withhold Title IV student aid and federal research grants—financial lifelines not just for institutions, but also for the pipeline of future employees in high-skill sectors.
The most notable flashpoint involves Harvard University, which initially resisted federal pressure by pursuing litigation and securing private loans to cover gaps created by threatened funding freezes and visa restrictions. But resistance is proving financially and reputationally costly. Harvard has already begun dismantling its DEI infrastructure. Columbia University has agreed to a sweeping $220 million settlement that includes federal oversight of its admissions, protest policies, and administrative operations. Brown University is also reportedly making structural concessions under pressure, as well as Duke, the University of Pennsylvania, and MIT.
This wave isn’t limited to the Elite Private Colleges. Public universities are also under fire. The president of the University of Virginia resigned amid political pressure linked to federal probes. George Mason University and UCLA (amongst others) face investigations or threatened funding freezes.
Why should we care? This shift towards punishment before procedure signals a collapse in the traditional boundaries between the federal government and autonomous organizations. In many cases, universities learned of sanctions only after public announcements. Some received no prior notice. In others, penalties were imposed before investigations even concluded. These are not just bureaucratic missteps—they are violations of due process, the bedrock principle of our democratic country that protects both universities and businesses from arbitrary government interference.
The erosion of those guardrails in higher education raises a critical question: if elite (particularly private) universities with deep legal teams and centuries of societal influence can be subjected to punishment without process, what’s to stop similar tactics from being used against all other colleges that enroll 96% of our nation’s future workforce? Unlike the more elite schools, community colleges and state schools often do not have hundreds of thousands of dollars to lobby Congress, let alone finance litigation or support students impacted by federal funding cuts or pauses.
With all the Legislative and Executive actions this past year, colleges have yet to cut costs. Quite the opposite, many universities, including schools in Wisconsin, Iowa, New Hampshire, and Nebraska, are increasing tuition. With millions fewer students expected to graduate high school in the next few years due to the impending Enrollment Cliff, many colleges will struggle to serve both current and future students.
What’s happening to colleges today is not an isolated crisis, but a mere preview of how unchecked government intervention can destabilize even the strongest institutions and democratic processes. The fate of higher education will determine the strength of our workforce, the pace of innovation, and America’s global competitiveness. Whether 2025 is remembered as the year higher education was weakened, or as the year leaders across sectors chose to reinforce it, will depend on how business and civic partners respond now.
Defending higher education now requires more than statements of concern; it demands coordinated action. Corporate leaders should use their influence to press lawmakers for policies that protect due process, sustain research funding, and preserve access for low- and middle-income students. Business coalitions can join forces with university associations to challenge punitive overreach in court, while also investing directly in scholarships and workforce partnerships to safeguard the talent pipeline. And individuals must speak out.
If we fail to act, the costs will not only be borne by students and campuses but also ripple across the very economy and democracy on which our shared future depends.
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