America’s system of higher education is one of the country’s most durable competitive assets. Colleges and universities birth new industries, attract the world’s best talent, drive technological breakthroughs, and propel intellectual and social innovation. Universities are also central to the American Dream—producing the skilled workers who power the economy and serving as incubators of democracy that prepare students for participating in a pluralistic society.

These advantages cannot be taken for granted. For students and families, the price of college is increasingly prohibitive. Just 12 percent of Americans feel colleges are doing an excellent or good job on affordability; 63 percent feel they are doing poorly.¹ College enrollment rates have fallen over the past 15 years, driven by high sticker prices, uneven aid, heavy debt burdens, and uncertain returns.² Concerns about cost and value, combined with ideological attacks on who universities admit and what they teach, have bred a crisis of confidence: only 38 percent of Americans now express substantial confidence in higher education, down from 57 percent in 2015.³ Lagging public trust has invited heavy-handed government interventions that impinge upon university integrity and independence.⁴

America’s global lead is also narrowing. Other countries are competing aggressively for students and researchers, while U.S. policies deter many applicants. New international enrollment at American institutions fell 17 percent in fall 2025; graduate enrollment declined 12 percent.⁵ The federally funded research model that supports teaching and research at many top universities has become unstable due to capped payments, terminated grants, and abrupt changes in federal support.

These pressures arrive amid rapid technological change. Employers expect nearly 40 percent of required job skills to change by 2030.⁶ AI has already rendered open-book exams, problem sets and take-home essays virtually obsolete, offering students often irresistible tools for cognitive offloading—transferring the burden of analysis and thought from human to machine.⁷ Professors and university leaders are being forced to rethink not just how to teach but what to teach. We are in the early stages of a drastic transformation of education at every level, and responsive strategies remain sporadic and experimental at best.

Without a more affordable, trusted, globally competitive, financially sustainable, and AI adaptive higher education system, the U.S. will surrender its advantage in higher education. Federal policy must help lead the way.

Leadership Now supports national, state, and campus strategies that fortify higher education—driving faster change and greater accountability. We are guided by five principles:

The higher education sector encompasses a tremendous range of institutions with different missions, populations, and objectives—a source of innovation and achievement. Policy should recognize these differences rather than impose a single model for success. The federal role in higher education is, by design, limited: federal policy should concentrate on areas where Washington has lawful, legitimate authority, and rely on voluntary incentives rather than directives or coercive tactics that stretch the bounds of federal power. While our recommendations are directed primarily at the federal government, we urge states and the institutions themselves to consider the implications.

I. Align Federal Policy Incentives to Improve Outcomes and Protect Institutional Independence

The federal government spends about $65 billion annually in grants, subsidies, and work-study for higher education, plus another $88 billion in student loans.⁸ It should use those funds to incentivize affordability, increase return on investment, and shape the workforce America needs. These incentives will matter most where federal aid makes up a large share of revenue—such as broad-access public universities and regional colleges—and far less at highly selective institutions. Rather than dictating programs or curriculum, the federal government should tie its contributions to measurable results, give students and families transparent data on returns, and operate within clear boundaries that prevent funding from being used as leverage over curriculum and institutional governance.

