Trends in Higher Education for 2026: Strategies for Resilience, Innovation

Challenges continue in 2026 for higher education, especially with the passage of the new federal tax law that changed rules for Pell Grants and some loans. These changes may further depress enrollment, but there are many strategies colleges and universities can implement to help remain financially sustainable.

Explore the top higher education trends for 2026 and tactics to address them.

One Big Beautiful Bill Act changes for higher education

The new federal One Big Beautiful Bill Act enacted significant reforms with notable student and economic impacts on higher education institutions. Collectively, these changes may reduce access to student funding, potentially discouraging individuals from pursuing higher education and influencing public perception, which may result in broader shifts in enrollment trends.

Changes include:

• Loans for most graduate programs, including master’s and doctoral degrees, are capped at an annual borrowing limit of $20,500 and a lifetime aggregate limit of $100,000.
• For professional degree programs, such as medicine, dentistry, and law, annual borrowing is limited to $50,000, with a cumulative cap of $200,000.
• The law mandates the discontinuation of the Graduate PLUS loan program for new borrowers starting in the 2026–2027 academic year, with complete phase-out by 2029–2030.
• Effective July 1, 2026, the law eliminates Pell Grants for students whose aid covers the full cost of attendance, while expanding Pell Grant eligibility to include job-training programs.
• Additionally, the law imposes income-based accountability standards on degree programs; those whose graduates earn less than the median income of high school graduates for two out of three years will lose federal loan eligibility for at least two years, although Pell Grants will remain available.
• The law established the Workforce Pell Grant program, which expands access to short-term training and credential program, making them eligible for federal Pell grant funding. States are highly involved in approving eligible programs.

The U.S. Department of Education’s future

The current administration has restructured the U.S. Department of Education’s (ED) oversight, resulting in considerable uncertainty regarding the future of higher education. Recently, the administration has started reallocating various programs to other federal agencies. Specifically:

• The Office of Postsecondary Education’s institution-based grants have been transferred to the Department of Labor,
• Support for on-campus childcare for parents enrolled in college has been moved to the U.S. Department of Health and Human Services, and
• International education and foreign language studies programs have been reassigned to the U.S. Department of State.

Currently, these changes have not affected federal student financial aid. However, as the administration continues to evaluate further options, higher education institutions must remain vigilant and monitor how these developments may influence their operations during this period of uncertainty.

Economic conditions/financial sustainability

Higher education institutions are projected to face significant challenges in 2026, primarily due to declining enrollment rates and a diminishing perceived value of a college degree. Increasing concerns regarding affordability and reduced post-graduation employment opportunities have led students to question the return on investment of higher education, further contributing to enrollment declines. In response to these adverse trends, institutions must proactively seek to diversify revenue streams for long-term sustainability and resilience in a changing educational landscape.

Revenue stream diversification for colleges and universities

Higher education has been facing a looming enrollment cliff for many years, which was exacerbated by the COVID-19 pandemic. With declining enrollment, funding constraints, and aging infrastructure, institutions are looking for creative ways to stimulate their revenue without directly impacting their balance sheet.

Public-private partnerships

Some institutions are turning to public-private partnerships (P3s) to increase revenue. These types of agreements offer alternative methods for institutions to fund finance projects, leverage assets, and transfer risk. By shifting the burden of resource constraints and costs, institutions can focus on their core mission.

Expanding continuing education/certificate programs

Another way to think about diversifying revenue is not necessarily to bring in completely new revenue streams but to look at current revenue streams and diversify within. For example, reviewing programs within the institution to expand to continuing education and certificate programs or targeting a new set of learners.

Facility rentals

Additionally, some institutions are monetizing campus facilities through conferences, events, and community engagement initiatives, generating alternative income streams while strengthening local relationships.

Ghost students

Companies and organizations continually encounter the risk of fraudulent activity, and higher education institutions are no exception. Since the onset of the COVID-19 pandemic and the subsequent shift to online learning, there’s been a notable rise in the phenomenon of so-called ghost students. This term refers to individuals using stolen identities to submit online applications, enroll in educational institutions, and illicitly obtain federal financial aid.

The repercussions of such fraudulent actions include misappropriating student seats, increased operational costs, and diverting Title IV aid funds away from genuine students who depend on this support to pursue their education. Furthermore, addressing these incidents demands significant time and effort from admissions staff and faculty members, which is particularly challenging amid ongoing staffing shortages.

In response, colleges and universities are implementing advanced identity verification measures, such as biometric checks and real-time identity proofing, frequently in partnership with third-party service providers. Institutions detecting such fraudulent activity are obligated to notify the ED’s Office of the Inspector General immediately upon confirmation of the fraud.

Artificial intelligence

Artificial intelligence (AI) is reshaping society and transforming higher education, underscoring the imperative for academia to fully harness its capabilities. AI can help have a positive impact on institutional finances by reducing operational and administrative costs through task automation and enabling resource enhancement, which allows colleges and universities to reinvest in student services and academic programs.

AI fosters creativity by enabling innovative teaching tools, simulations, and virtual labs while enhancing students’ personalized learning experience. As students have already embraced these technologies, institutions stand to gain from a deliberate and balanced integration of generative AI into higher education.