• An eligibility floor for federal support. The One Big Beautiful Bill Act, enacted in 2025, established for the first time a minimum earnings standard for degree programs across American higher education.⁹ Beginning in mid-2027, programs whose graduates steadily earn less than comparable young adults with the next-lower level of education can lose access to federal student loans—a useful floor that still leaves room for other measures of educational and social value.
• Risk-sharing on debt repayment. Congress should supplement the eligibility floor with graduated institutional risk-sharing: institutions whose borrowers default or fail to make progress on repayment at rates well above those of comparable institutions should reimburse the federal loan program for a modest share of the resulting cost. That measure should count every federal borrower, including students who leave without completing a degree, giving institutions a financial stake in completion without dictating how they pursue it—programs such as CUNY’s ASAP and Georgia State’s student-success work show what is possible.¹⁰ Risk-sharing should not turn colleges into job-placement programs, and it must be designed so that universities are not penalized for serving students from more challenged backgrounds or for preparing them to enter valuable but less lucrative professions.
• Create pathways to reduce the duration and cost of a degree. Federal and state policy should help students shorten the time to a degree and lower its cost. States such as Texas, Indiana, Massachusetts, New York, and North Carolina have pioneered pathways for high school students to earn significant transferable college credit—in some cases a full 60-credit associate’s degree¹¹—and randomized studies show that carefully designed early-college programs boost postsecondary enrollment and degree attainment.¹² Congress should authorize an Early Chance Pell program to fund low-income high school students in high-quality early-college programs, which would also propel the growth of three-year degrees that cut both time and cost by 25%. Policymakers should also encourage and evaluate 90-credit bachelor’s degree programs, particularly in career-oriented fields.The recently enacted Workforce Pell expansion, which extends Pell eligibility to short-term workforce training programs, deserves support as an additional on-ramp to improved employment.¹³ Its value will depend on tying eligibility to rigorous evidence that credentials actually raise earnings, since research shows some offer little or no benefit.¹⁴
• Rigorous data collection and transparency. Effective reform depends on reliable data. Congress should restore, modernize, and enforce the mandates of the Institute of Education Sciences and the National Center for Education Statistics, whose staffing and research capacity were sharply reduced beginning in 2025.¹⁵ A privacy-protected federal student data system should track enrollment, transfer, completion, repayment, and post-college earnings across institutions, degree programs, and short-term credentials, including how AI is affecting graduate outcomes. Students and parents should certify that they have had the opportunity to review program-level data on costs and employment patterns before enrolling and borrowing.
• Establish a legislated standard for funding sanctions. Accountability must flow in both directions, with clear constraints that prevent funding leverage from being used to interfere in university governance or compel ideological concessions. Before terminating assistance for an alleged Title VI civil rights violation, the government generally must give notice, provide an opportunity for a hearing, make an express finding of noncompliance, and limit the sanction to the recipient and program in which the violation was found. Congress should extend comparable safeguards to all federal funding actions against colleges and universities.
• Modernize accreditation while ensuring its integrity and independence. There is bipartisan consensus that traditional accreditation has limited entry of new and innovative models and focused too much on inputs rather than outcomes. Reforms should address these weaknesses without undermining independent quality control or using accreditation to undercut academic freedom and free speech.

II. Accelerate Innovation to Enhance Degree Relevance and Leverage AI

College instruction and curricula largely hew to longstanding models that may not match what students need to succeed in careers transformed by AI. Colleges need to adapt, but there is no roadmap for what lies ahead. The federal government can help by funding innovation and ensuring that standards—such as those of accreditors—do not impede change. State governments and college leaders must also take up the charge of incorporating work-based learning and driving AI transformation.

• Incorporate more work-based learning into degree programs. Evidence shows that students—especially those at broad-access colleges and from low-income backgrounds—who participate in work-based learning are significantly more likely to get a high-quality first job and launch high-earning careers.¹⁶ Co-ops, internships, research positions, practicums, and service learning let students explore careers, gain durable skills employers value, and earn recommendations from supervisors, and they are becoming more important as AI eliminates entry-level jobs. Federal, state, and campus policies should ensure that these experiences can earn credit toward degrees, do not interrupt financial aid, and keep students on track for timely graduation, and employers of all kinds should be partners in offering them.
• Lean into AI to ensure that it improves, rather than undercuts, learning and skills. AI is rapidly transforming both the skills employers demand and how universities teach and assess learning. While AI skills are essential for the workforce, cognitive offloading to AI can also threaten the development of durable skills—such as communication, critical thinking, and analytical reasoning—that employers identify as top hiring priorities.¹⁷ Universities must ensure that academic knowledge and durable skills are not just taught but learned, and assessed rigorously in ways that account for AI access. They must also equip students with AI fluency across disciplines, now a baseline workforce expectation. Because AI’s impact will vary significantly by discipline, institutions should empower faculty to rethink what and how they teach. The Department of Education’s Experimental Sites authority, currently dormant, should be used to fund and rigorously evaluate pilots of AI-era teaching and assessment.

III. Compete Effectively for Global Talent

American universities remain a powerful magnet for international talent, but that advantage is eroding. The U.S. hosted nearly 1.18 million international students in 2024-25, 57 percent of them in STEM fields.¹⁸ These students feed the U.S. workforce: more than 418,000 students and recent graduates were authorized for Optional Practical Training (OPT) in 2024.¹⁹ Recent federal guidance restricting internship work authorizations has already prompted major universities to pause approvals, further undermining the appeal of studying in the U.S.²⁰ Enhanced social media vetting, visa processing delays, record-high refusals, and new rules restricting periods of study—currently on hold pending litigation—have also contributed to a decline in international student enrollment.²¹ Congress should make it considerably easier for talented students to study here and for highly skilled graduates of U.S. universities to remain, while retaining strong security and labor protections.