AI isn’t only impacting academia but also operations. Accounting and finance departments are deploying AI agents to help students find policies and procedures on their websites as well as process accounts payable invoices. There are many opportunities to reduce administrative burden and increase focus on the institution’s mission.

Succession planning for colleges and universities

Succession planning has been an ongoing topic of conversation for many higher education institutions, and its importance has only grown in recent years due to the rapidly evolving landscape of academia. The tenure of presidents and cabinet members at higher education institutions has been continuing to decline the last decade. The sector is experiencing significant shifts, including technological advancements, changing student demographics, financial pressures, and increased competition for both students and faculty.

These challenges require institutions to have strong and adaptable leadership in place. As the Baby Boomer generation continues to retire in large numbers, colleges and universities are facing a wave of leadership vacancies at all levels.

In response, leaders within higher education institutions are taking a more proactive approach to succession planning. By doing so, institutions aim to provide continuity in their strategic direction, maintain institutional knowledge, and foster a culture of innovation and resilience.

Effective succession planning helps mitigate the risks associated with leadership transitions, allowing institutions to adapt to unforeseen challenges and seize new opportunities. Ultimately, these efforts are designed to help colleges and universities continue to thrive even during times of uncertainty and transformation.

Athletics/NIL

Collegiate athletics has been fundamentally transformed by the federal antitrust lawsuit, House v. NCAA. This settlement not only authorizes retroactive compensation for student-athletes but also establishes a framework for revenue sharing between institutions and their athletes.

Commencing with the 2025–2026 academic year, institutions are permitted to allocate a portion of athletics-generated revenue directly to student-athletes. Each institution will have discretion in determining the specific compensation structure, subject to an initial spending cap of $20.5 million, which is scheduled to increase incrementally over the subsequent decade.

While these developments present significant regulatory and compliance challenges, they also offer substantial opportunities. Institutions may leverage name, image, and likeness (NIL) initiatives as a strategic avenue to enhance their market position and attract prospective student-athletes. The question is — how will this change college athletics in the future?

Strategies for higher education institutions facing 2026 challenges

Given the many challenges — including federal policy shifts, financial constraints, enrollment declines, technological advances, and regulatory changes — higher education institutions must proactively adapt to remain resilient and sustainable.

The following strategies can help institutions combat these multifaceted challenges:

Diversify and innovate revenue streams

• Develop business agreements and P3s to finance projects and share risk.
• Expand continuing education, certificate programs, and job-training initiatives to attract nontraditional and adult learners.
• Monetize campus facilities through conferences, events, and community engagement to generate alternative income.
• Explore new grant and philanthropic opportunities.

Leverage technology and artificial intelligence

• Integrate AI tools to automate administrative processes, enhance operational efficiency, and personalize student learning experiences.
• Deploy AI-driven support in areas such as academic advising, financial aid, and administrative workflows to free up resources for core mission activities.
• Not sure where to start? Our digital team can perform a digital readiness assessment to help you get started and create a roadmap for your digital journey.

Rethink international student approach

• Shift from recruitment to risk management by diversifying locations and building multi-country pipelines.
• As students are increasingly choosing institutions with strong global networks, develop global partnerships with joint degrees, dual-campus pathways, and research partnerships.
• Consider adding flexible start dates, hybrid options, and deferral pathways to combat visa uncertainty.
• Reimagine support for international students once on campus by considering specific cultural mental health support, career services that understand global hiring, and community integration and belonging initiatives.

Implement robust identity verification measures

• Institute identity verification measures including biometric checks and real-time proofing to combat ghost student fraud and protect Title IV funding.

Adapt to regulatory and policy changes

• Monitor federal and state policy developments, especially those related to ED, loan limits, and grant eligibility.
• Adjust financial aid counseling and program offerings to align with new borrowing caps and accountability standards.

Prepare for Workforce Pell

• Review current program offerings and identify which short-term training and credential programs could become Pell eligible.
• Institutions may invest in data-driven career advising, develop flexible learning modalities such as online or hybrid models, and create pathways for stackable credentials allowing learners to progress toward higher qualifications.
• Strengthen relationships with local employers who may offer these types of programs but are not Title IV eligible.

Prioritize succession planning and leadership development

• Establish robust succession plans for leadership continuity and institutional knowledge retention amid high turnover rates.
• Foster a culture of innovation, adaptability, and resilience among current and future leaders.

Capitalize on changes in athletics and NIL

• Develop clear policies and frameworks for revenue sharing with student-athletes in compliance with new regulations.
• Leverage NIL initiatives to attract and retain talent, enhance institutional visibility, and create new revenue opportunities.
• Educate student athletes about the tax implications of athletic income.

How CLA can help with higher education strategies

By integrating these strategies, higher education institutions can better position themselves to navigate the uncertainties and opportunities presented by the 2026 outlook and beyond.

CLA advises hundreds of colleges and universities on financial modeling, cost containment strategies, and program contribution margin analysis. We can perform digital readiness assessments and assist in digital projects to streamline your operations.

Reach out for assistance or attend our 2026 Higher Education Virtual Conference to hear from peers and other higher education professionals on current challenges, changes, and outcomes.

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