• Make it easier for graduates in critical fields to remain in the U.S., gain work experience, and earn permanent residence. Congress should give international students pursuing advanced degrees in designated STEM and other critical fields dual-intent status, so they can pursue a U.S. education while remaining open to lawful permanent residence, without changing ordinary security and eligibility screening. Curricular Practical Training should be expressly permitted for international students in good standing, and post-graduation OPT—now a central bridge between American universities and the skilled workforce—should be codified in law, with appropriate safeguards. Graduates with U.S. master’s or doctoral degrees in these fields should also have access to a dedicated employment-based green-card pathway outside existing numerical caps when they secure a qualifying U.S. job, subject to labor-market wages, recruitment protections for U.S. workers, and security screening. Existing employment-based caps have remained largely unchanged since 1990, impairing access to talent in needed fields.²²
• Expedite the visa process for students and scholars. Unexplained denials and unpredictable processing delays risk deterring well-qualified students and researchers from coming to the U.S. The Departments of State and Homeland Security should organize student and scholar visa processing around academic calendars, publish clear processing-time data, and provide an escalation mechanism for applications stranded in prolonged administrative processing. Security screening should remain rigorous and risk-based, without subjective denials for disfavored political views unlinked to demonstrated security threats.

IV. Make It Easier for Americans to Enter High-Paid, High-Demand Fields

The United States faces persistent shortages in fields central to economic growth, technological leadership, national security, and basic public needs—especially medicine, engineering, computing, and advanced technology. With many Americans feeling locked out of high-earning jobs and upward mobility, this amounts to a self-defeating paradox that must be corrected urgently. Federal policy should preserve America’s ability to attract exceptional people from abroad while doing far more to expand the education and training of Americans for fields where shortages are chronic.

• Break bottlenecks that constrict access to attractive fields. In some occupations where employers struggle most to find workers, Americans are lining up to enter but are locked out by shortages of training capacity. In 2025, more than half of U.S. medical school applicants were not admitted,²³ and nursing schools turned away more than 93,000 qualified applications, largely for lack of faculty and clinical placements.²⁴ The skilled trades face similar limits, with too few apprenticeships, instructors, and specialized equipment. Federal policy should target these identifiable bottlenecks rather than broadly subsidizing particular industries. Recent steps—1,200 new Medicare-supported medical residency positions,²⁵ performance-based payments for new apprenticeship slots,²⁶ and Workforce Pell¹³—should be expanded into a comprehensive strategy aimed at ending workforce shortages.
• Accelerate pathways to in-demand fields not requiring four-year degrees. AI and automation are increasing demand for skilled technicians who install, maintain, and operate complex systems. Federal policy should treat Workforce Pell, community college technical programs, and employer-validated credentials as core pathways into these growing fields.

V. Make Research Funding Reliable and Cut Research Red Tape²⁷

University-based researchers cannot effectively run multiyear laboratories and research programs when funding and rules for existing grants are subject to abrupt change. NIH terminated more than 1,800 grants between February and June 2025 while new grant activity also slowed sharply and overhead payments were slashed.²⁸ While these measures were later blocked, they forced universities and research teams to absorb substantial uncertainty and disruption,²⁹ and the administration is now proposing regulations to further cement agency discretion to cancel already-awarded grants.³⁰

• Protect awarded grants from cancellation for political reasons. Grants awarded through a merit-based, peer-reviewed process should not be cancelled due to a change in administration without due process and a right of appeal. Once an agency awards a grant under published criteria, early termination should require a defined basis: material noncompliance, fraud or research misconduct, failure to make required progress, or a comparable justification. Administrations and Congress properly decide budgets, strategic priorities, and the subjects of future grant competitions, but changed priorities should govern future competitions, not existing awards. If a political appointee seeks to override scientific and technical review, the agency should provide a reviewable written explanation tied to the statutory program and published grant criteria.
• Reform research overhead through a stable process. Legitimate debate exists over how to reimburse facilities and administrative costs. Congress should permit reform while requiring any government-wide change in methodology to proceed prospectively, through transparent rulemaking, reliable cost analysis, and a reasonable transition period.
• Cut the compliance burden that consumes research time. Estimates suggest academic researchers spend more than 40 percent of federally funded research time on administrative and regulatory requirements.³¹ OMB and the federal science agencies should harmonize disclosure forms, researcher profiles, security certifications, and progress reports across agencies, so researchers can maintain a single reusable federal profile rather than repeatedly supplying identical information.

Current legislation that advances elements of these recommendations includes: