However, high school students have increasingly stopped believing this advice. Nationally, the college-going rate – the proportion of high school graduates who spend at least 1 semester enrolled in a certificate, 2-year, or 4-year program immediately after high school - has now declined from the peak of 70% to 62.8% in 2024. Compounded by the coming enrollment cliff, the challenges to college and university budgets are real.

While there is a lot of anecdotal evidence as to why fewer high school graduates are going to college (Inside Higher Ed, NBC, Higher Ed Dive, The Chronicle), more careful, quantitative studies are harder to come by.

This post will take a data-driven look at this question for the state of Indiana drawing explicitly on the work Marley Heritier did for her Master’s thesis. We (along with Dr. Christine Wilson) had the privilege of advising Marley. Her findings and implications will be helpful to anyone trying to understand this sobering trend in their state.

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The Indiana Context

Indiana is currently facing what some have called an “economic emergency.” Despite Indiana high schools producing more graduates than they did a decade ago, the number of those students enrolling directly in some form of college has plummeted.

In 2008, Indiana’s college going rate was 66% and by 2024 it was 51.7% - a 14%+ drop and the most dramatic in the nation. To better understand what is going on, the study looked at trends in the college-going rate for each of Indiana’s 92 counties for the 2010-2023 period.1

Figure 1. Change in College-Going Rates by County in Indiana: 2010-2023

Source: Heritier, 2026.

While the college-going rate has declined in every county, the decline is especially acute in some counties (Figure 1). A central question is: why?

Looking at the changes over time and across counties, nearly half of the differences in the college-going rate (48 percent) are driven by persistent, structural differences *between* counties that change little over time. Another 35 percent is driven by statewide trends—factors that affect every Hoosier county simultaneously. Only 17 percent of the variation comes from specific changes happening *within* a county over time.

These findings provide some initial insight as to what is going on: the decline in the Indiana college-going rate is 1) embedded in structural differences across counties – i.e., counties with strong college-going rates tend to stay that way, and vice versa; and 2) there has been a systemic retreat across the state from traditional postsecondary pathways over time.

The Three Eras of Decline

The period studied was marked by three distinct periods during which college-going changed in fundamental ways.

Figure 2: Structural Breaks in Indiana’s State-wide College Going Rate

Source: Heritier, 2026.

2010–2015: In the early years of the study, the overall college-going rate only dropped by about 1 percentage point. However, there was some movement across pathways. Enrollment in two-year public associate degrees dropped by 2.4 percentage points, but this was largely offset by students choosing private colleges or leaving the state to attend college. In this period, the “college-going” spirit was alive and well; students were just changing their destination.

2015–2019: In the last half of the decade, the rate of decline accelerated and the college-going rate dropped by 6.4 percentage points. There was no buffer provided by private and out-of-state schools – in part because a number of private colleges went out of business during this period. We saw the first real signs of a net loss of college-going students that was not being made up elsewhere. The traditional 2-year sector, in particular, saw sustained losses.

2019–2023: Post-2019, the decline became a broad-based contraction, dropping another 6.7 percentage points over a 4-year period. This decline was accelerated by COVID-19, and contrary to what happened in many states, enrollment did not recover in Indiana after COVID. Declines were observed across both associate and bachelor’s pathways simultaneously – more students were simply choosing not to enroll in college at all.

The Collapse of the Associate Degree

One of the most striking results is that this decline did not affect every degree equally. The college-going decline in Indiana is, at its core, a collapse of enrollment in the 2-year sector. This is ironic given the strong state call for workforce development programs and given these institutions offer a low-cost, locally accessible option for students. The annual net cost of attendance at Ivy Tech Community College (our state’s 2-year system) is $7,000 and it ranges from $13,000 to $16,000 for Indiana’s 4-year schools.

When we look at the data for Indiana public institutions, the share of students pursuing an associate degree has fallen from roughly 16 percent to below 8 percent of the total college-going cohort. In contrast, while bachelor’s degree enrollment has also fallen, the drop was far less dramatic and occurred earlier in the decade. Relative to 4-year colleges, enrollment in the 2-year sector fell by about 30 percent.

Why is this happening? Heritier’s research suggests that the 2-year degree, which was once the “gateway” for working-class and rural students, is being squeezed by two forces: 1) strong local labor markets paying decent wages directly out of high school and 2) a shift in student preference toward short-term certificates. This second point needs to be kept in perspective: while certificate enrollments increased across all time periods in the study, they remain a small slice of the overall pie—not nearly enough to replace the thousands of students who have walked away from 2- and 4-year degree programs.

Geography is Important

In Indiana, where you grow up has an important impact on whether you pursue a college education. The study looked at the decline across rural, suburban, and metropolitan counties, and there were important differences.

Figure 3. Percentage-Point Change in College-Going Rate by Enrollment Pathway and County Type: 2010–2023

Source: Heritier, 2026. Note: All values represent percentage-point changes in enrollment rates between 2010 and 2023; pathway categories reflect percentage-point changes in the college-going rate for each enrollment pathway and sum up to the total percentage-point decline. In-state degree type pathways represent only students who enrolled in Indiana public institutions.

Rural counties in Indiana are facing a “perfect storm.” They started with similar college enrollment rates to metropolitan areas, but these rural counties have seen the most pronounced drops. In these rural communities, the decline is broad-based, impacting both bachelor’s (-11.8 percent) and associate (-8.7 percent) enrollment.

We attribute much of this to selective migration. The data shows that 94 percent of the variation in adult bachelor’s degree attainment is explained by fixed county characteristics. In other words, if you live in a rural county where fewer adults have degrees, you are less likely to see the value in getting a degree yourself. In addition, as the most educated young people tend to leave rural areas for jobs in more urban areas, there is less support for a “college-going culture”.

The Labor Market “Pull”

An obvious question is: if students aren’t going to college, what are they doing? The answer lies in the Indiana labor market.

Indiana’s economy is heavily weighted toward sectors that do not require a college degree. The study found a significant negative correlation between Blue Collar employment in a county and the college-going rate. In counties with high concentrations of manufacturing, trade, and logistics jobs, the “pull” of the workforce immediately after high school is strong.

When unemployment is low and entry-level wages in a factory or warehouse are elevated, the opportunity cost of sitting in a classroom for two to four years becomes too high for many students – especially where there isn’t much of a college-going culture anyway. Why take on debt—or even just skip two years of wages—when you can start at $20+ an hour tomorrow? This labor market pressure is a primary driver of the decline, especially in rural and suburban counties where these industries are the economic backbone.

Conversely, the study found a positive correlation between Professional & Science employment and college-going. In areas where the local economy revolves around knowledge-based work, the incentive to get a degree is constantly reinforced.

The Tuition Paradox

When people talk about the decline in college enrollment, the first thing they usually point to is the cost of tuition. “College is just too expensive,” is the common refrain. However, as we have written in the past, the data tell a different story.

Adjusted for inflation, tuition and fees (sticker price) declined during the later years of the study period (Figure 4). In addition, much of the decline in college-going behavior was concentrated in 2-year schools – where tuition is much lower. As such, the financial burden of college has not been the primary driver of the decline in the college-going rate.

Figure 4. Average Inflation-Adjusted In-State Tuition (Sticker Price) by Institution Type: 2000-2023

Source: Heritier, 2026.

There is a Tuition Paradox in play here. If the real cost of college isn’t the problem, then lowering tuition alone likely won’t be the solution to increasing the college-going rate.

The issue isn’t simply the price of the degree and it doesn’t look to be the actual earnings made possible by a degree. (Median annual earnings 4-years post-graduation for an Ivy Tech 2-year graduate who received federal aid are $53,000.)

Perceptions matter. The uncertain job/career outcome of the degree when compared to the known (typically overestimated) costs of college and the known earnings from jobs immediately available to new high school graduates shape perceptions of the value of college.

Preparation and Counseling Matters…a Lot

One of the strongest predictors of college-going behavior was academic preparation – the better prepared the students, the more likely they were to attend college. The study looked at a variety of factors related to academic preparation and the related issue of school quality including SAT scores, honors coursework, attendance rates, and school quality and all have strong positive associations with college-going rates.

Beyond preparation and school quality, it’s clear that the decision to attend or skip college isn’t made on graduation day—it’s often made years earlier. So counseling matters, and there is evidence that decisions made early in high school are strongly correlated with college attendance. Some examples:

• The 21st Century Scholars Program: This program remains a true bright spot in Indiana’s higher education policy landscape. The 21st Century Scholars program offers up to a 100% tuition scholarship at 2- or 4-year public institutions (or partial coverage for private colleges) to income-eligible high school students. The study found that students in the program enroll in college at significantly higher rates than their peers—approximately 80 to 88 percent compared to just 52 percent of the general student body. However, participation is uneven across the state. In many rural counties, enrollment in the program is disproportionately low; this isn’t necessarily due to a lack of eligibility, but rather the result of significant informational gaps and outreach barriers.2

• The Honors Diploma: The Honors Diploma is the single strongest positive predictor of college enrollment in the study. Students who earn an honors diploma are far more likely to enroll in 4-year bachelor’s programs, suggesting that the choice to pursue a rigorous academic path during high school is a critical bridge to higher education.

• FAFSA Completion: Completing the FAFSA is a strong indicator that the student is seriously considering college. That said, the study found much within-county variation in FAFSA completion rates. Counties that prioritize and succeed at getting students to fill out financial aid forms have higher college enrollment rates as supporting FAFSA completion helps students see college as financially possible.

The Socioeconomic Anchor

Family income levels have an important role in explaining college-going behavior. Participation in the Free and Reduced-Price Lunch Program has the strongest negative correlation with college-going in the study. (While program eligibility rules are common to all counties, differences in income levels across counties drive differences in program participation.)

Figure 5. Change in Indiana Free or Reduced Lunch Program Participation: 2010-2023

Source: Heritier, 2026.

Economic disadvantage acts as an anchor for high school graduates. In counties with high levels of poverty as measured by participation in the Free and Reduced-Price Lunch Program, the immediate need for income frequently overrides the long-term potential of a college degree.

This income effect wasn’t confined to the lowest income households. After controlling for time trends, the study found that counties gaining “High Income” households saw rising college rates, while those with more “Lower-Middle Income” households saw enrollment fall. This suggests that the decline is increasingly concentrated in the “middle” of the socioeconomic spectrum—the families who aren’t wealthy enough to pay for college easily, but aren’t poor enough to receive full financial aid.

The Supply Side: Institutional Access

Is the drop in college-going influenced by institutional access – were fewer schools available for students to attend, or were they located too far away from students?

A Distance-Weighted Access Index was constructed in the study to measure how many colleges and universities were located within a 50-mile radius of a county to track the geographic footprint of Indiana’s higher education system. The study found that:

• Physical access to two-year public institutions has remained stable over the last decade.

• The actual decline in access has been driven almost entirely by the closure of private for-profit providers.

• Because access remained stable while enrollment fell, the study concludes the overall decline is not driven by a lack of nearby options.

• There are differences in the role of access across county type. In suburban counties, proximity to a college is a strong, positive predictor of enrollment. In rural areas, however, the relationship is mixed. This suggests that for Indiana’s rural high school graduates, simply being near a college isn’t enough.

Moving Forward: What the Data Tells Us

This research paints a picture of a state at an economic crossroads. The “standard” pathway to a degree is under pressure from many angles: job-market pull, academic preparation and school quality issues, family income challenges, college-going attitudes…

If Indiana wants to reverse these trends, the state cannot simply focus on tuition. Better information on the returns to and the cost of a college-education is needed. Academic preparation and counseling must be front and center issues. The geographic divide that is leaving many rural students behind must be addressed. Programs such as the 21st Century Scholars and honors coursework matter and should get additional attention.

Addressing academic preparation, teacher and counselor training, information gaps, geographic inequalities, and affordability in an integrated way will likely matter far more than focusing on one “silver bullet” solution.

The two-year sector deserves special focus. If the community college pathway continues to erode, Indiana risks losing an effective tool for workforce preparation and social mobility. An associate degree isn’t just “another two years of school,” but can be a valuable, high-return investment that can compete with the immediate pull of the labor market – as well as help build the better-educated workforce needed to attract investment to the state.

A Final Question

During the period that college-going was declining, college completion and on-time completion rates in Indiana were rising rapidly. Comparing the 2010 entering cohort to the 2020 cohort, the 3-year completion rate of associate’s degrees nearly *tripled*, rising from 10.8 percent to 31.3 percent.

We don’t know exactly why completion rates rose so fast, but it raises the possibility that the two facts are connected. Perhaps the decline in college-going rates was driven by the sorts of students who, in previous years, would start but not finish college. By opting *not* to pursue a degree they weren’t going to finish anyway, they drove up the college completion rate. And, by immediately entering the workforce they enjoyed years of earnings and avoided accumulating student debt.

If that’s the case, a decline in college-going might actually be a *better* outcome for students, even if it deprived higher education institutions of tuition dollars. To be clear, we don’t know if that’s what happened, but it’s a provocative hypothesis that we’ll tackle in future work.

Next Week

We’ll wrap up the academic year by sharing some recent developments on topics we have covered this Spring. The Spring 2026 job market for college graduates, state policies impacting higher education, building trust in higher ed – just three of the topics we will update in our final post for the academic year. As always, thanks for reading Finding Equilibrium!

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Our guest co-author this week, Marley Heritier, recently completed her Master’s thesis entitled “Why are Fewer Indiana High School Graduates Going to College? Evidence from County-Level Data”.

“Finding Equilibrium” is coauthored by Jay Akridge, Professor of Agricultural Economics, Trustee Chair in Teaching and Learning Excellence, and Provost Emeritus at Purdue University and David Hummels, Distinguished Professor of Economics and Dean Emeritus at the Daniels School of Business at Purdue.

We’re trying something new in Finding Equilibrium…a series of “Six Questions” interviews with experts who can help us explain challenging issues of interest to our readers.

This week we explore the problem of grade inflation with Professor Kevin Mumford, who has published some fascinating work on why we see grade inflation, and the impact that it has on student outcomes. We will hear from Kevin on these questions and more.

Our Six Questions posts include the unedited video of our conversation, and a link to a verbatim transcript. Below you can find a condensed transcript generated from that video with the help of the Gemini AI tool. All participants have reviewed the condensed transcript for accuracy. Let us know what you think!

Finding Equilibrium: A Conversation on Grade Inflation

David Hummels: Hi, everyone. I’m David Hummels, joined here by my colleague Jay Akridge. Together, we write the Substack Finding Equilibrium, “Two Economists on the Future of Higher Education”. We are trying a new experiment by doing podcast work to talk to people who are experts on various topics. Today we are joined by Kevin Mumford, a professor of economics at Purdue University and the Kozuch Director of the Purdue University Research Center on Economics.

Kevin is a leading expert in public, labor, and education economics. He has done interesting work on how institutional characteristics of higher education interact with policy questions.

Today we are interested in his work on grade inflation. Grade inflation is the idea that over time, students are receiving better grades for doing about the same quality of work they used to. It was an important component of the Trump administration’s compact with higher education and has been in the news quite a bit lately.

Recently, Harvard has been publicly wrestling with the fact that 60% of undergraduate grades are now A’s, up from about a quarter just 20 years ago. They have seen a huge increase in how many people get A’s.

Kevin, first question: the term “inflation” has a pejorative context. Does it really matter if faculty give better grades over time, and is there a reason that either government or university institutions have to get involved in that process?

Kevin Mumford: That is a great question. Price inflation is a good analogy. The definition is a sustained increase in the overall price level, resulting in dollars losing purchasing power. Grade inflation is similar; it is an overall increase in the general level of grades. What we are losing is the signaling power of those grades. Grades are more than just a reward for effort; they transmit information.

If A’s become more common because student performance is rising, nobody is concerned. But grade inflation means the same level of performance results in a higher grade, making it difficult to distinguish among levels of performance. The college transcript provides less information to potential employers or graduate schools, and to the university itself for things like prerequisites.

You asked if the administration needs to get involved. I think they do because there is a collective action problem. Each individual instructor has incentives to grade more generously because higher grades lead to better student evaluations, an easier job with less fighting over grades, and higher popularity for their course or major. These individual incentives work against the institution’s goal of having grades be meaningful and transmit useful information.

David Hummels: Just a quick follow-up: how do we know students don’t deserve those better grades?. Maybe they are better prepared or smarter, or institutions have invested more in student success to generate better outcomes. How do you tell that it’s inflation as opposed to students learning more?

Kevin Mumford: That is what makes this difficult to know. However, some facts suggest that students are not better prepared for college. High school achievement has not been going up; NAEP scores are essentially unchanged since the 1970s. From the 1970s until about 2012, there was a large increase in the fraction of high school graduates coming to university, which does not suggest that the average college student is better prepared when average NAEP scores are the same.

We also looked at whether students were picking majors that historically had higher graduation rates and easier grading and concluded that is not driving the increase. Colleges have invested in services that help students and while we cannot completely rule this out as improving student academic performance, universities do not have more resources on average. Government funding for college has gone down while student-to-faculty ratios have gone up. The evidence suggests that we are not likely doing a better job of educating students. While factors like advising or tutoring matter, they are definitely not the main reason that GPAs are up.

Jay Akridge: Kevin, you have looked at linking rising grades to increased college completion rates. Completion rates declined in the 70s and 80s but have been rising again, sometimes dramatically. Administrators like to brag about this, but tell us why you think grade inflation is a really important part of that story.

Kevin Mumford: When you were provost, you commissioned a study for me to explain grade inflation at Purdue. About a third of it was just better students. Purdue got a lot better over the study period; the average SAT score in economics was about a 1270 when I arrived and is now around a 1430. But two-thirds of the increase in grades at Purdue was not explained by better students.

I don’t think administrators are wrong to say student support, tutoring, and advising are valuable, but I am skeptical that those explain most of the increase in graduation rates. Government support for higher ed has decreased, and the fraction of per-student spending coming from tuition has gone up substantially.

In research I did with Jeff Denning, Eric Eide, Rich Patterson, and Merrill Warnick, we looked at factors that could affect graduation rates. We used NAEP scores, demographics, and student-faculty ratios. It turns out that the changes in all these variables over the period of our study would predict declines in graduation rates rather than the increases we observed. The only factor that did a great job of predicting the increase in college graduation was the increase in average GPAs. The observed grade inflation accounts for the observed increase in graduation rates almost entirely. While high-touch advising can be effective, grade inflation is explaining the lion’s share of graduation increases.

Jay Akridge: What is the mechanism that links higher grades for the same work to graduation?

Kevin Mumford: One source of grade inflation is that students are sorting into courses where they will perform better, partly because universities have expanded student freedom in course selection. This is important because there is a lot of discouragement that happens when students get bad grades.

If you have a very strict grading standard, students get discouraged and may think that the major is not for them. They switch majors, get poor grades, get discouraged again, and eventually think they are floundering, which results in them dropping out. We get more students who drop out on their own from Purdue than we would ever kick out. The discouragement from getting low grades is real and it causes students to drop out.

David Hummels: Are there different student populations that this hits more than others?

Kevin Mumford: Research has found that poor grades affect women more than men. It may be that women get more discouraged about bad grades than men do, and in general institutional hurdles seem to affect women more. I have earlier work showing that when a student gets a poor grade in an introductory course, the chance of a woman deciding to take the intermediate course is much lower than for a man with the same grade. Grade inflation helps with persistence, which is one reason departments with a desire for more diverse students might grade more easily.

David Hummels: I came across a study by Babcock and Marks finding a steep decline in student study hours, dropping from 40 hours a week in the 1960s to about 27 in the early 2000s. I am wondering whether we have entered a new equilibrium where faculty give easy grades, students don’t work hard, and we are spiraling toward lower levels of mastery.

Kevin Mumford: That could be true. The point is that grade inflation is not just a recent thing. There was a wave of grade inflation in the 1960s, it stabilized and then grade inflation picked up again in the mid-1980s. Since then there has been slow, gradual grade inflation, with elite private colleges inflating more than big state schools.

We also see periods of shocks, like the pandemic, which caused a crazy increase in grades. I think of that as a temporary price shock that mostly went away, though some was persistent. Regarding the Babcock and Marks study, the data is over a decade old, but it suggests students are studying less, making it difficult to believe that better student performance is producing the better grades. The problem is that grade inflation takes away some of the incentive to work hard; if it is easy to get an A, student effort suffers.

Jay Akridge: Is it possible grade inflation is actually a good thing in certain settings?

Kevin Mumford: There are definitely upsides. Student persistence increases and students are more likely to graduate because they are less discouraged. Grade inflation improves morale and mental health, reducing the long-term penalty of a temporary academic performance issue.

The biggest advantage of grade inflation is on the employment side. An employer might request to interview students from a specific major with at least a 3.5 GPA. If that major has strict grading standards, fewer students pass that employer’s initial screen. A little grade inflation gets more students over that threshold and gives them more opportunities.

However, there is a limit. If there is too much inflation, employers will have a hard time distinguishing excellent performance from good performance. They will respond by putting less weight on GPA and more weight on internships, recommendations, and interviews.

In the study I did for Purdue, we linked academic records to job placements and saw no drop in employment during a period of grade inflation; in fact, there were some employment gains. This could be because Purdue was grade-inflating less than other universities and so there were not negative reputation effects. At a school like Purdue that still grades tough, a little grade inflation would help more students get past employer screens. Employers don’t always account for a “Purdue fixed effect” where they grade tough; they just see the major and the GPA. You don’t want to go to the level of grade inflation at Harvard or Yale; both institutions are considering serious reforms to bring grades back into line.

David Hummels: I’m interested in how this intersects with government policy. Graduation rate increases were most pronounced at public institutions, and many states are moving to performance-based measures where completion figures into the funding formula. Will this lead to stronger incentives for faculty to inflate grades, and can we design policies that don’t have that adverse effect?

Kevin Mumford: Public schools saw bigger increases in graduation rates, but that’s because private schools already had high graduation rates before all the grade inflation. States that are tying funding to course completion, retention, or graduation rates create pressure to weaken standards and pass students who wouldn’t have passed otherwise.

The key is to not tie funding only to information on the transcript. The important outcomes for students are employment, earnings, and graduate school placement. If I were the state government, I would incentivize the outcomes that really matter. Some states are trying this; Texas community colleges have their funding tied to how many of their students can transfer to four-year universities. Tennessee has added performance on a standardized test administered by the state, which provides an outside standard. But I trust the job market to do an even better job than a state test, so the best is to incentivize colleges to help their students get great jobs.

Jay Akridge: Regarding the future of academic rigor, Harvard is considering grade caps, while the federal government has proposed tying funding to grade integrity audits. Which lever is most likely to succeed?

Kevin Mumford: Students want frequent feedback relative to a fixed achievement standard; they don’t like curves that create competition. Yet, if you just let faculty grade however they want, you get the collective action problem. Administrative intervention is needed.

At Purdue, we list the average GPA given by an instructor next to their course evaluations. We use that internally to see if great student evaluations of the instructor were the results of giving all A’s. Institutions have to give clear guidance. You want to encourage faculty to design assessments to produce a distribution because this allows grades to be a signal. Grade integrity audits seem very difficult to make work.

In the end, grade-inflating or deflating to the standard that employers expect feels like the right thing. This means grades at Harvard and Yale should come down, while at Purdue, they might need to go up slightly to hit what employers expect. Otherwise, we are hurting our own students’ chances at graduate school or jobs.

David Hummels: One challenge is that in disciplines like accounting or medicine, there is an objective measure of whether you learned what you need to be a professional. But for philosophy or economics, it’s hard to imagine an accreditation body standardizing learning.

Kevin Mumford: It works well in accounting where passing the CPA exam means the instructor did their job. For economics or philosophy, the measure is whether we are helping students achieve their goals, like a great job or graduate school. The grades alone are not what the student cares about; they care about market outcomes.

David Hummels: Kevin, you’ve been at Purdue for nearly two decades. What is your subjective impression of student effort and rigor today compared to when you started?

Kevin Mumford: In my econometrics courses, I have used the same grading rubric for my entire career. I’ve never had to adjust it. The students enrolling in my courses seem better and better academically prepared, though I am not convinced they are working harder. My grading scale has produced a very similar distribution of grades over the years.

However, I am responsible for some grade inflation in a new experiential learning courses I began teaching. It is a discussion-based course with a writing assignment, and if students do the work, they generally get an A. Many experiential courses like this have been introduced over the past couple of decades. We are introducing new courses that give mostly A’s while many existing courses have kept their same strict grading standard. New courses are one of the causes of grade inflation, but they represents a great experience for the student.

David Hummels: That is interesting because Jay and I have argued that universities need to do more experiential learning. Algorithmic questions with definitive right or wrong answers are exactly what AI can do better than students. If we only train students for those responses, they are poorly adapted to the world. But these experiential ways of doing things are very hard to grade with C’s and D’s.

Kevin Mumford: In experiential courses, students have to show up, participate in the discussion, and think critically. It’s a very valuable experience. One thing I have noticed is that student writing has improved significantly over the last five years, especially for international students, probably thanks to generative AI. This type of experiential learning is great because it is AI-proof.

I do think offering new courses and having more student flexibility has been an important source of grade inflation. Many universities have opened up the ability for students to take whatever courses. This allows students to choose courses that are a better fit and more valuable for them but also allows students to choose whichever course is grading easier.

David Hummels: Kevin, we really appreciate your time with us today. It’s been our pleasure talking with you.

Kevin Mumford: Thanks so much, appreciate it.

Finding Equilibrium” is coauthored by Jay Akridge, Professor of Agricultural Economics, Trustee Chair in Teaching and Learning Excellence, and Provost Emeritus at Purdue University and David Hummels, Distinguished Professor of Economics and Dean Emeritus at the Daniels School of Business at Purdue.

The term ‘enrollment cliff’ is dramatic – one envisions higher ed soaring off a precipice into an abyss much like (if you are old enough to remember!) Thelma and Louise launching their convertible Thunderbird into the gaping expanse of the Grand Canyon.

Well, despite the dramatic term, the enrollment challenge higher education is facing is not really like that – rolling down a steep hill would be more like it.

This Finding Equilibrium explainer will look at the projections behind the enrollment cliff and how the effects of the cliff will vary across institutions, geographic regions, and students. We’ll examine the assumptions which underlie these enrollment projections and ask if there are reasons to believe that the cliff may not be as dramatic as predicted. A few thoughts on consequences of the cliff are offered.

We’ll start with where higher education finds itself today…

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Was Fall 2025 Enrollment Peak Higher Ed?

Not quite, overall enrollment for US colleges and universities peaked at 21 million students in 2010. But Fall of 2025 was pretty good: total enrollment increased about 1% from 2024 to 19.4 million – 16.2 million undergraduates and 3.2 million graduate students, and the third straight year of enrollment increases. As we approach the cliff, *overall* enrollments have been on the upswing.

Looking closer, the 1% overall increase in Fall 2025 was driven by a 3% increase in community college enrollments and a 1.4% increase in enrollment at public 4-year colleges. However, enrollment at private 4-year institutions fell 1.6% and it fell 2% at for-profit institutions – not the momentum you want going over the cliff…

What is the Enrollment Cliff?

The phrase ‘enrollment cliff’ describes projections of the number of domestic (native born and foreign born) *18-year-olds* who are likely to attend college over the next decade. The projections are developed from a set of measurable demographic facts combined with a set of assumptions.

Several points are really important here: the focus is 18-year-olds who are likely to enter college, *NOT* total enrollment (18-year-olds made up 73.8% of the total freshman class in 2025.). International students are not included in these projections, nor are adult learners. The impacts of a decline in 18-year-olds will be felt over time as successive entering cohorts get smaller - and not as some dramatic step change in total enrollment. Understanding what is being forecast is important in developing a response…

Three data sources are central to understanding the enrollment cliff: US birthrate data, WICHE’s projections of high school graduates, and Nathan Grawe’s enrollment models from Demographics and the Demand for Higher Education and The Agile College.

Birthrates: The Starting Point

After the Great Recession (2007-2009) there was a dramatic decline in U.S. fertility rates and the number of children born. In 2000, there were more than 4 million live births in the US and about 65 births per 1000 women (aged 15-44). By 2024, those numbers had fallen to 3.6 million and 54. Put another way, it takes about 2.1 children born to each woman for our population to remain stable (assuming net migration is zero). By 2024, the fertility rate for US women was 1.62.

Holding immigration constant, this decline means fewer 18-year-olds – and as one observer put it “if they weren’t born, they can’t go to college”. But there is more to the college enrollment story than the overall decline in the US birthrate reveals…

College-going rates vary considerably with race/ethnicity, family income, and education level of parents, among other demographic factors. Immediate college enrollment rates (2022) for Asian students were about 74%, while they range from 58-64% for Hispanic, Black, and White students. Children of the highest household income quartile are about 30 percentage points more likely to be enrolled in college that those from the lowest income quartile (83% vs 52% in 2020). So, *where* the birth rates are declining matters a lot for college enrollment.

While the birth rate declined across all racial/ethnic groups, the decline was most pronounced among Hispanic women. The decline was more modest for White women, but they also report the lowest birth rates over most of the past 30 years.

Source: Cato.

Looking at household income, the steepest birth rate declines were in lowest household income quintile, with the decline much more modest for the highest income quintile - but like race/ethnicity, differences in birthrates across household income levels have narrowed. Birth rates also declined across all levels of the mother’s education, but the sharpest declines were reported for women who did not finish high school and college educated women.

The most dramatic declines in birth rates post Great Recession have been with some of the groups least likely to attend college. How does this complex set of demographics impact the number of high school graduates and the proportion of those graduates that do attend college?

WICHE Projections of High School Graduates

WICHE’s (Western Interstate Commission for Higher Education) develops projections of the number of high school graduates (Knocking at the College Door) every four years, with the most recent released in 2024.

According to WICHE data, the number of high school graduates will fall by roughly 6 percentage points by 2030 and 13 percentage points between now and 2041, with the sharpest declines coming in the late 2020s and mid 2030s.1

Note: Change in Number of High School Graduates 2023-2041 relative to 2023. Source: WICHE

The decline in high school graduates is not evenly distributed across the US. The Northeast (-17%), Midwest (-16%), and West (-20%) are expected to experience sharp declines by 2041. The South on the other hand, will see their number of high school graduates increase by 3% over the period. The number of high school graduates is projected to increase between now and 2041 in 10 states and will be flat (2) or decline (38) in the rest.

You can drill down on the WICHE data by state, by race/ethnicity (public schools only), by type of school, etc. Projected high school graduates are obviously helpful when thinking about higher education enrollment, but we are more interested in how many of those high school graduates will actually enroll in college and where they will go.

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Grawe: Modeling College Enrollment

Nathan Grawe, an economist at Carleton College, goes a step beyond the WICHE forecasts of high school graduates. Grawe developed projections of the number of domestic 18-year-olds likely to attend college (Higher Education Demand Index (HEDI)), by type of institution, by geographic region, and by racial/ethnic groups – beginning in 2019. His work does not include international students or adult/non-traditional students; total enrollment also depends on these groups.2

Grawe’s projections go out to 2035, but we’ll focus on his projections for the next 5 years to 2030 here. Overall, he projects a 12-percentage point drop in the number of 18-year-olds entering college over the 2025-2030 period.

Note: ‘Age 18’ shows Grawe projections for total number of 18-year-olds in US, relative to 2018. ‘College-Going’ shows Grawe projections of 18-year-olds that will attend college immediately after high school, relative to 2018. Source: Author generated from Grawe data.

Grawe’s projections have been widely cited in part because they suggest dramatically different futures for different types of universities, and across geographies and students.

• Two-year community colleges are expected to see a 14-percentage point decline in the number of 18-year-olds in their entering class over the 2025-2030 period. ‘Regional’ universities, those outside the top 100 national universities or liberal arts colleges as ranked by US News and World Report, will see an 11-percentage point decline. The decline for ‘National’ universities, 51-100 on the USNWR list, is projected to be 9 percentage points, and for ‘Elite’ universities, 1-50 as ranked by USNWR, 6 percentage points.

Note: Shows changes in projected 18-year-old enrollment by type of institution, relative to 2018. Source: Author generated from Grawe data.

• In general, declines in the traditional entering cohort are more pronounced in the Northeast and the Midwest, relative to the South and the West, with these differences particularly notable for national universities

• Nationally, relatively fewer White, Black, and Hispanic 18-year-old new college students are forecast in 2030, with an increasing number of Asian American high school graduates entering college. The projections by race/ethnicity look a bit different for National and Elite universities and these universities are projected to have more diverse student populations as we approach 2030. Note that Grawe’s projections predate the current federal and state focus on eliminating DEI initiatives.

The Assumptions

Of course, Grawe’s projections are based on a set of assumptions:

• College-going rates across demographic groups remain constant.

• Cross-state migration and international immigration levels are maintained without significant changes.

• Students continue to attend college close to home.

• Economic conditions and public policy remain “normal.” Grawe doesn’t model recessions, free college programs, FAFSA disruptions, Supreme Court decisions, etc. (And, importantly, his projections were developed pre-COVID.)

Given these assumptions, we see five factors that would lead to less pessimistic projections and/or lessen the impact of fewer 18-year-olds on enrollment:

• An increase in the college-going rate within demographic groups.

• An increase in the number of immigrants coming to the US.

• An increase in enrollment of international students.

• An increase in college completion.

• An increase in adult learners.

Let’s briefly look at each in turn.

College-Enrollment Rate

The national immediate college-enrollment rate has declined slowly since 2012, from 66% to 62% in 2022. Almost all of this decline is due to a decline in the rate for 2-year colleges – slipping from 26% in 2018 to 19% in 2022. The college-going rate has ticked up slightly to 45% for 4-year universities but has been quite stable over time.

The difference in immediate college-going rates across race/ethnicity has narrowed over time for White, Hispanic, and Black students – with the rate much higher for Asian students.

Given these trends, and all the questions being raised about the value of higher education, it is difficult to believe we will see a dramatic jump in the proportion of 18-year-olds choosing to attend college over the next five years.

Immigration

The current administration’s immigration policy is having the targeted effect and net international migration has dropped dramatically over the past two years – approaching 2020 levels. Barring a radical and highly unlikely change in policy, new immigrants won’t boost the number of 18-year-old college students.

International Enrollment

While the overall number of international students had been increasing since the dramatic drop post-COVID, Fall 2025 was a mixed bag. The number of undergraduate international students was up 3.2%, while the number of international graduate students was down 5.9%.

A recent Chronicle analysis reported the number of F-1 student visas declined 36% in the critical May-August 2025 period. Given the current administration’s visa policies and general attitudes toward international students, one is hard pressed to see this negative enrollment trend with international students turning around soon – if ever.

Completion

One important way to maintain or increase total enrollment in the face of a declining entering class is improving retention and completion rates. (Of course, shortening time to degree, all other things equal, can shrink enrollment!) And, as we have discussed in earlier posts, there is plenty of room for improvement.

The national 6-year completion rate is about 61% - 4 in 10 students who start college finish in 6 years. There has been some improvement over time – the number was 56% for the 2008 cohort. But, the completion issue has been with us a long time and improvement has been modest. Whether universities can improve retention and completion enough to offset the decline in 18-year-olds is an open question.

Adult Students

Another way to offset a decline in traditional students is to target and serve older students/working adults. What are the prospects with this group?

An enrollment study by the National Center for Educational Statistics forecast *TOTAL* Fall 2030 enrollment and came to a different conclusion than WICHE and Grawe – reporting a 2.5 percent increase in 2030 over 2025 levels. The NCES study made different assumptions about 18-year-olds, accounting for some of the difference.

But another difference is the NCES study includes adult learners and projects an additional 500,000 students in the 24 and over age group over the 2020-2030 period (about 3% of current enrollment).

Increasing adult learners could be one way colleges can offset the decline in traditional undergraduates.

Has Grawe Been Right?

We now have a few years of data to look at this question. The National Student Clearinghouse started reporting 18-year-old first-year students in 2019 and that data can be compared with Grawe’s projections (which were made in 2018).

Note: Compares Grawe projections with actual college enrollment of 18-year-olds for available years, relative to 2018. Source: Author calculations based on NSC and Grawe data.

2020 and 2021, the COVID years, pushed actual 18-year-old enrollment down substantially below Grawe’s estimates (he had not factored in the pandemic!). His estimates post 2021 are more optimistic as a result but track pretty closely with actual 18-year-old enrollment – picking up the 2025 uptick is notable. That said, the real test begins in academic year 2026 when Grawe projects steep enrollment declines.

What about Fall 2026 Applications?

The Common Application reported that on January 1, 2026 Fall 2026 applications were up 4% from year earlier levels. Growth rates were highest among low-income students, Black students, and rural students. International applications were down 7%.

It is important to note the Common Application represents about ½ of all undergraduate applications nationally, but a far higher percentage of applications at private and highly selective public universities. Likewise, a much lower percentage of applications to open-access, community colleges, and regional publics are through the Common Application. These institutions are where enrollment pressures have been most pronounced – so stay tuned.

Upshot

Higher education is not plunging over an enrollment cliff, but it is sliding down an enrollment hill. With fewer total 18-year-old high school graduates, colleges are competing for a shrinking pool of traditional beginners.

Two-year schools, broad-access institutions, tuition-dependent privates, and many regional publics look to be hardest hit. These institutions may respond by rethinking tuition, recruitment, program offerings, and student support. If such strategies don’t work, shrinking, merging, and closing may be the outcome.

Highly selective institutions *MAY* remain somewhat insulated, but actions taken by those institutions struggling with enrollment issues could well impact the more selective institutions as well. Tuition cuts, actions by states to keep more students at home, 2-year schools offering 4-year degrees, 4-year schools offering 3-year degrees – the actions of desperate (and innovative) competitors could have implications for national and elite universities despite the trends in their favor (or at least not as unfavorable!).

Faced with declining numbers of traditional students, colleges may try (harder) to broaden their reach—recruiting older students, adult learners, and nontraditional students who historically haven’t been targeted. This could be great for adult learners, but it also means different needs, services, modalities - and if everyone does this…

The demographic cliff (or hill) is real, but its consequences depend on how higher education responds — how institutions adapt to smaller, and more diverse, cohorts of 18-year-olds; how they approach retention and completion of those they enroll; and whether or not they can be successful with adult learners.

Next Week

We will give you a Spring Break reprieve! After Spring Break, we have a series on academic leadership planned, taking a look at a set of leadership issues: managing your team, managing communication, managing time, and building trust.

Our guest co-author this week is Marley Heritier, graduate student in Agricultural Economics at Purdue.

Finding Equilibrium” is coauthored by Jay Akridge, Professor of Agricultural Economics, Trustee Chair in Teaching and Learning Excellence, and Provost Emeritus at Purdue University and David Hummels, Distinguished Professor of Economics and Dean Emeritus at the Daniels School of Business at Purdue.

The Important News…

Last week, Oklahoma Governor Kevin Stitt signed an executive order prohibiting public universities that do not hold R1 status from granting tenure to faculty going forward. Faculty who already hold tenure would not lose it, but they would be subject to post-tenure review. While the University of Oklahoma and Oklahoma State retain the right to grant tenure, tenured faculty at these two institutions will be subject to post-tenure review on an interval not exceeding 5 years.

This action comes on the heels of rising skepticism about, and restrictions on, tenure around the country. Multiple bills have been put forward that sought to end tenure or enforce a much more stringent post-tenure review. Taylor and Watts tracked 13 bills in 6 states (one Oklahoma) over the 2012-2022 period that would ‘eliminate tenure protections within all or part of a public higher education system’. Florida has adopted an aggressive post-tenure review policy, along with at least 10 other states including Georgia, Hawaii, Ohio, Nebraska, and, yes, Indiana.

So, the fire has been smoldering for a while – but with this Oklahoma Executive Order the ‘ban-tenure movement’ now has a flame…

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Some Background on the Issues

We don’t think this is the last state government move on tenure: Oklahoma is likely the first domino to fall. We think this is bad policy, not just for the faculty or the universities involved, but bad for the students and bad for the states that adopt them. We could give you 10,000 words on this subject, but luckily, we already wrote about tenure in some depth last year.

• The What, Who, How, and Why of Tenure: We provided data on tenure, and explained what tenure is and what it is not (spoiler alert: tenure *is not* a lifetime employment guarantee.)

• The Arguments Against Faculty Tenure: Critics assert that faculty productivity declines post-tenure; that tenured faculty reduce budget flexibility; that tenured faculty slow/stop needed change at universities; and that universities should run more like a business (and businesses don’t have tenure). We don’t believe the facts back any of these arguments.

• Economic Arguments for Faculty Tenure: We argued that tenure links faculty performance to university success; it incentivizes the service work needed to move a university forward; it provides an incentive for the investment in time required to master a narrow discipline and to address the spatial and temporal risks faculty face. The latter point is essential in attracting talent to academe.

• Faculty Tenure and Academic Freedom: Tenure plays a key role in protecting academic freedom, but what is academic freedom? (Another spoiler alert: academic freedom *does not* give a faculty member the right to say and do anything they please). We talked about why academic freedom is valuable; why is it under fire; how academic freedom plays out in practice.

• Faculty Tenure: A Better Way: We outlined a set of ideas for how universities can respond to criticisms of tenure - including a proposal for a better post-tenure review system.

What is Behind This Current Moment?

As we argued last year, it starts with a flawed understanding of what tenure is and what it is not, and a failure to recognize that higher education has been moving away from tenure for decades. In 1987, about 53% of the (non-medical) faculty in the US were full-time, tenure-track/tenured. By 2022, only 1 in 3 faculty in the US held tenure or were on the tenure track.

Source: AAUP

Beyond this general context, we think the movement to ban tenure is driven by five related beliefs:

1. Concerns about the cost of higher education and the incorrect belief that there is a lot of money to be saved by eliminating tenure protections.

2. A belief that tenure enables faculty undue leverage in political governance at universities and misguided influence in the classroom.

3. A belief that tenure insulates faculty from the consequences of low productivity, and that universities don’t already hold faculty accountable. To quote Governor Stitt: “No job funded by taxpayers should be exempt from regular, meaningful performance reviews, whether you’re the governor or you are a university professor.”

4. A declining belief in the value of university research, particularly research outside of the STEM disciplines.

5. The belief that university education is fundamentally similar to K-12 education, in terms of the way they are produced, the characteristics of faculty needed to produce them, and the merits of direct government intervention in their production.

On these last two points, policies that strip tenure protections are first cousins to the new teaching load mandates we are starting to see enacted across the country, and to the expansion of community colleges into offering four-year degrees.

If you don’t value research, why not eliminate institutional arrangements (teaching loads that provide faculty time to engage in research, the ability to take high-risk gambles on pathbreaking discoveries) that facilitate it? If you don’t value faculty engagement in community/service activities, mandate faculty teaching loads that are high enough to ensure faculty do one thing: teach.

And if you don’t think college-level teaching requires faculty with research credentials and ongoing research agendas, why not require faculty to teach material well out of their expertise or dramatically expand the set of people authorized to offer bachelors degrees?

We wrote about teaching load mandates last fall:

• Should Faculty Teach More?: We took a look at the cost issue: are instructional costs the boogeyman when it comes to the increasing cost of college; what are typical teaching loads; and where do faculty actually spend their time?

• The Unintended Consequences of Mandated Teaching Loads: We explored what it takes to teach well – and what has to give if faculty are required to teach more than they do today.

As part of our work on this topic, we also talked with Megan Zahneis at The Chronicle for her recent article on teaching mandates.

Last fall, we also wrote about the value of university research, not just for curing cancer or other pure scientific reasons, but for a host of additional reasons - including benefits at places that are not renowned for producing research at the very highest levels. Some of these benefits include ensuring teaching faculty stay current in their fields and in preparing the next generation of human talent. Undergraduate research is one of the highest impact teaching practices on a university campus. Pretty tough to lead an undergraduate research project if you aren’t doing research yourself…

But Wait, There’s More!

Now, Governor Stitt issued a second Executive Order that we believe will make a far bigger impact on the quality and cost of education than banning tenure – and will provide evidence on the impact of a tenure ban.

This Executive Order is focused on moving to a performance-based funding model for Oklahoma’s public universities; collecting and reporting wage and outcome data for college graduates; and asks for a feasibility study on accelerated baccalaureate degrees.

We will hold the 3-year baccalaureate degrees for another day. But, we have written on the need for more and better information on college outcomes and how that kind of data can help students and their families make more informed decisions. Flush with better data and the competition it will enhance, the market for higher education can bring focus and discipline to resource allocation decisions on campus – in ways trying to comply with some ban on tenure or teaching mandates never will.

In addition, such data will tell us something about whether or not this move to ban tenure has any appreciable effect on student outcomes. Maybe we are wrong…and it just won’t matter. But the ability to systematically test that hypothesis may be the best thing to come out of this experiment.

Closing Thoughts

Look, we believe in accountability. We believe in making a college education more affordable. We believe students deserve an education that prepares them for a successful career.

But we don’t believe that micromanaging universities, banning tenure, and mandating teaching loads is the way to get there.

Governor Stitt’s second Executive Order takes a step in the direction of holding universities accountable through the outcomes they produce. Now that is an approach we can get behind.

What’s Next?

Well, our plan is to launch a series on college athletics Friday – but we’ll see what the rest of the week brings... Thanks for reading Finding Equilibrium!

Finding Equilibrium” is coauthored by Jay Akridge, Professor of Agricultural Economics, Trustee Chair in Teaching and Learning Excellence, and Provost Emeritus at Purdue University and David Hummels, Distinguished Professor of Economics and Dean Emeritus at the Daniels School of Business at Purdue.

(The post got a lot of reads and generated a lot of interest. If you’re enjoying and learning from these posts, please share with your colleagues and friends and encourage them to subscribe!)

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In this post we discuss the unintended consequences of mandating increased teaching loads. Last week we talked about the Faculty Survey of Student Engagement from the Indiana University Center for Postsecondary Research, which surveys thousands of faculty at universities nationwide. They report that tenured and tenure-track faculty spend 25.3 hours a week teaching and advising students, 9 hours doing research and 9.7 hours providing service, for a 44-hour work week. (The faculty we know work a lot more than that!)

If you require that faculty teach more, they have three ways to compensate for this added commitment. They can conserve on teaching time per class. They can minimize engagement and service commitments. Or they can cut back on time invested in research. Let’s take each in turn.

Load Mandates Increase Course Preps

We are strong proponents for the idea that universities must elevate their teaching and learning mission and create incentives and structures that support that goal. The problem is that teaching quantity is the enemy of teaching quality.

Many of the costs to deliver a course are paid per course prep as opposed to per credit hour. If you are assigned four course sections to teach, the time saving strategy is to repeat the same course four times rather than teach four different courses one time each.

That can work if you are teaching at a large public university, or if you are teaching an introductory course in which very many students enroll and are spread across multiple sections. It works poorly if you are at a smaller school or you are teaching upper division electives with smaller enrollments. And increasing teaching loads makes the course prep problem worse.

Think about this simple example. A degree consists of 40 3-credit hour courses, roughly 16 “core” classes common to many students, and 24 courses specific to a major taken during the sophomore, junior and senior years. Suppose the university has 600 students in a major, each taking 8 major-specific courses a year, or 4800 course enrollments. If students are spread evenly across courses, the university can form four sections of 50 students in each of the 24 distinct courses. If 12 faculty are employed teaching four undergraduate courses a year, they each get two preps repeated twice a year.

Enter the state mandate: everyone has to teach six classes a year. Perhaps the university could use the extra teaching capacity to increase enrollments by 50%. Unfortunately, most of the universities that would look to increase teaching loads are fighting to maintain their current enrollment – or worse, losing enrollments. So upping teaching loads means two things: the university can get rid of 4 faculty and each of the remaining 8 faculty members now has to prep 3 classes to cover the 24 distinct courses needed for the major. Increase teaching loads again to eight classes a year and the university is down to 6 faculty, each prepping 4 distinct courses.

All that assumes universities respond to state mandates by holding class size fixed. If sneaky administrators let class sizes fall, instead of 4 classes of 50 each, faculty could teach 8 classes in sections of 25. This doubles faculty time in the classroom and meets state mandates, while having no impact on the overall cost of instruction.

And then we’re into a game of regulatory Whac-a-Mole, with teaching load mandates followed by minimum class size mandates, and enrollment minimums for majors….

The larger point: fixing enrollments and class sizes means that an increase in teaching loads will result in a double whammy on faculty time, both more time in the classroom and potentially much more time preparing distinct courses.

But should we care if faculty have to prep a lot of distinct courses?

Standardized Textbooks and Depth of Faculty Expertise

How much time and effort faculty invest in course preparation depends heavily on whether the course has available a high-quality textbook. Lower division courses with high enrollments usually have some textbook, for which a student may pay several hundred dollars. That seems like a lot of money for a book, but what students are buying is time savings for the professor.

Generally speaking, textbooks are an excellent tool for supplying a medium quality learning experience.

(A brief co-author exchange on an earlier draft of this post…

Jay: I co-authored a new textbook that was just published. I think that statement is a bit harsh.

David: Not *Your* textbook of course. I’m sure that’s a high-quality learning experience. 😊 What I mean is that textbooks provide a quality floor, even for faculty without deep expertise in the subject matter. But they aren’t in most cases elevating the ceiling.

Now….back to our post.)

Textbook authors have done the heavy lifting of deciding what is covered and what is not covered (which, if you haven’t tried to design a course, can be exceptionally hard). They have thought through course progression, simplified pedagogy for broad understanding, drawn out “real-world” examples, provided focus questions or practice problems to guide reading. For larger enrollment courses they may provide frequently updated banks of homework and exam questions and even PowerPoint slides.

The rise of these all-inclusive textbooks corresponds to the falling share of tenured and tenure-track faculty in the professoriate. Why? Teaching faculty tend to have both higher teaching loads, and for reasons we’ve just described, a large number of course preps each year.

A lecturer in Economics, e.g. might teach Microeconomics principles courses, but also be asked to teach Labor Economics, Money and Banking, and International Trade. (And in small enrollment schools, that person might cover Economics, and Marketing, and Finance.) Nobody is an expert in all these things!

Covering multiple preps often means teaching content disconnected from your research expertise, and for which you have little time to stay abreast of developments in the field or current events in the world. So, faculty become dependent on the textbook, as opposed to developing a deeper and independent understanding of what’s happening in the world.

That may be fine for fields that are completely static. But it’s a problem in fields where the research frontier is steadily moving forward, or where relevant events in the real world evolve rapidly. Textbook revisions are slow and time consuming and expensive. (Publishers’ main interest in issuing new editions is not maintaining currency, but rather killing off the resale market in used textbooks.) If you do not engage in research in a closely related discipline and invest time to stay abreast of rapidly evolving world events, you will be teaching students dated material.

We talked about this issue when discussing the value of university research for its education mission, and the fascinating recent paper by Biasi and Ma, “The Education Innovation Gap”. They used natural language processing techniques to discern how far course syllabi are from the frontier of knowledge in a field, and found that research active instructors teach more frontier knowledge. And that students from institutions with smaller gaps between the course content and the frontier earn more and are more likely to become innovators (patent holders, earn doctorates,..) themselves.

Real Excellence in Teaching

Beyond the challenge of keeping up with the field, exceptional teaching demands committing the time to identify and deploy the appropriate pedagogy for the course/students. It means creating and evaluating activities that are experiential and offer opportunities to solve open-ended problems. It means assessment activities that evaluate employer-demanded skills such as critical thinking, oral and written communications, and complex problem-solving. It may mean bringing in a curated set of outside experts into the classroom, or taking the class to the field to experience the course material where is it being applied. All of this goes beyond putting to work the textbook and the ancillary materials supplied with it.

But that is a tough thing to ask of faculty whose professional rewards are not strongly tied to innovative teaching, especially if those faculty are expected to deliver multiple distinct course preps in a heavy teaching load.

Minimizing Service and Engagement Commitments

We also believe that universities need to ask more of their faculty when it comes to service and engagement. And again, quantity is the enemy of quality.

Universities are unusual in that they ask the primary producers of their main outputs (teaching and research) to also engage in a wide range of HR and product development activities. In addition to time in the classroom and scholarship, faculty hire, mentor, and make promotion decisions for other faculty. They create and update curriculum. And they serve in a wide range of other administrative roles necessary to keep the university functioning.

You can see this in the FSEE survey data, where faculty report spending nearly 10 hours a week on these activities. But as we discussed in our post on faculty tenure, it is extremely hard to monitor the quality of the service work faculty put in. If you mandate a very heavy teaching load, they are likely to respond by minimizing effort on the critical work whose quality leadership and the legislature can’t observe.

Similarly, for many universities, and especially land-grant universities, faculty are asked to create and deliver programs that engage the university’s stakeholders and communities. This may involve educational activities delivered to non-student audiences, decision support for state, county, and city governments, service activities for non-profit organizations, and economic development support. Engagement can be a big line item – public service in public doctoral institutions comprises 7.4% of overall expenditures. Like internal service, the quality of external engagement is difficult (but not impossible) to monitor. Mandated teaching loads will crowd out this work – and the benefits it provides the broader citizenry – at a time when higher education needs strong and positive relationships with its varied stakeholders.

Of course, you could strip these service and engagement duties away from faculty to make time for more teaching, either by handing them to staff members or not doing these tasks at all. That’s generally a bad idea when it comes to tasks that require highly specific knowledge sets. Relying on staff or administrators to hire, mentor, and promote faculty or develop curriculum will not work — you need to be an expert in a discipline to recognize another expert in a discipline or to map that expertise into learning experiences. And if engagement requires research expertise/deep disciplinary knowledge, subcontracting it is similarly problematic.

But there are some activities you could (and we do) subcontract. Many universities have moved the primary responsibility for student advising to full-time staff. Other important student support activities such as tutoring/supplemental instruction, co-curricular support, and career guidance, among others have been successfully sub-contracted to staff. But staff are busy too, so asking them to do more means hiring more - a practice derided in many quarters as “administrative bloat”. So, hiring more staff is a particularly tough ask for universities looking to balance budgets by upping teaching loads.

Minimizing Research Time

Faculty have many options to respond to increased teaching loads by reducing the quality of their teaching and the quality of their service/engagement. But the main impact will likely be felt by reducing - or at many universities eliminating entirely - research output.

That might seem like a good idea to many legislators for whom supporting research, rather than simply educating citizens for the workforce, probably seems like a luxury. It is almost certainly an inevitability for faculty whose teaching time had been substantially reduced by federal grants. That may be bad for the research enterprise, but it’s a pretty reasonable thing to expect if those federal grants disappear.

To see what effect we think that will have on the mission of higher education, we direct you to our recent posts on the value of university research. TLDR: it’s a bad idea.

Mandates v. Letting Competition Sort Things Out

The move to mandate increased faculty teaching loads is understandable in light of budgetary pressures and a lack of understanding of what faculty do. But we think external mandates on teaching loads make little sense. The primary consideration is that mandated quantity is the enemy of quality. We should be working to increase the quality of work faculty do, whether teaching, research or service. But apart from this, there are a host of practical considerations.

• Contrary to mistaken common wisdom, college costs are no longer rising and faculty expenses are falling… both absolutely and as a share of overall costs. One reason is that universities have already increased the effective teaching load per faculty by switching their hiring away from research-oriented faculty and toward clinical/lecturer faculty for whom teaching is a full-time responsibility. We do not believe this can be pushed much further than it already has without compromising the very meaning of the university.

• Fixed external mandates are difficult to reconcile with the wide variation in the types of faculty universities employ, the field-specific teaching they engage in, and sizes of classes they offer. Universities will effectively game any set of mandates laid down, leading to an endless series of regulatory Whac-a-Mole.

• Mandates freeze the current credit-based/faculty-delivered model in the spirit of needing to meet a set of state directives. University administrators will focus on how to meet the requirements, instead of rethinking more effective approaches for delivering instruction.

Our view is that universities are in the best position to decide how much faculty teach and who teaches what. Budget and enrollment realities – and perhaps the new federal research funding reality – will continue to push universities to rebalance teaching portfolios and rethink how teaching is done.

Letting universities sort this out themselves is not in any way about diminishing accountability. Instead, it’s a recognition that competition between universities can bring innovative change that government mandates will not.

Next Week… We begin a series of posts about how new artificial intelligence tools are changing the workforce and their implications for university strategy and curricula.

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Finding Equilibrium” is coauthored by Jay Akridge, Professor of Agricultural Economics, Trustee Chair in Teaching and Learning Excellence, and Provost Emeritus at Purdue University and David Hummels, Distinguished Professor of Economics and Dean Emeritus at the Daniels School of Business at Purdue.

In this post and the next we take a careful look at this teaching mandate and its implications for universities. This week we’ll address three questions.

• Are the Wisconsin and Utah situations unique, or should we expect more state teaching mandates to come?

• What problem are teaching load mandates trying to solve?

• How do faculty spend their time and why does teaching well take so much time?

This May Be Just the Beginning

The Wisconsin mandate was touted as an effort to lower the cost of college education in that state, the Utah effort aimed at ensuring universities ‘focus on their most important job: educating students’. They may be a harbinger of things to come, with far reaching consequences for higher education nationwide.

Why? First, Wisconsin’s was a bipartisan effort to reduce costs, in contrast to the interventions in DC and in state-houses across the country that appear largely driven by the GOP. Second, very few people understand how faculty spend their time or the work that goes into producing a high-quality course. As a result, standard teaching loads (particularly at research institutions) appear to represent a shockingly low commitment to the work of the university.

Third, the Manhattan Institute, which has become increasingly influential in the politics of higher education, has called for faculty to teach more. Fourth and finally, federal cuts to research funding have birthed twin problems: cutting expenses and finding something to occupy the time of faculty previously bought out by federal grants. Increasing teaching obligations could be the stone that kills both birds…. provided these universities find enough students to teach.

What Problem are We Trying to Solve?

As we’ve written in previous posts, complaints about the rising costs of and falling returns to higher education have become so ubiquitous that they obscure fundamental truths: the real cost of attendance at universities have been falling for a decade and the returns to higher ed have held steady for three decades.

But what do we know about how universities have managed the cost of faculty?

We’ll focus here on four-year public universities, since these are the ones most likely to be affected by political mandates, and share a few key datapoints from IPEDS.

• Since 2002, the number of students enrolled per full time faculty has risen from 31.4 to 34.

• Since 2016, inflation-adjusted average faculty salaries have fallen. Holding fixed faculty rank and type, faculty salaries have fallen 4% in doctoral institutions and 7.5% in masters/bachelors institutions (and a whopping 14% for tenured full professors in these more teaching-oriented institutions).

• The number of faculty with research responsibilities (i.e. tenured and tenure-track faculty) have fallen from 53% of the national faculty workforce in 1985 to 33% in 2021. This means that 2/3 of the faculty headcount nationwide is focused primarily on teaching.

• Putting all that together…since 2016, instructional expenses per student have fallen steadily, whether measured on a per student basis or (more noticeably) as a share of total expenditures.

Source: IPEDS. This graph separates institutions by highest degree offered.

Given these numbers, if you thought higher education had a cost problem, perhaps trying to squeeze more teaching out of faculty would not be the first place you’d look!

What about spending on research, instead of teaching? Here, it’s important to note that (most) students have many choices when to comes to deciding what university they want to attend. There are 2614 four-year institutions in the US. Of these, 187 are designated “R1: Very High Research”, and another 139 are designated “R2: High Research Activity” by the Carnegie Classification. So if one wants to avoid a university that expends resources on research, 7 out of 8 4-year college options out there do just that. That said, enrollments in the more research-intensive universities are growing while others shrink, so perhaps avoiding research institutions is *not* what students want.

Of course, whether costs are going up or down or sideways, a state can choose to support its higher education institutions less generously if it wants. There are plenty of other places to spend citizens’ tax money. Supporting activities other than teaching at the university (such as research or engagement), rather than simply educating citizens for the workforce, probably seems like a luxury to many legislators. Especially if that shift enables these universities to sharply lower their faculty headcount and push faculty expenditures even lower than they’ve already fallen.

As we highlighted in our last few posts, we believe there are outsized returns to the research and engagement missions of universities. But, if you place zero value on anything faculty produce other than teaching, it probably seems pretty reasonable to lower costs further by increasing teaching loads.

What are Typical Faculty Teaching Loads?

Most universities that teach on a semester basis describe teaching loads in terms of the number of “three-credit hour” courses a faculty member would offer, with a typical undergraduate student taking 5 courses (15 credit hours) a semester over the course of four years to complete a 120-credit hour degree.

The Wisconsin legislature mandated that faculty in its research-oriented institutions in Madison and Milwaukee teach a 2/2 load (i.e., two three-credit-hour courses each semester), and that all other universities in the state teach a 4/4 load.

Are these loads typical? That is a surprisingly hard question to answer, as institutions do not provide data that would make comparisons possible. The only systematic information we could find comes from the Faculty Survey of Student Engagement from Indiana University Center for Postsecondary Research, which surveys thousands of faculty at universities nationwide.

The list of universities surveyed is not a large share of American higher education, and is not perfectly representative at that. But one can drill down into their data tables to look at teaching loads for faculty at different ranks at universities of differing research (and therefore teaching) intensity.

Focusing only on full-time faculty, the FSEE survey reports these average teaching loads per academic year:

• tenured and tenure track faculty at doctoral institutions (4.95 classes: 4 undergraduate);

• tenured and tenure track faculty at masters/bachelors institutions (6.24 classes: 5.3 undergraduate

• lecturers for all institutions (6.2 classes, 5.8 undergraduate).

These numbers are roughly similar in their 2014 and 2024 surveys.

We should be clear that teaching load data are very difficult to interpret. Within institutions teaching loads might vary between colleges and departments based on disciplinary norms and the need to compete for top talent. Even within the same department and faculty rank, the same number of courses taught can mean very different things depending on whether you have graduate or undergraduate students, prepare one course or many, assign writing or experiential projects instead of multiple-choice exams, have a lab associated with the class, or teach 20 students in a ‘class’… or 500 or 1000. (The FSSE data make clear that lecturers teach *much* larger classes on average.)

That said, these data are consistent with our personal experience and conversations with other leadership within and across institutions. Research-intensive universities tend to have lighter teaching loads. Departments that attract large federal research grants have lighter teaching loads. Non-tenured clinical and lecturer faculty without research responsibilities have higher teaching loads. And as the share of these faculty in overall ranks grows steadily… it is very likely that the average teaching load per faculty has risen over time at many universities.

How Faculty Spend Their Time

Public misunderstanding of what faculty do with their time is a major vulnerability for universities. We might be on an island someplace sipping rum drinks if we had $1 for every time we have been asked ‘what do you teach’ – and when we answered got the follow-up question ‘what else do you do’? In the public imagination, faculty are primarily teachers and it follows that they should primarily spend their time teaching.

But of course, university faculty also have service and engagement and research responsibilities, and a fixed number of hours in a day. The FSSE survey reports this breakdown of time across these broad activities. The chart below shows averages across all full-time tenure and tenure track faculty, across all institution types. Teaching and advising students comprises 25.3 hours a week, research 9 hours, and service 9.7, for a 44-hour work week.

Source: Faculty Survey of Student Engagement from IU Center for Postsecondary Research

If we focus only on research-intensive R1 and R2 institutions in the survey, we see similar aggregate numbers but more focus on research: 12.3 hours a week. (An anecdotal observation: we aren’t aware of many tenure-track/tenured faculty at our research-intensive university that only work 44 hours per week…)

Time in the Classroom…Or Something Else?

What is it about college teaching that takes all this time?

Let’s take a 2/2 faculty teaching load, that is, teaching two-3 credit hours each semester. If we count only the contact hours in the classroom, 16 weeks in a semester multiplied by 2.5 hours of in class time represents 40 contact hours per 3 credit hour class. Multiply that by 2 classes to get 80 contact hours… why, that’s only two weeks of work spread over 4 months! If you double a 2/2 teaching load to 4/4, that’s only a month of work spread over 4 months. Sounds like a great gig!

The problem of course is that in-class contact hours are just the tip of the iceberg – if teaching is done right. It starts with course development and extensive lecture prep. There are office hours to meet students and answer their questions. Securing and hosting guest speakers. Creating and managing experiential learning activities/laboratory experiences. Updating the Learning Management System (LMS). Satisfying an ever-growing list of university and government certifications and regulations. Creating and grading homework, papers, and exams that both build and accurately assess student capabilities (a much harder chore with GenAI providing a universal cheat code).

There are also opportunities to invest wildly disproportionate amounts of time in a small number of students. That includes supervising thesis research (a very labor-intensive task undertaken by conscientious faculty with no direct teaching “credit”) or writing a thoughtful letter of recommendation (or 10) to help a student secure employment or a place in grad/professional school. Or, less happily, dealing with students who have violated academic integrity or are unhappy about the course.

Oh and, it would be nice to stay up to date on the material that forms the basis of the class content. That alone could be a full-time job if you let it!

What does that all add up to? Turning again to the FSSE data, and again focused on full-time tenured and tenure-track faculty, survey respondents report the following time investment in teaching and advising activities. These averages (totaling 32 hours a week for tenured and tenure track faculty in doctoral institutions and 38.5 per week for TT faculty in BA/MA institutions) seem pretty high to us, and they are quite a bit higher than the aggregate teaching/advising commitment hours reported by the same respondents above. But the distribution of time spent on different activities seems about right, with actual time in class representing less than one-third of total time investment.

Source: Faculty Survey of Student Engagement from IU Center for Postsecondary Research

As Deans we used a rough heuristic that a 3-credit hour course that was already fully prepped took a full month, or roughly 160 hours, to deliver. That translates to 40 direct contact hours and another 120 indirect contact hours. Preparing a new course from scratch represents roughly another full month of work. As faculty newly returned from administration to teaching, both now seem like significant underestimates!

So maybe these FSEE data are closer to the truth than what we thought when we were in leadership…

Wrapping Up

So, it takes a lot of time to teach a course well, and faculty jobs include a range of activities other than teaching that keep them fully occupied. So if they are asked to teach more, something has to give.

Next week we’ll come back to this question: suppose a university faced mandates to increase teaching loads. How would faculty respond and how would it affect the ability of the university to deliver on its mission?

Finding Equilibrium” is coauthored by Jay Akridge, Professor of Agricultural Economics, Trustee Chair in Teaching and Learning Excellence, and Provost Emeritus at Purdue University and David Hummels, Distinguished Professor of Economics and Dean Emeritus at the Daniels School of Business at Purdue.

Last week we analyzed where universities get their money and what they spend it on. We highlighted a series of vulnerabilities: demographics, federal cuts to medical funding, volatility in investment returns, the dependence of state budgets on federal budgets, and universities’ dependence on both. While proposed federal cuts to scientific research have attracted a great deal of attention, these other vulnerabilities may be at least as large.

This week we dig into research funding: who funds university science, how big are the proposed federal cuts, and what alternative sources of funding are available. We’ll conclude with some thoughts on the most likely science funding scenario.

Source of Research Funding in Universities

When we described state and federal funding for higher education last week, we did not distinguish precisely what government funds are being used for. To provide insights on research funding we draw on data collected by the National Center for Science and Engineering Statistics within NSF, both their Higher Education Research and Development Survey and Business Research and Development Survey.

The chart below shows both the aggregate growth in higher education research expenditures in constant 2023 dollars (blue dotted line, units on right axis) and the percentage contributions of federal, state, and institutional fund sources to that overall expenditure (units on left axis).

Source: National Center for Science and Engineering Statistics, Higher Education Research and Development Survey.

Share

Real expenditures on university R&D have grown from just under $3bn in 1953 to $108.8bn in 2023. The federal contribution to those expenditures includes both direct and indirect expenditures; we wrote about the government intention to cut indirect expenditures last spring.) Federal expenditures rose from around 55% of total research spend in the 1950s to a peak at 73% in 1966. It then begun a long slide until, by 2023, the federal contribution as a percentage of the total had returned to 1950s levels.

Still, this represents a massive dollar increase in inflation-adjusted expenditures: from about $1.5bn to $59bn over 70 years. To put this in contrast, federal research spending in universities as a share of the overall federal budget grew from 0.19% in 1953 to 0.87% in 1966 and 0.92% in 2023. As a share of GDP, federal research spending in universities grew from 0.035% in 1953 to 0.155% in 1966 and 0.215% in 2023.

After the federal government, the next largest category is institutional support of research, which has grown to 25% of the total. Think of this in terms of faculty salaries, expenditures on facilities and equipment and materials that are not paid directly or indirectly by other funding sources. Where does this ‘institutional support’ come from? Tuition dollars, income on university investments, and state general funds.

The last two categories are state support of research, and business and philanthropic sources. State support has grown in dollar terms but shrunk from around 15% of the total to now just 5%. Business and philanthropic sources are not pictured in the graph, they represent about 14.7% of the total in 2023. That number has fluctuated from as little as 9% to as much as 17.6% of the total.

Research in the Private Sector

In the next chart we compare university research spend with R&D expenditures in the corporate sector. Business R&D has also grown rapidly, from $41bn in 1953 to $719bn in 2022. Basic research, which most closely approximates the work done in universities, represents around 6% of the total in recent years. The $44.7 billion in corporate basic science for 2022 is largely concentrated in the information technology sector and in life sciences. University science is around 2.5 times the amount industry spends on basic research.

Source: NCSES Business Research and Development, various issues.

We aren’t sure whether the new AI data centers being built by the tech giants will count as R&D and if so, which of the research categories they will fit in. But some estimates put the total investment in these data centers at around $450bn this year alone!

If you’re curious about the evolution of funding for science, and the dynamic interplay between federal, institutional, and private funding of research, we highly recommend, “The Changing Structure of Innovation: Some Cautionary Remarks for Economic Growth” by Arora, Belenson, Patacconi, and Suh. They describe how university labs were initially highly dependent on corporate funding, then moved away from these corporate connections as the technological challenges of World War II and the Cold War spurred an explosion in federal appropriations for science.

They also describe how integrated corporate labs (think: Bell Labs, Xerox Parc) that did basic science and applied research rose and then fell from prominence in response to both concerns about their contributions to corporate profitability and the increased availability of university science. The authors argue that this division of labor has not been good for innovation, with corporate labs too cut off from basic science, and basic science in universities too cut off from applied problems that might use that science.

Perhaps current events will spur the reconnection! But for that to happen, corporate funders will need to reconcile new investments in universities and/or basic science more generally with the profitability concerns that caused them to pull back in decades past.

(Toward that end, we note that recent analyses of productivity growth in the US and studies that draw contrasts between rapid US productivity growth and slow European productivity growth reach a similar conclusion. The only parts of the US economy that are experiencing rapid productivity growth are those sectors that actually engage in basic science research.)

The Size of the Federal Science Funding Cuts

We’ll focus here on the overall magnitude of the proposed cuts, but we highly recommend an article from Nature in June of this year that broke down the impact of these cuts on a host of metrics, including: grant recissions; lab equipment sales; conference attendance; lab occupancy; venture capital funding; journal publications; and the pipeline of interested student scientists.

An article in American Progress provides an exhaustive list (as of July 23, 2025) of every university that has had grants already terminated or in the process of being terminated, and their value. All in, they total somewhere in the range of $10.16bn (Treasury estimate) to $11.97bn (DOGE/HHS estimate).

Of course, legal battles are still raging as to the legality of these cuts, and it remains to be seen what additional cuts may be on hand for universities such as Harvard or UCLA that have come in for “special treatment” by the Trump administration for reasons unrelated to the grants themselves.

It is also unclear how much of the cuts to science funding proposed in the Trump administration “skinny budget” will make it into law. That budget called for cuts of $18bn from NIH (37% of total), $5bn for the NSF (50% of total), and $12bn from the Education Department (a mix of research expenditures and funding for student, institution, and teacher support programs).

The skinny budget also called for research cuts in the Department of Energy (14%), NASA (53%), NOAA (24%), USGS (33%), USDA (18%), EPA (46%), CDC (29%), in addition to a host of cuts to smaller agencies. Some of these budget cuts would take the form of ending or consolidating programs, others would cap indirect cost recovery rates at 15%, a topic we tackled in the spring.

If all of these proposed cuts become reality, the American Association for the Advancement of Science reported in July that the overall budget for basic science would fall from $45 billion to $30 billion. If we round up all types of science funding, including facilities, basic and applied science, and development work, overall federal expenditures on science would fall from $198bn to $154bn, a cut of $44bn (22%). We recommend the AAAS real time dashboard on science appropriations, as these numbers are likely to fluctuate wildly in the coming weeks and months.

Now, not all of this would fall on universities – the federal government spends about as much on science outside of universities as it does inside universities. And it is not clear how much of the proposed skinny budget will make it through the actual budget process. For example, as of early September 2025, spending subcommittees in both the House and the Senate had rejected *all* of the proposed NIH cuts, returning funding to 2024 levels. But we are still a long ways from the federal government passing a budget that can find majority support in Congress and the President’s signature.

But let’s work with that $15bn cut to basic science as a reference point. That would represent roughly a 25% cut to federal funding of university science, or around 14% of the overall university research spend. It would bring federal science funding back to levels not seen since 2002-2003. A cut of this size would mean the federal investment in university science as a share of the federal budget (or as a share of US GDP) would fall to levels not seen since the early 1960s.

Are Federal Science Cuts Replaceable?

To understand whether these cuts are replaceable, we have to start by asking how big these cuts are relative to overall university budgets and compare that figure to alternative fund sources. Recall that federal grants (including Pell and research grants) represent 10.8% of funds for private doctoral universities and 12.3% of funds for public doctoral universities. Assuming that federal research funds flow primarily to doctoral universities, cuts of $15 billion are on the order of 2-3% of overall budgets for doctoral universities.

Let’s think about some options to replace these cuts to doctoral institutions.

Private institutions could raise tuition by 10% and public institutions by 20%, essentially charging undergraduates so universities can continue producing science for the public.

Philanthropic and industry funding of university research together represent about 14.7% of current university funding spend. If one could somehow induce a doubling of industry investment in, and philanthropic giving to, university science, that would almost exactly cover the gap that federal funding cuts open.

Alternatively, universities in 2024 received nearly $61.5 billion in giving, 58% ($35bn) of which went for current operations. If they could somehow induce donors to shift an additional one-quarter of that $61.5bn in giving toward research funding and away from another use, e.g. student support, facilities, and/or athletics, that could plug the gap.

None of this seems likely. Large tuition increases are politically fraught. Donor preferences drive where they make their gifts. We had a lot of experience (and success!) in fund-raising roles, and we think this kind of shift in donor focus is highly improbable. That is especially true given all the changes in college athletics (we’ll get into athletics later in the fall).

There is some evidence of foundations stepping up to backstop federal cuts. But, most research-oriented universities already work research foundations hard and barring a sea change in the size or focus of these foundations, it is difficult to see an additional $15 billion from that source.

That leaves industry funding. There may be some potential here, particularly if the funding cuts hammer disciplines that deliver the basic science on which industry depends. The most obvious candidates are the industries that have maintained high levels of basic science funding – medical, pharma, biotech research – where science translates more rapidly to commercial products. Likewise, the tech giants such as Microsoft, Meta, Google, and the new Gen AI companies could make major basic science investments to fund the AI-arms race.

It’s also possible that we will see more industry consortia forming to pool funds for pre-competitive basic research. That happened previously in areas like semi-conductors.

That said, we imagine most corporations interested in university research will take a wait and see approach. First, to determine whether the draconian federal cuts to science actually stick, and second to ride out the macroeconomic uncertainty plaguing the economy. So universities should not expect the corporate calvary to come riding to the rescue any time soon.

If increased corporate investment does arrive, universities have to be prepared for a very different relationship with industry funders than they have enjoyed with federal funders. Industry funding takes years of relationship building with specific corporations before contracting begins. These contracts are one-offs, with billing and contract oversight that require much more time and expense to negotiate and monitor for both faculty and administrators. Industry contracts are based on deliverables and milestones. Which is to say, industry funding typically comes with far more strings than federal funding, in terms of timelines, what is studied, what is paid for, and what can be publicly released.

All this means that if universities do succeed in substantially increasing industry research funding, they will need to invest in different kinds of research support to help faculty understand and deliver against industry expectations. It also seems likely that universities will need to rethink faculty incentive structures, especially how they identify and reward research excellence. Is a professor who can attract mega-contracts to produce proprietary results but no publications doing good science?

The Most Likely Scenario

It seems unlikely to us that universities can identify other sources of research funds to fully replace large cuts to federal funding of science. Instead, they will simply cut expenses, or look for other sources of revenue from non-research sources. How they choose to cut expenses and where they look is really the question.

The most obvious option will be to cut back on the science that was federally funded. In the short term that means hiring fewer post-docs and grad students, not spending on research equipment and materials, deferring maintenance in labs, not building new lab capacity, not filling faculty and staff vacancies. In the medium term it could mean redirecting faculty time away from research and toward teaching. That both absorbs faculty time that can no longer be spent engaging in federally funded research, and increases the teaching capacity of universities so they can either boost enrollment or reduce faculty head count.

But you don’t have to cut science – or at least science doesn’t need to take the full hit. Let’s be honest, there are lots of ways to make cuts and/or grow revenue in universities. Having led in a university that’s had tuition frozen since 2012, and having made decisions within our units to enable that to occur, we know. If the target is something like cutting 2-3% of overall spending to make up for federal research funding, that should be do-able for most research universities…

…Provided that federal cuts to science are the only shoe that drops. If you compound these cuts on top of the vulnerabilities we highlighted last week -- demographic shifts, cuts to hospital revenues, state cutbacks as they respond to federal cuts, variable investment returns – then universities may be looking for cuts of 2-3% over and over and over. And we’re pretty sure if that’s the case, university science is going to lose.

If these proposed cuts occur, one thing is clear. The focus of university science will change. If the federal government is no longer steering the research ship with its massive investment in science, whoever does provide the funds will have a much larger role in what gets done – and who does it.

Next Week

A couple of recent surveys have shown some improvement in the public’s confidence in higher education. In the spirit of building on any momentum that suggests, we will share some thoughts from a paper Jay recently co-authored on re-building trust in higher education through the lens of land-grant universities. As always, thanks for reading Finding Equilibrium!

Thanks to Ken Sandel for his helpful comments and insights on this post.

“Finding Equilibrium” is coauthored by Jay Akridge, Professor of Agricultural Economics, Trustee Chair in Teaching and Learning Excellence, and Provost Emeritus at Purdue University and David Hummels, Distinguished Professor of Economics and Dean Emeritus at the Daniels School of Business at Purdue.

The message is clear: it’s taxpayer money you are spending. If you, higher education, can’t get your house in order, the government will do it for you.

Continuing our series on the current battle between federal and state governments and higher education, we’ll look at accountability this week. What should universities be held accountable for today – and how are they currently held accountable? Why isn’t the blizzard of laws, policies, standards, and requirements that already constrain university behavior enough? Where should government and universities focus their efforts to ensure higher education delivers on its responsibilities to society?

Accountable for What?

Let’s consider six social responsibilities of higher education.

• Student Access, Opportunity, and Outcomes: Can students regardless of background enroll and succeed? Are students graduating? Is financial aid used responsibly while minimizing student debt levels? Are students ready for the work world and employed in their fields at competitive salaries or prepared for success in graduate/professional programs?

• Academic Program Quality: Is the curriculum relevant/forward-facing and does it develop in students the knowledge, skills, and abilities needed for successful careers? Are faculty and staff appropriately credentialed, sufficient in number, and prepared to deliver a quality experience inside and outside of classrooms?

• Research and Knowledge Creation: Is knowledge being advanced in ways that benefit society? Is the research enterprise effective, efficient, ethical, and responsible?

• Appropriate Financial Management: Are university resources stewarded responsibly? Is the total cost of attendance carefully managed, with decisions made to keep cost as low as possible while maintaining program quality?

• Legal Compliance and Transparency: Is the university following all relevant legal requirements, including use of public funds and with respect to non-discrimination. Are decision-making processes and reporting to stakeholders appropriate and transparent?

• Free and Open Inquiry: Does the university culture respect and support open inquiry, freedom of expression, and civil discourse?

Universities differ in their missions and so will attach different weights to these different responsibilities. Some schools emphasize providing access to underserved populations as their top priority. Others emphasize the teaching mission over research output, others the reverse. Some put an enormous weight on keeping cost of attendance down, while others work to maximize the quality of faculty and their teaching and research output, regardless of cost. And of course, legal compliance and transparency can look different for public and for private universities.

Regardless of these differences in mission, we believe that maximizing student outcomes is the single most important responsibility for all institutions of higher education, and yet, the one for which accountability is weakest.

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Money for Nothing and Checks for Free?

With all due credit to Dire Straits, there is a clear implication of recent political interventions. Politicians seem to believe that higher education is currently free to operate without constraint, accountable to no one for delivering on its responsibility to society.

Well, that was certainly not our experience when we were administrators! Below we outline key stakeholders holding universities accountable for the social responsibilities described above.

• State governments: For public universities, states allocate funds, but they require significant accountability in return around finances, academic program quality, and decision-making transparency.

States approve tuition rates and some circumscribe access by limiting the proportion of out-of-state students a university can enroll. They set credit requirements for graduation and mandate how transfer credits are handled. In about 30 states, performance funding models tie higher education funding to state priorities including graduation rates and production of certain majors. Finally, they have the ultimate accountability lever, naming governing boards either through direct political control or through an electoral process.

• Federal government: For nearly all universities, the Feds are integral to financial operations, providing subsidized student loans and Pell grants, and directly funding university research. In exchange they require significant accountability around finances, the direction and conduct of research, and legal compliance.

Federal funding agencies exert a great deal of control over the research questions that universities can answer through their calls for proposals. Granting agencies decide who gets funding and then, for each and every grant, hold universities accountable to deliver what was promised on the timeline it was promised.

Universities must comply with all federal policy related to discriminatory behavior including (the continually shifting) Title IX requirements and the increasingly scrutinized Title IV. Eligibility to receive Title IV funds (federal financial aid) requires a university to be authorized by the state, accredited, and certified by the Department of Education (while it still exists…). FERPA, The Clery Act, Campus Sex Crimes Prevention Act, Drug-Free Schools and Communities Act, Violence Against Women Act,…, mandate faculty and staff training and reporting to protect student privacy and safety.

The Higher Education Compliance Alliance documents more than 300 different federal statutes with which universities must comply – we are not an under-regulated industry.

• Accreditors: Because access to federal funds requires universities to be accredited, accreditation bodies are empowered by federal law to set standards around academic program quality, student success, and financial resources.

Universities and some specific programs with field-specific accreditation go through an involved process to demonstrate they have met those standards on some regular cadence (e.g. the Higher Learning Commission, our university’s accreditor, uses a 10-year cycle; business schools through AACSB every 5 years)

These reviews are intensive and expensive because they include documentation of faculty credentials (what degrees they possess, what research did they produce), assurance of learning (how do you know that students actually learn what you teach), student graduation outcomes, governance processes, and resource sufficiency.

More controversially, accrediting bodies are under fire for an emphasis on DEI in curriculum and faculty credentials that aligns poorly with Trump administration priorities.

• Ourselves: Universities have plenty of their own internal accountability processes related to all six responsibilities. Colleges and departments get reviewed with resource allocation based on those reviews. Faculty promotion and tenure processes are extensive (and exhaustive). Annual merit-review for faculty and staff brings another element of individual accountability. Universities implement a wide range of legal compliance measures as required by regulators. (Reminded about all these internal accountability processes as we write this, it is a true miracle that any research and teaching actually gets done…)

• The Market: Perhaps the biggest accountability lever for higher education is as American as apple pie: competition. Universities compete (aggressively) for a declining number of traditional college age students – students and their families have choices. Universities compete (aggressively) for talent – the very best faculty can take a job literally anywhere.

Faculty compete intensely for grant funds from the federal government, foundations, and industry – fewer than 2 in 10 proposals are funded in many programs. Faculty compete in the marketplace for ideas and getting published in top journals is ridiculously competitive: acceptance rates for the top five economics journals range from 3-8%, and the vast majority of papers are never even submitted there because they have no chance.

Donors have many places they can invest their philanthropic dollars, and universities compete with those places. State budgets are constrained, so universities compete with all the other ways a legislature can invest taxpayer dollars – including in other higher education institutions.

Universities wither if they can’t attract students, hire great faculty, secure grant funds, capture donor dollars, and/or deliver something their state wants to invest in. They wither and increasingly they die. Historically death tends to be slow and painful in higher education but we expect the mortality rate to rise sharply given all the pressures on the sector.

No one should underestimate how powerful competition is as a source of accountability for higher education.

Where are Universities Falling Short?

Despite all this ‘accountability’, the government and more broadly, the public, doesn’t think higher education is delivering and wants more.

Judging from recent interventions, federal and state governments are not satisfied with what is being taught, who is being taught, who is being hired and retained, and the focus of research (or at least the results of that research). A lot of this is highly politicized and we think it’s hard for the university to be accountable to political actors on these dimensions without losing much of the value universities provide to society.

These political issues are only one of the public’s concerns. Other concerns held by politicians and the public focus on student outcomes: cost of attendance, student debt, completion, and preparation for their careers.

So much ‘accountability’, yet so much frustration at what higher education is (not) delivering - what is going on?

A few things strike us. First, accountability in higher education comes in many forms from many places. Given the many different stakeholders seeking accountability for any given responsibility, higher education faces a patchwork of rules, requirements, and standards. This raises a question as to whether higher education is actually being held accountable for the right things in any coherent, material way.

Consider two concrete examples. One, accreditation bodies emphasis on resource sufficiency means you’re more likely to lose accreditation for spending too little rather than spending too much. Two, compliance with state and federal regulations requires a literal army of lawyers, compliance officers, data analysts, training programs, all of which detract from, and raise the cost of, teaching and research.

So will the current barrage of governmental interventions actually improve higher education outcomes? It’s notable that increased ‘accountability’ as currently exercised is remarkably light when it comes to higher education’s first responsibility: student outcomes. The only external bodies that focus on student outcomes are accreditors and even they have been criticized for “vague, qualitative requirements”. (Still, that is better than nothing – and now the Trump administration wants to sharply diminish accreditors’ influence.)

This is not just about what ‘they’ are doing to ‘us’: we think higher education needs to take a deep look at whether it is simply complying with the rules as currently defined or truly delivering against its responsibilities to society – and there is a big difference.

A Better Way: The Role of Government

We think government could greatly increase university accountability by focusing on student outcomes and then letting the market for higher education work.

We have written on this idea before, but what if state governments collected detailed outcome data for every student enrolled in higher education? Then, students and their families could know, institution by institution, major by major, what completion rates were, what placement rates were, what starting salaries were, what debt levels were.

The market alone will bring accountability with such information freely available, but state governments could add another layer by linking such outcomes in a material way to higher education funding.

Building on this example, if governments want to promote innovation and productivity in higher education, why not take steps to make the industry more competitive, not more bogged down with even more rules and regulations. Getting more aggressive with outcome-based funding is one approach. Don’t tell higher education how to do things, tell us what you want. Reward us when we get it right, punish us when we don’t – but let higher education decide how it will be done.

Students who complete their degree? Graduates who are work world ready? Research aligned with state/federal priorities? Critics of such a performance-based approach will say every one of these ‘outcomes’ is fraught with unintended consequences and it would certainly take more data and careful thought to execute. But that effort by government to develop a robust way to reward performance in priority areas seems much more productive than dictating majors or trying to figure out if a faculty member in Food Science is doing their job.

A Better Way: The Role of the University

Outrage seems to be the first reaction from higher education in response to these questions about our performance. But, we need to take a look in the mirror. Regardless of the current political assault on our operating model, public trust in what we do has been on the decline for a long while…so there is more here than partisan politics.

No amount of complaining or pushback will solve the current crisis – though pushback and legal action is part of the solution, as is negotiation. Universities must get their heads around the fact that institutional autonomy and self-governance is a privilege – a privilege that can be taken away and one that must be protected and preserved through responsible discharge of the privilege. Harvard’s President put it this way:

• The work of addressing our shortcomings, fulfilling our commitments, and embodying our values is ours to define and undertake as a community.

For starters, we better take on (in a highly visible way) questions about our ‘political agenda’ – a recent Gallup poll found concerns about indoctrination, liberal political agendas, etc. made up the most important set of reasons Americans are not confident in higher education. That said, issues about cost, debt, retention, completion, and preparation are also major issues for our stakeholders and must get attention.

Refocusing on Our Core Missions

Turning to the more ideological points, we can’t self-sensor research questions or take only one side of a controversial issue. If we are to retain the privilege of self-governance, the public must be convinced that we are in good faith seeking the truth, and not some version of the truth constrained by faculty political beliefs or scientific bias.

We can’t ignore context when developing curricula. The work world is evolving, our students are different, and such context must be acknowledged as curricula are built. This means getting outside the walls of the academy, better understanding the needs of employers and the abilities and experiences of students. It means bringing relevant insights into curricula decisions, ensuring students are well prepared for successful careers.

Building trust and support for institutional governance and autonomy means more transparency. It means making data available to the public on outcomes that matter to them – placement and salary data as outlined above would be an example. It means sharing data we may not be proud of (i.e., completion data) and being forthright about what we are doing to improve.

Finally, accountability also means active engagement with the stakeholders we serve. Academic leaders spending time with elected officials, in communities, with parents/families, listening to concerns, acting on those concerns, and helping them understand the value that is being created. Being defensive isn’t going to cut it in this moment of crisis - this is no time to hunker down safely in the Ivory Tower.

The Role of Faculty

Perhaps most importantly, faculty can’t take the privilege of institutional autonomy and self-governance for granted. Faculty face severe time constraints meeting their teaching and research obligations. Participation in matters of institutional governance can be a residual claimant on time at best and left in the hands of a very few faculty at worst – a few faculty who may or may not represent the true voice of the institution.

We are in a different world today: there may have been a point in time when faculty could keep their head down and do their work, ignoring the winds blowing outside the university. Now, whether or not the university is seen as delivering on its societal obligations has a direct and in some cases, dramatic, impact on that faculty member’s world.

That means faculty (broadly) need to engage in discussions about core curricula, they need to pay attention to student retention and completion issues, they need to ask hard questions about student preparation for the work world, they need to be engaged in (and open to) efforts to find more efficient ways of doing things on campus.

A disconnect between the public and the institution is one thing. A disconnect between the public’s perception of the institution and what the broader faculty at the institution actually want/believe is a self-inflicted wound.

If higher education wants to retain the privilege of self-governance, faculty across the institution must engage fully in matters relating to the governance of the institution. This includes ensuring the integrity of the research enterprise, the relevance and balance of the curricula, and in general living every day the responsibility of seeking truth in a rigorous, academically honest way.

Next Week

In our final post in this series, we will offer up some questions that we believe should be on the minds of universities and their leaders as we head into the summer ‘break’. (Yeah, we know…) Thanks for reading Finding Equilibrium!

Research assistance provided by Marley Heritier. Our thanks to Trent Klingerman for his helpful comments on this post.

“Finding Equilibrium” is coauthored by Jay Akridge, Professor of Agricultural Economics, Trustee Chair in Teaching and Learning Excellence, and Provost Emeritus at Purdue University and David Hummels, Distinguished Professor of Economics and Dean Emeritus at the Daniels School of Business at Purdue.

Some of the mechanisms for enforcing viewpoint diversity include surveys of students and employees, establishing processes by which students and employees can submit complaints when viewpoint diversity is not respected, and, in Harvard’s case, dissolving departments that can’t prove they are viewpoint diverse.

Last week we wrote about why institutional autonomy is valuable to society. In this post we discuss where this push for viewpoint diversity came from, whether the underlying concerns have merit, how it may impact university autonomy, and what to do about it.

What Does Viewpoint Diversity Mean?

We think of viewpoint diversity in this way. The university brings together a set of people who collectively ask a wide variety of questions, and approach similar questions from different angles or with different methodological tools. These people listen to new perspectives on problems without imposing ideological constraints, and they are open to answers that differ from their prior beliefs when another scholar has brought new and credible evidence to the table. In the classroom, students are exposed to credible alternative theories and competing evidence on controversial issues.

Phrased in this way, viewpoint diversity is not just a good thing for the university, it’s a fundamental value we should hold.

It would be great if that was also what politicians have in mind when they seek to mandate viewpoint diversity. But, given recent actions, that is much less clear to us. They may instead have in mind a rebalancing of the professoriate along political lines. Or to ensure the ascendance of conservative viewpoints in left-leaning research and classrooms, while perhaps not exercising the same vigor in ensuring the reverse. And in some cases, to ensure that certain topics are excluded entirely from the curricula.

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Where Did This Come From?

Pundits and politicians have long decried what they perceive as the left-leaning political orientation of the university. Universities were hotbeds of protests over the Vietnam War. Some professors’ scholarship took a negative view of US history, for example, focusing on slavery and race relations, the impact of US military intervention abroad, or the consequences of market-based capitalism for inequality.

More recently, some campuses were caught up in disruptive protests. Some university DEI efforts excluded more than they included. Right-leaning speakers were shouted down by students and/or outside protestors. Some job candidates felt excluded by required diversity statements in faculty hiring.

But it is critical to note that these well-known examples of left-leaning scholarship, programs, and behaviors represent a small fraction of the overall activity on a campus. Scholarship at a large university is much broader than a few professors producing left-oriented critiques of US culture and history. Ethnic and Gender Studies programs come in for a lot of criticism, but students in these programs represent 0.3% of undergraduate majors nationwide.

Disruptive protests generally involve a tiny fraction of the campus population, and a small number of campuses. In May 2024 news organizations tallied Gaza protests on 140 campuses and 3100 arrests of faculty, staff, and students…out of roughly 4000 higher education institutions and campus populations totaling 23.5 million. And DEI initiatives are broader and more positive than the excesses of cancel culture and some mandated training would indicate. Many of the DEI policies pursued are (or at least were) a commonplace of not just universities but also major for-profit corporations.

Still, these examples of left-leaning activity have become fixtures in the news even if they are not at all representative of the vast majority of actual activity on a campus. Sometimes your reputation is based on the loudest and most public 1% of people and activity, not on the quiet 99%. (Which raises a question we tackle next week -- why don’t the 99% choose to be more vocal and visible?)

Using the Logic of Racial and Gender Diversity to Advance Political Viewpoint Diversity

Advocates for mandated viewpoint diversity in hiring and curriculum base their argument in the logic of DEI programs, a logic that universities themselves have fully embraced.

At the core of this approach is the quintessentially American ideal that there is strength in bringing together people from different backgrounds. That we learn more when we are around people who have different perspectives and life histories than if we surround ourselves with the like-minded. It is why universities support cross-disciplinary research. It is why universities, and corporations, seek diversity (broadly defined) in leadership.

Including a greater diversity of scholars in the university can change the things we research and teach because our research and teaching can be influenced by our experiences. Breakthroughs in science come not just from brilliance, or a supreme mastery of the methodological tools of one’s discipline. They come through looking at old problems in new ways, or from seeing different problems entirely. Having a wider range of perspectives on how to attack problem, or what problems to attack, is a highly effective way to advance science.

And now, let’s spring the trap. Surely, if that logic for including racial and gender diversity in higher education has merit, then it must also apply to people who have diverse viewpoints for other reasons. Why not select on viewpoint diversity directly? And maybe, while we’re at it, institute political orientation as a new protected class and source of that diversity.

Hence, you get the spectacle of the “Dear Harvard” letter that simultaneously demands an end to DEI policies (historically focused on race and gender) while insisting on admission and hiring quotas based on viewpoint diversity.

It’s a logical pickle for higher ed. But, let’s take a bite.

Are Professors A Bunch of Raging Liberals?

It is not hard to find articles that report biased political orientation among faculty -- far more liberals than conservatives, far more Democrats than Republicans. For someone disinclined to trust universities, it’s not hard to draw a straight line between the relatively small number of conservatives among faculty and the prevalence of left-leaning behaviors with which universities have become associated.

But when you dig into the details of the existing studies you learn this narrative is misleading in two ways. One, while the left-right mix (whether identified by party registration or self-reports of political orientation) often looks highly skewed, the headlines obscure a key fact. The plurality of faculty self-report as neither liberal or conservative but instead as moderates, and a majority of faculty don’t register as members of either political party. The dominant middle is ignored.

Two, many of these studies and the headlines they provoke focus on liberal arts colleges, and on departments in the humanities and social sciences. That is, they focus on places where faculty skew left while ignoring entirely those departments, colleges, and universities that skew right.

Let’s dig in on this last point, because we think this is critical. The UCLA-HERI studies represent the only long-term effort to gauge faculty political orientation (among questions surveying a long list of other faculty attitudes and behaviors). It appears to show that the number of liberals among university faculty is rising over time. That inference seems problematic to us because the institutional coverage of this survey has changed dramatically over the period studied.

Source: https://www.the-american-interest.com/2017/03/10/mind-the-professors/ based on data from UCLA-HERI.

Still, we think the change over time obscures the more interesting part of these data. While some departments like English self-report to be 60-80% liberal, others like Business self-report to be only 20-25% liberal. Many other campus units (health-related professions, engineering) also skew to the right.

Now compare this distribution to student enrollments by discipline. We noted above that Ethnic and Gender Studies graduate only 0.3% of students, down from 0.5% in 2000. While universities as a whole graduate 62% more students than they did in 2000, the number of English majors has dropped 40% and now represent only 1.6% of graduates.

What about the majors for faculty that skew right? Business majors, taught by the most conservative faculty on campuses, are the largest grouping at 19% of majors nationwide. Health related professions are 13% of majors and have increased 6 times faster than the overall student population. Engineers are 6% of majors, and have more than doubled since 2000. If we look within social sciences, the second-largest and the fastest growing major is Economics, where studies have shown faculty are evenly divided between Republican, Democratic, and Independent political registrations.

So, yes, judging from the UCLA-HERI data and more targeted studies, some units on campus are liberal. But some are decidedly not. And it is the more conservative parts of campus where all the enrollment growth is happening. Is that because the students are seeking out conservative faculty or are both students and conservative faculty more attracted to disciplines that have better job outcomes? We can’t say for sure, but our guess is the latter.

Looking at these data helped us to understand why our perspectives on these issues differ from some of our colleagues around the country. We sit on a STEM and Business oriented campus in the Midwest, a university that Time Magazine called “a hotbed of rest” during the 1960s. Our experience of the relatively mild influence and impact of left-leaning faculty is markedly different from what colleagues on other campuses report.

Does University Research Suffer from a Lack of Viewpoint Diversity?

We think political orientation is less determinative of research and teaching than critics believe.

While the evidence is clear that some faculty disciplines have more liberals than moderates and conservatives (and vice versa), the evidence that this affects research output or student attitudes and beliefs is too understudied to reach conclusions about the effect. So, let’s take a step back and think conceptually about what viewpoint diversity might mean in different contexts, and whether this could be affected by political affiliation.

Most research areas at the university do not have an obvious political connotation. Civil engineering techniques for building a bridge are not partisan. Mathematics is not partisan. Most of the research and teaching that occurs in STEM disciplines has no connection at all to political fights.

Here viewpoint diversity is largely about the choice of problems and that could be affected by a long list of personal interests and life experiences. A drug researcher who lost their mother to cancer might choose to study cures for that disease.

Doing Science When its Implications are Political

Of course, some science and engineering research takes on a political connotation because of its implications for policy. Research on vaccines is one example. Climate science is another.

There may be legitimate intra-field disagreements about the best ways to measure temperatures or atmospheric gas, and probably larger disagreements when one looks to the geological record. There are still larger disagreements about the best predictive models to map these measurements into long run climate forecasts. And, ultimately, disagreements about the extent to which climate change is anthropogenic.

Viewpoint diversity in this context could mean exploring disagreements on the fine points of these methodologies. It doesn’t mean that we continue holding views that are inconsistent with evidence and pretending that they are equally valid. Or that we look for answers to validate preconceived ideas.

That’s all par for the course with science, and nobody outside the specific field would much care -- except for the fact that the implications of climate research are profoundly political. Should we tax carbon or subsidize ‘green’ energy sources? Should we discourage building in low-lying coastal areas? Should our military prepare for the national security implications of a thawing arctic and climate refugees from swamped or desiccated regions?

Not liking the political implications of science causes politicians to want a say in how the science is done. To hire more scientists who might point to flaws in climate studies, or to teach students that the science is unsettled. If this is about ensuring methodologies are rigorous, and that conclusions do not outpace what the research can confidently demonstrate, then fine. That is what science should always do.

The problem comes when viewpoint diversity starts to look like selecting on someone who provides the “right” answers rather than selecting on who asks different questions or employs better methodologies. If viewpoint diversity, or balancing partisan numbers in a field, means finding someone who will reliably provide politically aligned answers to scientific questions, that is a certain path to corrupt research.

Even Policy Oriented Fields Are Not Obviously Red/Blue Partisan

Of course, some fields are inherently bound up with politics. Our field of economics is deeply tied to questions about the effect certain policies have on the economy, and what policies should be pursued.

Some of these – e.g. policies related to income taxation, setting minimum wages, acceptable levels of environmental regulation -- align clearly with partisan politics. Other critical policies – e.g. how long should a firm enjoy intellectual property protection, should we break up monopolies held by giant technology companies -- have no obvious partisan alignment.

Other policy areas have seen a complete inversion of partisan alignment. For decades market-oriented Republicans strongly supported free trade policies. Democrats, concerned about the effect on blue collar workers, resisted. Then Presidents Clinton and Obama came into the free trade camp, leading the Democratic party in this direction, and later President Trump led the Republican party in the opposite direction.

What then does party affiliation in the faculty tell us about whether an Economics department has a diverse viewpoint when it comes to international trade policy?

Where Should we Look for Balance?

Should a university as a whole represent viewpoint diversity, or should it be present within each department?

Diversifying departments, in the manner the “Dear Harvard” letter would require, seems sensible on its face. Say, for every climate scientist who measures ice cores this way, we balance them with a climate scientist who measures ice cores a different way. Or we find an economist whose research points to problems with free trade to balance the economist whose research points to the virtue of free trade.

That runs into two problems. First, very few departments are big enough to afford multiple experts in every research area who balance each other out. Second, some fields are inherently imbalanced in their approach to problems.

We noted above that business school faculty skew more conservative than liberal. And, you’ll find that most business school faculty are broadly supportive of the notion that market capitalism is an effective way to organize the economy. Their teaching and research is largely focused on how to operate within the system of market capitalism. You could try to balance that, but good luck finding radical Marxists with a PhD in Accounting.

Instead, we can look across campus and find examples of disciplines (maybe history, or sociology) where faculty do not presume market capitalism is the only or the best way to run an economy. They are interested in a critique of the system itself, as opposed to refining ways to operate within the system.

As long as there are critics of market capitalism somewhere on campus, does a business school have to hire some in order to ensure that students can find, and the research of the university taken as a whole offers, that viewpoint diversity?

Of course, we’re being cute by picking this example. We do not think the “Dear Harvard” letter means that the Trump administration wants more radical leftists at Harvard Business School. It almost certainly means changing left-leaning departments with an affirmative action program for conservatives.

In any case, balancing across departments to ensure the university as a whole represents diverse viewpoints is not only feasible, it’s what university leaders already do when they support a History Department and an Economics Department, and faculty in Humanities and in Health Sciences. And its what students do when they pick majors. They are picking not only a field of inquiry and perhaps a career trajectory, they are picking a world view. Increasingly, they are picking majors whose research and teaching has no political connotation, or aligns with a conservative worldview.

Viewpoint Diversity in the Classroom

Representing diverse viewpoints in the classroom runs into some of the same problems we just described for research. But it is both feasible and indeed essential to make students aware that other scholars have reached different conclusions and why.

The real challenge lies in political solutions that try to enforce viewpoint diversity. EVERY class with controversial material represents a selective editing of viewpoints, even for the most even-handed instructor. We don’t begin every economics course with an extended digression on Marxist critiques of markets and private ownership of capital. There isn’t time.

For someone outside the classroom it’s simply not possible to systematically evaluate whether a broad selection of university content is teaching all sides; you need expertise in a field to even know the sides.

One thing is clear: students don’t know the sides. They don’t hear and understand everything that is said. They are prone to selective understanding/reporting, which makes them unreliable as monitors, and a system that relies on that reporting is highly problematic.

So, what are faculty to do?

The worst solution is for faculty to pull back from controversial topics to avoid being called out by a disgruntled student. We understand the motivation – even a successful defense is time consuming. But this defeats the point of the university and the point of the classroom. Unfortunately, as we reported last week, some pullback in this area is already happening.

Instead, we think there is a reasonable three-part approach that is consistent with the aims of the university, ethically and legally defensible, and will ultimately save faculty a lot of time and grief.

1. Don’t shy away from controversial topics, but instead signal clearly – in the syllabus, and in class – that this is a controversial topic. And as the best instructors do, teach the controversy. This doesn’t mean rehashing every absurd YouTuber’s take, but doing one’s best to represent legitimate arguments and counter-arguments.

2. Tell students explicitly when you are “teaching the controversy”. Students do respond to and remember cues to pay attention. We think it is entirely legitimate to cue your students with phrases like, “Now we are going to wrestle with the other side of the argument.” Or, “Let’s think about other views.”

3. If your institution provides the opportunity to video record lectures, use it. On more than one occasion we dealt with angry student complaints directly related to viewpoint diversity. When we had recordings to look at, we found that what was actually said was miles away from the student claim. Maybe the students were deliberately misstating the facts or, much more likely, their own biases led them to selectively hear one side.

(On this last point, faculty who are uncertain how to navigate specific laws or university policies regarding recording, student privacy, and consent should first seek input from their relevant campus offices.)

Some Concluding Thoughts…

Taken at face value, viewpoint diversity is a value that every campus should hold dear. The challenge is keeping the focus on encouraging and valuing diverse ideas and not using viewpoint diversity as a means to a political agenda.

Perhaps the folks who both oppose DEI and propose strengthening a political version of viewpoint diversity might keep this in mind. Much of what they hate about DEI began as a sincere effort to include more people in the conversation and respect viewpoints and experiences that arise from racial and gender differences. Are you so sure that political viewpoint diversity will land in a healthier place?

In any event, the current moment is a call to arms. Coming to terms with what viewpoint diversity means on campus and how the campus will promote and protect that core value is a good place to start.

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Next Week

Much of the current challenge to higher education is driven by a call for ‘accountability’. Next week we will talk about where accountability fits with institutional autonomy and how both can be improved.

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Research assistance provided by Marley Heritier. We are grateful to Trent Klingerman and Peter Hollenbeck for their excellent suggestions on this post.

“Finding Equilibrium” is coauthored by Jay Akridge, Professor of Agricultural Economics, Trustee Chair in Teaching and Learning Excellence, and Provost Emeritus at Purdue University and David Hummels, Distinguished Professor of Economics and Dean Emeritus at the Daniels School of Business at Purdue.

• “No government—regardless of which party is in power—should dictate what private universities can teach, whom they can admit and hire, and which areas of study and inquiry they can pursue.”

The federal government doubles down, threatening to take away Harvard’s tax-exempt status and cancel all international student visas. But wait, anonymous White House sources claim the initial letter to Harvard was a ‘mistake’ and there is back and forth as to whether the letter was intended to be the starting point of a private negotiation.

Harvard goes to the bond market and to donors to bolster its finances for the fight. President Trump threatens to withhold another billion in federal grants from Harvard. Harvard sues. What a week indeed…

Pressure on Institutional Autonomy and Self-Governance

While Harvard dominated the headlines, we are reminded of the African proverb: when the elephants fight, it is the grass that suffers. There has been plenty going on in the ‘grass’ this week with Texas (among others) considering new restrictions on institutional autonomy and self-governance. And, for public universities, states can make such changes stick.

In our last post, we shared thoughts on how higher education ended up in this mess. This week, we explore the case for institutional autonomy and self-governance. We like Menand’s definition of autonomy, that institutions don’t have to “answer to some standard of political correctness, economic utility, or religious orthodoxy” and are allowed to “decide among themselves the work it is important for them to undertake” (page 8).

Taxpayers foot the bill for much of the research and teaching at universities, whether they are public or private. The argument for why society benefits from institutional autonomy has two key parts: universities are valuable, and autonomously run universities are more valuable than ones constrained by overt political intrusion.

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How Does the Public Benefit from Great Universities?

This is a topic for a much deeper look in future posts, but the case comes down to four main points:

1. Universities graduate students (by the millions) with the skills and capabilities needed in today’s economy. That value is demonstrated by the fact that graduates earn dramatically more than those who don’t go to college, among other personal and societal benefits from a well-educated citizenry. We wrote extensively on this topic in the fall – including how universities can get better at preparing students for successful careers.

2. Universities play a fundamental role in the US innovation ecosystem. Innovation requires a combination of basic science that helps us deepen our understanding of the world and commercialization processes that turn that understanding into valuable technologies. A deeper understanding of basic plant biology precedes more resilient crops, crops with improved yield, crops that can be used for industrial purposes such as biofuels,…

Historically, for-profit companies engaged in both basic science and commercialization, but companies have retreated from basic science. Two big reasons are the growing lead times between invention and commercialization, and the likelihood that breakthroughs spillover to rivals, making harder to appropriate returns to basic research.

Virtually gone are the days of the Bell, DuPont, Xerox and other corporate labs where armies of researchers pursued basic science. (Bell Labs at its peak had 15,000 employees, 1200 with Ph.D.s, 14 Nobel Laureates, 5 Turing Awards,…).

Universities have filled the void – fueled by dramatic increases in federal funding and the transfer of patent rights on federally funded research from the government to the university. And, the costs of losing the front end of the innovation pipeline currently filled by universities are immense but won’t be fully realized for years.

3. Universities are an economic engine in their local/regional/state economies and are increasingly important in a world where science and innovation matter. Higher education employs more than 4 million in the US directly – and so many of these jobs are not in coastal cities, but in the industrial heartland and rural areas. They are also one of the largest export earners in the economy – universities generated $50 billion dollars of value to the US economy from foreign student enrollments in 2023.

Source: College Towns

Beyond direct employment, universities spur economic development as firms and medical centers co-locate to take advantage of university talent and research. Some of these are high-tech: defense, aerospace, and semi-conductor manufacturing and our own university provide a good example.

Others are less splashy but vital, and arise from the engagement mission of land-grant universities and increasingly universities more broadly. Technical expertise, workforce development, public health education, PK-12 partnerships – and so many others – create value for business, community, and individual stakeholders.

4. Universities are one of the few places that can challenge the way society runs because doing so is not commercially viable and is politically risky. The private sector gets hammered when they take positions that aren’t politically popular. Politicians with contrarian ideas may not survive elections and/or have any real voice in decisions. We will dig much deeper into this point below.

How Does the Public Benefit from Institutional Autonomy?

The fact that universities generate a lot of value for society does not immediately imply that autonomous universities generate more value. How do we make the case?

For starters, Stein asks a good question: “Do we really want new research and new knowledge to come exclusively from private businesses?” To which we would add, “Do we really want what is researched and taught to be defined by partisan politics?”

More concretely, let’s identify some specific benefits that accrue from an autonomous university system – one that develops and disseminates new knowledge and operates without the short-term pressure of profitability or the constraints of a political party’s values and beliefs.

Thinking About a Better World

Ideas that challenge society are necessary for society to progress. But ideas that challenge society are the least likely to be funded and supported in a captured university.

The case for university research is relatively easy to make for engineering, science, medicine, agriculture – the traditional STEM disciplines – where discoveries can provide a platform for more applied research that can be commercialized. That said, even in these fields, work in areas such as climate science, environmental issues, and health disparities can draw criticism from politicians and the private sector.

The harder case is humanities and social sciences research, and yet that research is probably MOST valuable when it questions how we work as a society. Creative work in these areas may never lead to anything that can be commercialized but may help us better understand the human condition. Questions of how prior/other societies made the choices they did – and the consequences of those choices – can help inform decisions today.

Here is an example: nobody can commercialize the idea that free trade leads to gains to society and that putting up tariff walls will immiserate us. Ignoring the careful research of international trade economists led to “Liberation Day” tariffs last month that wiped out 2 trillion dollars of market value in US public equity markets (and more than that if you add effects around the world and in private equity markets). What was the last commercial innovation coming out of university labs that generated 2 trillion in value? Not that we are grumpy about this or anything…

Research that simply affirms that everything is great doesn’t lead to progress. There is irony here: research that challenges policy, social organization, current industry practices, etc. may well be the most valuable, yet at the same time, such research is the MOST vulnerable to funding whims and in need of freedom to operate.

Note we are not saying that all university research is ‘useful’ (in the broadest sense of the term). And, hard decisions about the need to continue research in some areas have to be made given resource constraints. The issue is who makes the decision and why it is made.

Freedom Attracts Talent

When it comes to creativity, there is value in the freedom to approach a problem without constraints (economic, political, or otherwise). Seeking answers to “why” without worrying about whether or not the answer can be monetized in the short-term. Looking to push the boundaries of what we know and understand to be true without political interference.

The freedom to pursue research for research’s sake drives so many faculty we know – it is their personal passion and the fundamental reason they chose an academic career over a career in the private sector/government. Faculty focus on a question they find important and are excited about, and if they can find the funding/resources needed to explore the question, they currently have the freedom to do so.

It is very difficult to adequately capture the focus, intensity, and drive a passionate scholar brings to their research. While some critics poke at the idea of faculty work ethic, we have seen over and over precisely the opposite: faculty who work ridiculous hours to meet a grant deadline, complete a series of experiments, get another paper in review, help a graduate student across the finish line…all in the name of bringing new knowledge to the world. Such intrinsic motivation is about so much more than compensation.

Contrast this with much private sector research where the focus is constrained by the need for a commercial outcome. Reduce that freedom to explore, and the job security of tenure, and see how many bright, creative people are attracted to higher education? There is already evidence the current battle over autonomy and commensurate research funding cuts is leading some US scientists to look at positions abroad.

Importance of Stability

Meaningful research programs can take decades of incremental work. Being insulated from the whims of politicians and the pressures of quarterly earnings reports allows a university researcher to spend a career on a narrow area of science (if they can find the funding).

Stability allows curricula to evolve over time and not chase every fad/hot career field running around, with all the downsides fad-chasing brings. As we have written before, the privilege of stability also means higher education has a responsibility to ensure curricula are contemporary and students are well-prepared – and we have work to do here.

Perhaps the most concerning element of the proposed interventions is the whipsaw effect seen when one political party (along with their interventions) is voted out and the new party replaces these with interventions of their own. We are already seeing this: Biden administration DEI requirements on grant funds are leading to cancellation of those same grants because of the DEI requirements – flushing all the work/investment in the process. This kind of back and forth is in no way supportive of an environment that fosters scholarly creativity and productivity.

Cost of Intervention

We have written before about the regulatory burden higher education currently deals with. But, read that list of Harvard provisions again. You think operating costs won’t increase and the effectiveness of institutions be diminished as administrators and faculty take on even more compliance and reporting burdens? Every hour a faculty member spends on some reporting requirement/training is an hour they are not devoting to research, teaching or engagement.

Experts Know Things

Autonomy means that faculty decide what is taught and how to teach it. The argument of course is that expertise matters: an economist is in the best position to determine what goes into a course on international trade; an engineer is in the best position to determine how a class in aeronautics is taught; a humanities faculty member should decide what books are part of a course in medieval literature,…

There is an element of arrogance here that has certainly rubbed some the wrong way. And, there is growing resistance to the idea of deferring to experts. This has led to plenty of arguments over faculty control of the curricula with governments intervening on the university core, what is taught in those courses, what books are in the library,…

The challenge is once a government intervenes/dictates some aspect of curricula, where does it stop? Are government bureaucrats really better positioned to decide what a college student studies than are faculty experts? We think the answer is no. (We’ll get into the responsibility this position brings in our post on autonomy.)

The Chilling Effect of Intrusion

There is no room for ‘the chilling effect’ in higher education – be it chilling liberal or conservative voices, be the chilling from within the academy or from outside (and yes, some chilling comes from within the academy). If we are going to ‘search for truth’, faculty and students need freedom (and support) to explore hard questions – from multiple perspectives.

There is already evidence that faculty are pulling back on controversial topics in our current environment. A recent AAC&U/AAUP study found that 35% of faculty believe that relative to six or seven years ago, there is less academic freedom with respect to teaching without any interference and 19% believed there is less academic freedom with respect to investigating and publishing research findings without any interference.

Some 51% of the faculty in the survey believed their colleagues are more careful to avoid controversial topics when revising curricula and 40% believe their faculty colleagues have become less willing to express controversial views in their courses.

Wait until the federal government can merge your unit with another (see the Harvard letter) if you can’t demonstrate ‘viewpoint diversity’ and see what happens…

Source: AAC&U/AAUP

What’s Next?

“Viewpoint diversity” has become an important goal of much the recent government intervention into higher education. A look into why viewpoint diversity has become a point of concern, whether that concern has merit, and how remedies may impact institutional autonomy is coming soon.

We are well aware institutional autonomy and self-governance is a privilege society has afforded universities. And, with that privilege comes a set of responsibilities. To better understand those responsibilities and what is needed to retain the privilege of self-governance, we will take a look at the issue of accountability in a future post.

As always, thanks for reading Finding Equilibrium!

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Research assistance provided by Marley Heritier.

“Finding Equilibrium” is coauthored by Jay Akridge, Professor of Agricultural Economics, Trustee Chair in Teaching and Learning Excellence, and Provost Emeritus at Purdue University and David Hummels, Distinguished Professor of Economics and Dean Emeritus at the Daniels School of Business at Purdue

Taken together, these demands would effectively end the autonomous operation of a private university.

The provisions included specific actions to be taken in light of the anti-Semitic protests/activities on campus – and anti-Semitism, or any other form of discrimination, has absolutely no place on a college campus.

But going far beyond this specific issue, the provisions include major changes to Harvard’s governance, departmental structure, faculty hiring, student admissions, and student conduct policies. In addition, the demands require extensive and intrusive new reporting and audit requirements on all the above, along with punitive actions taken against particular departments based on the content of their scholarship.

A recurring theme is the end of diversity, equity, and inclusion efforts, in admission, hiring, and programming, while simultaneously requiring quotas in faculty hiring and student admissions based on a federally mandated conception of “viewpoint diversity”.

When Harvard informed the federal government they would not accept the proposed agreement, the Trump administration announced they would freeze $2.2 billion in multiyear grants along with a $60 million contract.

But it didn’t stop there. President Trump took to social media to propose eliminating Harvard’s tax exemption as a non-profit entity, in line with earlier efforts to tax away Harvard’s prodigious endowment. A day later this escalated to a Presidential demand, in violation of norms and laws meant to insulate tax treatment of individual persons and institutions from political retribution, a demand the IRS was considering as of this writing.

In addition, the Department of Homeland Security threatened to revoke Harvard’s ability to host student visas, an action that would affect 6793 international students, 27% of Harvard’s enrollment, and likely eviscerate graduate programs on the campus.

Why Does this Matter?

It’s old, rich, elite Harvard. The vast majority of higher education institutions look nothing like Harvard with respect to financial resources, selectivity, student profile, research reputation, alumni achievements,…so?

Let’s be clear. This represents perhaps the most dangerous moment in the history of the modern university. The Trump administration is threatening nothing less than the financial destruction of the world’s leading university. That is, unless Harvard complies with what they (Harvard) regard as a series of clearly illegal and unconstitutional demands, and put every aspect of their operation under the systematic control of the federal government.

Again, you might think this is an Ivy League problem and not relevant to the rest of higher education, but that would be wrong. It is no accident that first Columbia and now Harvard have been targeted, with Penn, Princeton, Cornell, Northwestern, and Brown next in line, and the list of “concerning” universities growing by the day. If the strongest and best-resourced universities are brought to heel, the rest will follow. And as should be clear from Columbia’s capitulation, agreeing to the administration’s initial demands does not resolve matters. It invites additional penalties and more aggressive intervention.

You might also think that it’s possible for other universities to duck and cover, and just wait this out. After all, does a Department of Education that has laid off most of its workforce really have the manpower to micromanage thousands of institutions of higher education?

And it seems entirely possible that courts will intervene on Harvard’s behalf because the administration’s demands are so over-the-top and in contravention of clear statutory language preventing such interference. Civil rights law does allow penalties for universities that violate civil rights. But the legally required findings of fact, opportunity for response and redress, and permissible scope for punitive action have been thrown out the window. The “Dear Harvard” letter uses the veneer of the law to flagrantly break the law.

But while the Trump administration’s recent actions are extraordinary in their scope and severity and flouting of legal boundaries, they are best understood as a continuation of a whole host of government actions impinging on university autonomy. Higher education as we know it has been under increasing pressure the past decade with state governments taking on faculty tenure, DEI, curricular issues, and admissions practices.

Unlike the administration’s “Dear Harvard” letter, these state-level interventions are death of the university’s autonomy and self-governance by a thousand small cuts, and yet probably well within these governments’ legal authority.

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Where We are Going in Finding Equilibrium

We will explore institutional autonomy and self-governance over the coming weeks. In this series of posts, we want to sort through the daily barrage of charges, changes, proclamations, accusations, threats and actual cuts to get to the heart of some issues that really matter to the autonomy of universities. We start with some history on the evolution of government-university relations and why fraying trust in higher education has opened the door to intrusions on autonomy.

Then in subsequent posts we will address a series of related specific issues: the value of autonomy and academic freedom, not just to universities but to society at large; university accountability; viewpoint diversity; and the link between funding and autonomy – and how universities might respond to the challenges presented in the current environment.

This week these issues are front and center for Harvard. In the months and years to come, they will be front and center for all of us.

Some History on US Universities and Government

Education is important to society and fundamental to a country’s economic development. Universities are expensive to establish and run. For these reasons, there has always been a close connection between government action and university function. We learned a lot about this history from this short piece highlighting the historical connections and tensions between higher education and government when it comes to who calls the shots.

While Harvard is widely considered to be the first private university in the US, it was initially established with an investment of 400 pounds from the General Assembly and Court of Massachusetts Bay to ‘serve the newly established colony’. Yes, Harvard was essentially founded as public institution, and notice that word “serve”.

In the nearly four centuries since that investment, many important pieces of legislation and many, many court cases have impacted the relationship between higher education and federal and state governments.

The Morill Act Land Grant Act of 1862 not only involved a major federal financial commitment (in the form of grants of federal lands) to create universities nationwide, it specified both curriculum and admissions criteria. Support was given only for colleges teaching “agriculture and the mechanic arts”, training in military tactics was a required part of the curriculum, the admission target focused on students from the farming and industrial classes.

The Second Land Grant Act of 1890 tied federal funding for a state’s higher education institutions to non-discrimination in admissions on the basis of race, while also establishing separate but similar ‘land-grant’ colleges to serve African American students – what we now know as the HBCUs (Historically Black Colleges and Universities). Which is to say, the first widespread DEI policies in higher education were federal mandates leveraged by the threat of lost funding.

The National Defense Act of 1916 established Reserve Officer Training Corps programs (federal funding to create departments and direct curriculum) and the GI Bill of 1944 created a massive infusion of federal financial aid targeted at a specific student population (returning veterans of the war). University research played a key role in weapons innovation during World War II, and that, plus the shock of the Soviet Sputnik launch, led to large and escalating federal investments in science and engineering research.

Finally, a wave of civil rights laws enacted over the last six decades have regulated conduct within the university, including race (Title VI), sex (Title IX) and disability (ADA). In each case, federal funding is used as leverage to discipline behavior within the university.

The Way it Was

This history makes clear that government has always been involved in the affairs of US universities. Not just founding and funding them, but broadly influencing what is taught, who is taught, and what is researched, as well as what conduct is prohibited.

Yet even given these various laws and policies that constrain behavior, US higher education has enjoyed relatively broad freedom to compete, operate, and self-govern. This autonomy rests on two critical pillars: expertise and intellectual freedom. Faculty experts are in the best position to make decisions about curricula and hiring, and the best scholarship is unconstrained by political, economic, or social agendas.

More than 30 years ago, Menand (page 8) described higher education’s ‘compact’ with society this way:

• Universities have, essentially, a compact with the rest of society on this matter: society agrees that research which doesn’t have to answer to some standard of political correctness, economic utility, or religious orthodoxy is a desirable good and agrees to allow professors to decide among themselves the work it is important for them to undertake.

Or to state the converse, research (and presumably teaching) that *does* have to answer to some standard of political correctness, economic utility, or religious orthodoxy will ultimately be less desirable to society.

What Happened?

One way to view the current change is that people, and the politicians they elect, stopped believing in the social compact Menand wrote about. Which is to say, the public stopped believing that the research and teaching of the university was generating goods of value to society.

We can see this in a wide variety of concerns. On the student end critics point to spiraling tuition prices, rising student debt, low completion rates, worries that graduates are ready for work, whether we guard against discriminatory behavior and ensure the safety of all students. On the faculty end of things, critics question the reliability of our research, whether we exclude certain viewpoints, and ‘indoctrinate’ students into certain perspectives.

We’ve written about many of these issues extensively and believe the evidence shows that a lot of the concerns are overblown. Still, some are real and haven’t been taken seriously by higher education. Others are rooted in seeds of truth, and the real issues combined with those seeds have grown into increasing public distrust of higher education.

Higher education has gotten caught up in the culture wars, cancelling speakers, dealing (or not) with protests on campus, going further with DEI efforts than some are comfortable with. Of course, many stakeholders applauded these efforts, but culture “war” means these efforts infuriated others. And it doesn’t help that the political sphere has become increasingly polarized around education, with a growing share of the population without college degrees voting for one party.

Ultimately, all this would only be grist for opinion columns and animated dinner conversations, except for funding. It was inevitable that someone in the political sphere would recognize that universities overwhelming dependence on public funds would create leverage. And, as we note above, the expansion of civil rights laws into a university context used precisely those funds as leverage.

What is different today is that leverage is not being used to address some serious, indeed dangerous, discriminatory behaviors at the margin. Rather, the American people elected an administration that saw the massive federal investments as a hammer to restructure the US higher education model in a way aligned with the administration’s vision. The “Dear Harvard” letter speaks to the scope of that vision – nothing less than remaking the university in its entirety.

Reducing F&A, shrinking research investments, withholding federal funds … these actions hit higher education where it truly hurts: their budgets. And, very, very few institutions have the financial resources to push back on these changes. As Menand put it…

• …academic freedom will be killed by the thing that, in America, kills most swiftly and surely, not bad ideas, but lack of money.

We (higher education) lost the trust of those who provide the funding. The values higher education holds dear are now at risk because they drifted from the values held by those in power. We think those in power are wrong about the value higher education provides to society, but they have the checkbook, and with it the ability to remake higher education.

So What Then Do We Do?

In our next four posts we take this on directly. We start with Menand’s compact and argue for the social value of a (relatively) autonomous university, along with evidence about how creeping intrusions are already undermining that value.

We then tackle accountability, what mechanisms society already has in place to ensure universities are adding value, and what we can do to increase and make visible that accountability. We will dig into the issue of viewpoint diversity, the composition of our faculty, what we teach, and how we hire. We close with the funding lever, and examine what strategies universities might use in light of it.

Despite its flaws, US higher education has long been regarded as the best system in the world. Whether or not we maintain that position will depend on how the current crisis plays out. Universities (and their stakeholders) can’t be spectators as it does – and the response will need to be more than complaints and pushback – relevant criticisms will need to be addressed and trust rebuilt.

Research assistance provided by Marley Heritier.

“Finding Equilibrium” is coauthored by Jay Akridge, Professor of Agricultural Economics, Trustee Chair in Teaching and Learning Excellence, and Provost Emeritus at Purdue University and David Hummels, Distinguished Professor of Economics and Dean Emeritus at the Daniels School of Business at Purdue.

Where does this leave us? Universities, and more especially faculty themselves, have to be more responsive to public critiques of tenure, while ensuring the necessary components of tenure remain and are strengthened. The reason is not only self-protection, but also because tenure and the protections it provides makes for better research, for better instruction for students, and for a better role for strong universities in shaping our society.

In this post we highlight a number of areas where a rethinking is necessary, along with our recommendations for strengthening and protecting the core benefits of tenure and thereby higher education as an institution.

Academic Freedom and Job Security for Who?

Faculty who actually enjoy the protections of tenure are rapidly shrinking as a share of the faculty workforce at most universities, and even faster as a share of overall undergraduate teaching. At many institutions, the lion’s share of credit hours outside of graduate programs are delivered by non-tenured faculty members.

An immediate implication is that, to the extent that tenure is *the* guarantor of academic freedom in the classroom, academic freedom is not guaranteed at all in the vast majority of classes taught to undergraduates. It is only what we might call regulatory forbearance that prevents the state, the university, or its agents (i.e., other faculty, staff, or administrators), from dictating classroom content. Regulatory forbearance means that a person or institution with the authority to intervene in courses or curricula simply chooses not to, but that hands-off choice depends on the faculty member in question remaining in their good graces.

That tenuous state is complicated by an important reality of faculty HR processes within universities. The hiring, evaluation, and promotion of tenured faculty are subject to a great deal of formal university process, along with a very significant investment of time by other faculty, staff and administrators. In contrast, HR decision making around non-tenured faculty is much more ad-hoc and subject to far less scrutiny.

Why? Non-tenure track positions are, alas, not enough of a priority at most research universities. Taking great care in selecting candidates takes time nobody has to invest. It is difficult to assess excellent teaching, and undergraduate teaching itself is perhaps not taken as seriously as it could be by many faculty. And really, what’s the harm? A mistaken lecturer hire can be corrected after a year or two; a mistaken tenure decision stays with you a long time.

A consequence is that we effectively delegate hiring, evaluation and contract renewal decisions for non-tenured faculty to a much smaller set of individuals with far less clear criteria for making these decisions. Suppose a department head simply does not like what or how a lecturer teaches -- what is to stop them from simply not renewing a contract?

How Can We Ensure Academic Freedom in the Classroom?

We think the growing importance of non-tenured faculty points at three key elements that are necessary to ensure academic freedom in the classroom.

1. States and universities should state explicitly that academic freedoms in the classroom are held by all instructors, regardless of tenure status.

2. HR decision-making around the hiring, development, evaluation, compensation, and promotion of non-tenure track faculty should be professionalized and treated with the same seriousness as related functions are for tenured faculty. An important element is getting much more serious about the evaluation of teaching.

3. Both of these suggestions will work more effectively if academic freedom and HR decision-making are paired with longer term contracts for non-tenure-track (NTT) faculty. Perhaps not indefinite, but long enough (a) that other faculty take related HR functions more seriously because the consequences of good/bad decisions stay with you and (b) to insure against situations in which the content of a class, as opposed to the efficacy with which that content is taught, becomes a reason for non-renewal.

Longer term contracts for NTT faculty also work on a related issue. We argued that personal investment in completing a PhD program is sizeable, and that tenure is a mechanism for insuring the risks associated with that investment. Without tenure protections, we fear that fewer and fewer excellent scholars will opt to pursue a PhD, or having earned one, to work in universities.

While the underlying risks facing NTT faculty are not as severe (you can control the quality of your classroom more than you can control whether a truly innovative research agenda pans out), they are still subject to the vagaries of university budgets and that risk can dissuade potentially excellent teachers from pursuing academic life.

Enhancing Productivity Post-Tenure

As we discussed here, there is no evidence that productivity for the average faculty member declines post-tenure. But that is not the same thing as saying that no faculty member sees a decline in their productivity. How do we address this situation?

First, quit wasting their damn time! One of the biggest drags on faculty productivity is participation in endless meetings that didn’t have to happen, and engagement in meaningless committees that exist only because no one has ever reviewed why the committee exists or made the (perhaps hard) call to shut them down.

Related, federal, state and university regulations impose significant time burdens on faculty, including endless “trainings” (FERPA, Title IX, Cybersecurity, Research Ethics, …) and reporting requirements, which are particularly onerous around research grants. The desire to let faculty be free to do their work is constantly at war with administrators’ and regulators’ desire to know what faculty are doing with all that free time!

Second, we rely on faculty to take a whole host of service positions that pull them away from excellent individual contributions to research and teaching. This includes both formal leadership roles and informal or ad-hoc roles doing the hard work of curriculum development or HR functions. These positions are generally not well-compensated if they are compensated at all, and to do them properly involves either unsustainably long work weeks or significantly sacrificing scholarly output. Positions that extend beyond a few years (and it’s really hard to be effective in a leadership role if they don’t) can permanently impair one’s productivity as a scholar.

So there simply has to be some acknowledgement of this diversion of effort, and some recognition in both current and lasting compensation, and some recognition that research productivity and teaching/engagement contributions on the far end may be impaired. (We know. We know. This sounds like us begging our colleagues to take it easy on us as recovering administrators. But we are working hard to return to our prior research and teaching productivity, in addition to doing some novel things like this Substack!)

Put more directly, if faculty know that they will be severely penalized for slacking productivity, the logical response is to refuse all service effort and all leadership positions. Only someone who was already in a research end-state in their mid-late 60s would rationally agree to serve.

Increasing the Incentives to Produce Post-tenure

We argued earlier that a reason productivity doesn’t decline for a typical post-tenure faculty member is that many universities offer significant financial rewards for continuing to work. Annual raises that compound over time. Summer support. Access to better research resources: labs, grad students, post-docs. But not all universities behave this way.

If a university is struggling with post-tenure productivity the first thing it should do is look in the mirror and ask what its compensation and faculty support scheme actually rewards. If you offer no raise pool, or give all your faculty the same raise, you eliminate a great tool to encourage effort. If no one gets summer support, or if everyone gets summer support, you have eliminated an even better tool to encourage effort. Likewise, you do little to incentivize effort if other forms of faculty support such as graduate students, travel funds, staff assistance, etc. are spread like peanut butter across a unit.

And while this will disturb our faculty colleagues…annual raises don’t have to be a one-way ratchet upwards. You can lower salaries. You can pay salary increases as one-time bonuses instead of layering them into a permanently higher base salary. Behavioral economics research highlights the power of loss aversion. People are far more responsive to losing something they already had than to gaining something they never had. If you want more productivity from your post-tenure faculty, you can use the power of loss aversion to good effect.

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Post-Tenure Review Issues

A number of states, most notably Florida, but also Georgia and Tennessee and others, have put in place a process of post-tenure review. If you are concerned about faculty productivity after tenure this process has a surface plausibility to it. Why not review faculty? To which we have three answers:

1. Most institutions already engage in systematic post-tenure review through the use of annual evaluations of faculty work that feed into raises and many other resource decisions. If this process is weak tea at an institution, the simplest starting point is to bolster it. Establish criteria for evaluation, require written annual evaluations, and tie variation in compensation to variation in performance. If there isn’t already a culture of serious annual review and varying compensation, senior administrators MUST back department heads to make this happen: the screams will be loud.

2. In-depth post-tenure review is costly. We want to draw a distinction between “Excel Macro” evaluations and the types of comprehensive review that are used at major faculty promotion events. One can very quickly count publications, working papers, research presentations, grants received, courses taught, students mentored, student evaluation scores, and so on. It’s so easy to do it can even be outsourced to an Excel Macro. That makes it ideal for annual evaluations, but it’s noisy and it misses things.

The types of review used at the tenure decision and other major promotion events, and at any kind of review that would threaten to strip faculty of their tenure, should be far more comprehensive. Not just counting, but using higher order skills. Like reading. Soliciting and considering evidence provided in outside letters from experts. Weighing intellectual contributions in research, in teaching, and to all the critical service functions that make an academic department go-round.

We calculated that our university absorbs roughly ten faculty-years in our in-depth annual promotion and tenure processes, which involve reviews of perhaps 4-5% of the total faculty. And that’s not counting the costs we impose on outside experts who write letters of review. Asking a university to review all of its tenured faculty this way on a regular basis is an invitation to completely paralyze the university (see the point above about regulatory time wasting as a key impediment to faculty productivity!)

3. Non-performing faculty are outliers, but they exist. When we've gone through reviews of faculty, whether intensive or “Excel Macro” reviews, the evidence has been clear that almost all of the faculty are doing pretty good work! They are teaching well and students are happy. They are actively producing new research, some of which looks like work-in-progress, some of which has been anointed with grants or accepted publications. Most of the faculty who aren’t producing a lot of individual output in the current year often have a compelling reason, like an extended stretch as a department head or associate dean.

But there are exceptions. People who have hung up their research but still have the light teaching loads and heavy paychecks of a productive researcher. People who are doing a terrible job in the classroom. Worse yet, people whose anti-social antics are making life miserable for all the students, staff, and faculty around them.

The trick then is to design a system that catches the outliers without pointlessly absorbing a massive amount of time and effort to carefully evaluate the vast majority of faculty who are doing good work – and then take action on the outliers.

A Better Post-Tenure Review System

What does a better post-tenure review system look like? We think it’s a three-part process:

1. Real annual activity evaluations, as described above, that drive compensation and resource/support decisions.

2. Periodic “Excel Macro” screenings at, say, three to five-year intervals, depending on the discipline and based on the accumulated output of the annual activity evaluations. Everyone can have a low productivity year, or two. But five in a row? The purpose of these screenings is to accumulate the evidence of annual evaluations and to identify outliers.

3. Deep dives on outliers. This starts with asking why these people are not producing to the university’s expectations. Have they invested a great deal of time and effort in much needed leadership and service functions? Have they suffered serious health concerns of their own or a close family member? Or have they simply quit working? In this last case one can pursue performance improvement plans, salary adjustments, changing the focus of work (e.g. an excellent teacher who has lost their taste for research could have their teaching load increased), and ultimately, termination.

We strongly oppose any system that would pre-judge how many low performers there are (say, by singling out the bottom 10%). We also think any evaluation of a low performing outlier has to be both holistic and aimed, at least initially, at improvement. That necessarily involves difficult and context-specific understanding and remedies, which is why it is completely unsuited for addressing more than a handful of cases in a year.

While this discussion has focused on research and teaching productivity, such a process could also be used to identify and correct anti-social behavior. Academic freedom does not include the freedom to be a belligerent a**hole to your colleagues, or to staff, or to students. Anti-social behavior does not have to rise to the level of outright misconduct to be incredibly harmful and there is no reason that a university has to tolerate someone who abuses the people around them.

Why Implement a Post-Tenure Review Policy?

First, it is the right thing to do. Just because relatively few tenured faculty abuse the privilege doesn’t mean we should provide indefinite cover to those who do. And this is especially true for those who subject others to awful teaching and bad behavior.

Two, NOT addressing such outliers is a drain on morale for all those actually doing work. The ‘one bad apple’ proverb applies too frequently in academic units. By addressing productivity issues and not letting bad behavior slide, you can see attitudes and output move quickly to a new and better level.

Three, if we don’t do it to ourselves, someone else is going to do it to us. The best defense to a state legislature that wants to scrutinize tenure protections is to demonstrate the standard we already hold ourselves to, and the rigor with which we enforce that standard.

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Coming Posts

Over the next few posts, we will get into the current – and material - threats to institutional autonomy and self-governance. And we will offer some thoughts on how universities can respond in this incredibly chaotic and uncertain time.

“Finding Equilibrium” is coauthored by Jay Akridge, Professor of Agricultural Economics, Trustee Chair in Teaching and Learning Excellence, and Provost Emeritus at Purdue University and David Hummels, Distinguished Professor of Economics and Dean Emeritus at the Daniels School of Business at Purdue.

The idea of academic freedom as a right of tenured faculty and as a principle of institutional autonomy is being challenged as never before. This post explores academic freedom as one of the primary objectives of tenure: what it is, why it is important, why it is under fire, and how it impacts the choices that faculty make in their research and teaching.

Note these questions are distinct from an issue currently roiling universities: how the reliance on external funding challenges institutional autonomy and academic freedom. We’ll take that on in a future post.

What is Academic Freedom?

The American Association of University Professors provides a formal definition, but the essence of the idea is faculty can’t be fired for what they teach or the research they do – as long as what they are doing is in their academic field. They also can’t be fired for speaking their mind on matters of institutional governance or for expressing themselves outside the university on matters that are important to them.

The idea seems simple enough: faculty are to be left alone to do their work. In practice, this seemingly innocuous idea is anything but simple and it generates a lot of heat – in part because of a lack of understanding of what academic freedom is and what it is not.

Academic freedom does not mean a faculty member can say anything they want in a classroom (they can’t). It does not mean they can behave in any way they want (no again – university policy and regulations (and our legal system) govern faculty behavior). It does not mean they can publish anything they want (the peer review process means other experts dictate what gets published).

While there are limits and constraints, academic freedom does mean that tenured faculty have a lot of control over what they teach and the focus of their research.

Why Does Academic Freedom Exist?

The short version is new ideas aren’t often well received – put forward a new way of doing something or a new way of thinking about something and someone’s proverbial ox is gored. That can be very problematic for the person with the new idea!

There is a long history of scholars being persecuted for new ideas (think Galileo and his crazy notion the Earth rotated around the Sun, Darwin and the theory of natural selection, etc.)

A more recent example comes from the “difficult years” of McCarthyism in the late 1940s/1950s when fears that Communists had infiltrated universities (along with other institutions) were pervasive. In a 1955 survey of 2500 social science faculty, 990 incidents were reported in which an accusation was made against at least one professor. About one-half of these led to some form of sanction and “104 faculty members were forced to resign for political or religious reasons” (Lazarsfeld & Thielens, Jr., summarized in FIRE).

Formalized in the 1940 AAUP Statement of Principles on Academic Freedom and Tenure, one pillar of tenure as a formal condition of employment was academic freedom: allowing scholars to do their work with the confidence that no matter who didn’t like their ideas, they got to keep their jobs. At least those faculty with tenure do…

Does Academic Freedom Still Matter?

Galileo got in trouble with the Church about 500 years ago and Senator McCarthy began his search for Communists 75 years ago. Do the protections of academic freedom for faculty still matter in the 21^st century? The answer is a resounding yes! In our leadership roles, we have dealt with plenty of issues where the academic freedom of a faculty member was challenged.

Research findings put a company’s product in a bad light – you need to rein that rogue faculty member in! A study offers up a controversial position on a social issue – watch the internet trolls bombard the faculty member with disgusting comments and threats. A student hears a perspective that is not aligned with their view of the world – get that faculty member out of the classroom!

Such pressures come from inside the academy as well – if you are in a pre-tenure or non-tenured position, and another (tenured) faculty member really doesn’t like what you are teaching or the focus of your research, you may find yourself looking for a job with your tenure denied or your annual employment contract cancelled. Tenured faculty have no such worries.

This stuff happens – regularly – and protecting the faculty member’s right to keep their job while they do their work in the face of such pressures is what academic freedom is all about. Basically, it guarantees the university has the faculty member’s back.

Why Should Society Care about Academic Freedom?

Good research changes our understanding of the world…great research changes the world. If we already knew everything there would be no point in doing research. When you change an understanding…of politics, history, economics, biology, engineering, soil science… someone is going to be unhappy with the new understanding. So, all good/relevant research offends someone, hence the need to protect the researcher.

Think about research in areas that have been called out for funding cuts such as racial inequality and health access, vaccine hesitancy, and climate science. Do we really think we are better off if we don’t know why certain groups have worse health outcomes, why people don’t want vaccines, or how sea level rise will affect coastal communities?

Great teaching works the same way – challenging ways of thinking, deepening perspectives, building skills in discernment. Academic freedom empowers faculty – who have spent years mastering their discipline – to make decisions on what material needs to be taught and how to teach it.

Constraining these rights of faculty to choose what they research ultimately limits creativity, shuts down promising ideas, slows/stops innovation and progress. Restricting what faculty teach leads to groupthink and limits development of critical thinking skills by students.

Why is Academic Freedom Under Fire?

Control, accountability, and politics. The fact that academic freedom gives faculty the right to do their jobs without outside influence is infuriating to some outside influencers. Public universities are funded by taxpayers, and governed by Boards that are typically appointed through a political process. And, you are telling these elected officials and governing boards to keep their hands off what faculty teach and research, the broader curricula, who is hired and retained? That just doesn’t sit well…

In fairness, many of the political critiques of the university cast political intervention as a necessary antidote to the university’s own failure to protect academic freedom as well as the decline in public trust of universities.

They would claim that politically unbalanced hiring or cancelling `controversial’ speakers is evidence that academic freedom as currently practiced is a one-sided affair. Those paying the bills question the cost of education, student debt, student preparation for the work world, etc. And because the university and its faculty can’t be trusted to right their own ship, politicians will do it for them.

While there is some truth to the idea that universities have provided plenty of kindling for the fire currently burning, even well-intentioned interventions can spin out of control. What starts with a call for balance can quickly land on the outright prohibition of teaching particular ideas and/or directing research agendas in destructive ways. We’ll dig deeper into this in a future post.

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Academic Freedom and Research in Practice

Academic freedom as guaranteed through tenure means faculty have the right to ‘publish findings without interference’. But this is far from a blank check to work on whatever you want. Four practical constraints shape the research that a faculty member does and the impact that it has.

First, who gets to do research? You don’t have much academic freedom if you don’t have a job, and you don’t have time to do research if you aren’t hired into a tenure-track position. While faculty are involved in the hiring (and promotion) process, central administration typically controls whether or not available faculty positions enjoy the protections of tenure.

Second, who decides what faculty work on? University research (particularly capital-intensive research in engineering, science, medicine, agriculture,…) is dependent on competitive grants to support the work. Even for non-capital-intensive disciplines such as some of the humanities and social sciences, you still have to find funds for graduate students, post docs, data collection, travel, etc. And the federal agencies, NGOs, and private sector firms that sponsor these competitive grants/provide such funding determine what topics/areas get funded.

Yes, faculty can be engaged by funding agencies in helping define topics/areas. And, faculty have the freedom to compete for the funds and to do the work (if they are one of the few to get funded), but this is all within the constraints of the grants program that dictates what kind of research proposals the funding agency will consider. In many disciplines (but certainly not all) this affects who gets tenure: no matter how talented you are, if you can’t fund your research program, no tenure for you.

Third, faculty peers can limit the research domain. Before your research gets published, it must pass muster with a group of peers working in your discipline/general area. While some would say this process leads to insular thinking/constraints on bold ideas in a discipline, there is a strong argument for such a hurdle.

The standard that a faculty member must meet - presenting compelling evidence that their idea/perspective adds something to what is already known in a discipline - separates a faculty member from a You Tuber. Pitching a new idea: not so hard. Pitching a new idea with the evidence that it clearly adds to/turns over the knowledge we have accumulated in a discipline over the course of human history: hard!

Fourth, universities face a dilemma when trying to be relevant with their research agenda. For research to have an impact, people need to know about it. But bringing attention to the outcomes of research on a contentious issue makes it much more likely you will invite complaints. Would you rather remain quiet, and uncriticized, or highly public and face a backlash? Such increased scrutiny can have the unintended consequence of faculty just keeping research quiet, at best, and shifting the direction of their work to something less relevant at worst.

The bottom-line: faculty have some leeway in the research they do and how they communicate their work. But, the constraints imposed by funding agencies and peers are real, as are the implicit pressures that come with working on relevant, contentious issues.

Academic Freedom and Teaching in Practice

What does it mean to ‘teach without interference’? In preparing a course, a faculty member makes thousands of decisions, large and small, about what content to include in their course. (The exception is new faculty, who try to include everything known to humanity in their course the first time out – trust us, we have been there...)

Academic freedom says this choice of what to include in the course and how to teach the course belongs to the faculty member – they are the disciplinary expert, they choose the content and the approach.

Note this does not say faculty have the right to spout off about something unrelated to their discipline in the course – they don’t. If you are teaching calculus, academic freedom does not mean you can take the first 25 minutes of class railing about the Russia-Ukraine war, local zoning issues, or your busted NCAA basketball bracket (unless you can somehow weave a team’s win/loss trajectory into a discussion of derivatives).

This business of what is germane and what is not may be pretty straightforward with a calculus class, but can get far trickier in the humanities and social sciences – and likely focuses as much on how a topic is discussed as the topic itself. Faculty have the right to bring any contentious topic into their course if relevant to the course. That said, faculty also have a responsibility to students to help them put that contentious topic into context so they can form their own opinions about said topic – and to have a reasoned, civil discussion about it.

To take a current example: the Trump administration is in the middle of igniting the biggest international trade war in the last century. And in the view of these authors (one of whom is an actual expert on the subject), these policies are likely to lead to a lot of grief. But to teach the topic properly one needs to acknowledge that there are theoretical economic arguments that describe the conditions under which tariffs can raise national incomes, or lower them. And other arguments about how tariffs can be used to redistribute income within a country. And other arguments about how tariffs can be used to pursue national security or other non-economic objectives. And there is a lot of evidence about all of the above.

Strictly speaking, academic freedom as conventionally conceived would allow a faculty member to cherry-pick only those arguments that support their own view of the topic, perhaps inflected by support or dislike for the Trump administration itself.

In our experience, faculty members generally do their best to reflect conflicting major strands of thinking and evidence on controversial topics. But this balancing act is constrained by the faculty member’s editorial function in constructing a class – there isn’t time to talk about everything. And providing a balanced treatment doesn’t mean that students actually *hear* the balance in what is presented. Students’ own prejudices about the subject can influence what they remember.

Many current challenges to academic freedom are based on some vague allegation that universities ‘indoctrinate’ students. There are some students we wish we could indoctrinate with economics – getting them to read the syllabus is challenge enough! That said, when it comes to affecting views and how they are shared, students likely have far more influence on one another than the instructor does.

Source: Chronicle.

Upshot

We have argued there is societal value in allowing faculty to do their work as free from constraints as is possible. Tenure protects this right by connecting continued employment to that freedom. However, only about 1/3 of the faculty in the US enjoy the protection of tenure. If freedom to make choices about research and teaching is so important to the operation of the academic enterprise, why do so few faculty enjoy it? Is the promise of continued employment the only way to guarantee that right? We will take this issue up next week.

More broadly, issues of trust and accountability set up the fundamental problem that universities face concerning increasingly suspicious external stakeholders. We ask them to trust us as experts: to make good decisions about what we research, what we teach, who we hire and promote, how we operate our campuses.

Our external stakeholders have very little evidence on which to base criticism of any of the above because, as non-experts, they don’t know what good research is, or how to teach a controversial topic, or who the best candidates are for hiring and promotion, or even how to operate a university. So they have to trust our judgments, and that trust takes the shape of academic freedom, as protected by tenure, and institutional autonomy and self-governance, which higher education has enjoyed over time.

What we are learning now is what happens when the non-experts stop trusting us.

Next Week

The current tenure system has clear pros and cons – tossing it is a bad idea, but so is preserving the status quo. We will share our thoughts on some alternatives in our next post.

Research assistance provided by Marley Heritier.

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“Finding Equilibrium” is coauthored by Jay Akridge, Professor of Agricultural Economics, Trustee Chair in Teaching and Learning Excellence, and Provost Emeritus at Purdue University and David Hummels, Distinguished Professor of Economics and Dean Emeritus at the Daniels School of Business at Purdue.

In this post we make an affirmative case for tenure using arguments from the economics of executive compensation and thin labor markets.

Tenure and Executive Compensation

Many corporate executives receive significant compensation packages that include not only base salaries, but shares, or options to purchase shares, in their firm. Some argue these packages are too generous in terms of overall dollars, but the comparison that interests us is the structure of the compensation. Why do boards give executives equity (ownership) shares in the firm?

The problem facing a corporate board is this. The value of the firm (and the corresponding returns to its shareholders) depends on a number of factors. Some of these can be controlled by the firm and depend on the effort and quality of decision making by its leadership. But other factors are outside the control of the firm – are input costs rising or falling, is the economy growing or shrinking, have competitors developed fabulous new products or suffered major quality defects.

Unfortunately, the board has a difficult time assessing the effort their executives put into the job and the quality of their decisions. Boards struggle to separate whether sales and profits are rising because of great executive decisions or because the external competitive environment is rosy. How then do you write a contract that incentivizes executives to work hard and make great decisions when you can’t clearly assess whether they have?

The answer is to provide an executive with a base salary along with a share of ownership of the firm. Sharing in the rising/falling fortunes of the firm aligns the incentives of the executive with the interests of the shareholders, resulting in more effort and better decisions.

Incentivizing Hard-to-Observe Effort

What does this have to do with faculty and with tenure? Faculty are expected to do many things: generate high quality scholarship, teach effectively, and provide service to the university. In land-grant and many other public universities, the to-do list also includes engagement with external stakeholders.

Research, teaching, and engagement are the university’s main products, and service to the university makes providing those products feasible. “Service” means that faculty act as human resources officers in hiring, developing, and evaluating other faculty. They also work as product designers (creating and improving curriculum) and in operations roles, assisting with a host of other administrative chores that are adjacent to the other roles.

Just as with corporate executives, it can be extremely hard to evaluate the effort that faculty put in and the quality of work they produce. University boards and executive leadership can look at a CV to count publications or citations or tally up research dollars, but it takes someone working in closely related fields to truly evaluate a research record. That is so time consuming (we estimate our institution invests ten professor-years of work every year to evaluate candidates for tenure and promotion) and so reliant on experts outside the university that we do it perhaps twice in a career – corresponding to two major promotion windows.

University boards and executive leaders can look at faculty teaching evaluations in individual courses, or increasingly, at student complaints. But as we earlier argued, those are very poor measures of student learning in a course, let alone learning across a student’s cumulative experience in college.

Still, when it comes to teaching and research, boards and university leaders have some ability to evaluate and incentivize individual output. You can tell if someone is a disaster in a classroom or stops producing research entirely. If you wanted to strengthen these incentives toward individual production, you could do that pretty easily. (More on that in a few weeks.)

However, boards effectively have no ability to observe the effort and quality of decision making that goes into faculty’s HR and product design functions. If we consider the ongoing viability of the university as a whole, these may be the most important activities in which faculty engage.

A university might currently have great individual faculty and great programs. But if those faculty do not invest thoughtfully in their HR function - hiring, developing, and evaluating peers – the quality of faculty will degrade quickly, and with it, the main outputs of the university. Similarly, neglect of programs and curriculum quickly leads to outdated learning and inferior job market outcomes for students.

In the face of the difficulties in carefully assessing research and teaching output, and the comprehensive inability of university boards to measure effort or quality of service output, tenure is the academic equivalent of sharing the equity of a firm with a corporate executive.

How Does Tenure Tie a Faculty Member to University Performance?

Struggling institutions do not give raises. They provide inadequate benefit packages. They attract poor students who are a chore to teach. They inhibit faculty research productivity by housing faculty in sub-standard spaces or failing to provide adequate support for advanced computing, laboratories, grant-writing, or a host of other services. They are not able to hire strong research colleagues with whom to interact and innovate. In extreme cases, they close down departments and lay faculty off.

Because thriving and struggling institutions treat faculty very differently, the success of the university is strongly linked to desirable personal and professional outcomes for individual faculty. Contrast a faculty member with tenure to an adjunct delivering coursework piecemeal. If you have no long-term connection to the university, the variability in outcomes at an institution is far less concerning. You go and find another place to work that offers better pay and better working conditions.

Sometimes university leaders (us included) bemoan the fact that faculty invest less time in the institution itself than leadership might hope for. What is actually amazing is that faculty invest any time whatsoever in improving the institution.

Since service of the sort described here (HR function, product design, operations) generates little or no direct short-run financial returns to individual faculty, you might think an optimizing faculty member would eschew this activity altogether. Yet we consistently saw faculty invest time and thoughtful effort in their critical HR functions, in their critical product design functions, and in a whole host of necessary administrative chores. Many of these investments pay off over the very long-run, years or even decades. Yet faculty continue to provide this service.

Some would ascribe this to intrinsic motivation, that is, to an uncompensated motivation to make their university better. We think it is better described as faculty recognizing that tenure has provided them with an equity share in the university and they want to maximize the value of that equity share.

In short, while some argue that tenure insulates faculty from the consequences of institutional success or failure, we think this is completely backwards. Tenure causes faculty to take a much stronger interest in the long-term viability and strength of their institution than they otherwise would.

Extreme Specialization and Thin Markets

In the early days of universities, faculty were polymaths covering broad subject matter. But as disciplines developed, and the associated knowledge base deepened, it became necessary to specialize. Social sciences divided from the humanities and then divided into psychology, political science, sociology, and economics and these in turn divided into sub-specialties again, and again. Engineering divided from science and then divided into a focus on mechanical, or electrical, or chemical properties and systems, and these divided into sub-specialties again, and again.

From the outside all this specialization invites mockery, with scholars knowing “more and more about less and less” in Nicholas Butler’s memorable phrase. But this specialization is an inevitable consequence of scientific progress. In their research duties, we ask our faculty to do nothing less than produce a piece of science, or analysis, or understanding, that no person has previously produced in the history of mankind! And to do it over and over again. That is a tall order.

Alas, there are no more DaVincis or Jeffersons creating breakthrough knowledge across a wide range of disciplines. Or rather, knowledge has advanced so far that it is no longer feasible to be such a person. The only way to expand the frontier of what we know is to narrow the scope of focus so that we can accumulate the learning and experience necessary to reach the frontier in the first place.

(For a formal economic model of this process, we recommend reading Jones, The Burden of Knowledge and the Death of the Renaissance Man or the highly accessible summary written by Matt Clancy here which summarizes a number of additional provocative implications of this idea.)

How does this relate to tenure? Because of the extreme specialization we demand of people who can push out the knowledge frontier, we are asking them to take two kinds of big risks: temporal and spatial.

Temporal Risks for Faculty

Innovation is inherently risky. Many research ideas don’t pan out and represent what looks like, in retrospect, wasted resources. That isn’t just true of academic research, it is also true of private sector research.

In our last post we mentioned the extremely low success rate of new molecules explored by pharmaceutical firms – just 10% make it through regulatory approvals and that’s only counting as a share of molecules that make it far enough through the scientific process to begin clinical trials. In that industry the cost of developing a successful new molecule, including the cost of failures, is nearly $1Bn on average, though some estimates place the number as high as $4.5Bn.

The inherent risk in innovation – in generating a successful new idea nobody has previously thought of – is that many projects don’t pan out. You can try and fail and try and fail repeatedly, and without an external signal of production (a success that yields a grant, or a publication, or a patent) it may look to an outside observer that you have been doing nothing at all.

When your review is time limited (as it is prior to tenure) faculty respond by de-risking their investments and taking on projects with higher probability of success. That usually means taking on projects that add small increments to our stock of knowledge to generate the tangible outputs needed for their promotion.

The question is whether we want faculty to take big swings and big misses in order to solve big problems. If we do, tenure provides an insurance policy against being evaluated only on the basis of your most recent quarter of production.

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Spatial Risks for Faculty

Because faculty are so specialized, there are at any one time a very small number of positions anywhere in the world that are of suitable quality/value to interest a high performing faculty member. And if you are located in a medium-sized college town somewhere in the Midwest, there is zero chance there is another position you would want to take anywhere in the same commuting distance.

You might have wondered why certain occupations are so heavily concentrated in very specific areas: finance in New York and London, software and venture capital in Silicon Valley, film-making in Hollywood. One reason is that these places host dense concentrations of firms who can hire someone with a very narrow specialization in sub-specialties of finance or software engineering or film editing. That means a person can choose to specialize very narrowly, move to where there is a concentration of firms, and be assured that they have options if employment in their first firm does not pan out.

Universities do not much cluster. Even the world’s great cities have only a small handful of top places, and most universities are the only game in town. From a labor supply standpoint that is an incredibly risky proposition. It gives the university what we call a monopsony position (monopolists are the only sellers in a market; monopsonists are the only buyer). If business turns down, the monopsonist university can lay you off, or slash your wages, or demand twice as much teaching. And you have no outside option.

Tenure is a guarantee against both kinds of risk. The temporal risk that you have a bad quarter or year of production. The spatial risk that in a downturn the only university in your city will be tempted to balance the budget on your head.

You might ask, why do faculty need that guarantee if most workers don’t get it? And the answer is, almost nobody in the labor market is as narrowly specialized as faculty are. The more narrowly you are specialized, and the thinner the market for your services, the more at risk you are.

Investing Half Your Working Life to get Tenure

You might think, well, life’s tough, you get a bad draw, so what? Here we have to ask about the incentives to become a faculty member in the first place. Faculty members invest four years in college. Another 6-8 years in a PhD program, and for many fields another 2-4 years in post-doc positions. Another 6-8 years as an untenured assistant professor before being granted tenure, and increasingly twice that with “tenure re-starts”.

Altogether this represents 22+ years invested in a research specialization, along with paying the associated costs for their academic program and the opportunity cost of foregone wages. These costs are substantial. About one in five PhD students use their own resources to fund doctoral study, and those numbers are dramatically higher in minority populations. For those who are on paid assistantships, PhD stipends are much lower than one could earn with a bachelor’s degree. (In our discipline, PhD stipends are about 33% of what you could earn in the private sector; for engineering it’s likely closer to 20-25%.) Further, if you are out of the private workforce, you aren’t accumulating the occupation- and firm-specific expertise that leads to really significant wage growth.

And now imagine at the end of all that highly specific investment and time to be a faculty member, your employment is at the mercy of your university’s short-run budget situation. Or at the mercy of a university leader or a legislator who doesn’t like the conclusions of your research. Massive upfront investment to generate meager and variable returns is not likely to attract smart people to pursue faculty careers.

Academia vs. Industry

These big upfront investments are one reason that many of our brightest scholars have given up on academia and opted for industry instead. In the most recent year, fewer than 12% of new PhDs in engineering took academic positions. Some of that reflects the length of investment and uncertain returns just described. Some of that is no doubt because academic institutions are expanding non-tenure track lines while reducing tenure track positions. Given the precarity of lecturing roles, new PhDs are saying: no thanks.

Of course, there is a level of compensation that would make all this investment worthwhile even without the insurance offered by tenure. What can we say about wages for a new PhD considering the academy versus industry?

Faculty wages vary widely across institutions and disciplinary areas, and the premia involved in industry positions also varies widely. Engineers and scientists are in great demand in industry, as are, for example, finance PhDs. Using data from NSFs “Survey of Earned Doctorates”, industry employment offered a 67% premium over academic employment for science and engineering fields overall, but only about 10% for the humanities. That probably tells us a lot about why 2/3 of new humanities PhDs but fewer than 1/8 of new engineering PhDs take jobs at a university.

But what about pursuing the PhD path in the first place? Our discipline, economics, tends to be well-paid relative to most faculty areas. In 2023-24 the median salary for a tenured economist at associate professor rank in the US was a little over twice what a newly minted undergraduate could expect to earn. But that’s after investing almost half of their working life, foregoing better earnings all along the way, to earn tenure.

So, you can revoke tenure, and eliminate stable returns on the decades of investment needed to earn it. You just shouldn’t expect many people to be interested in taking that deal.

Next Week

We’ve stalled as long as we could, but next week we tackle the 800-pound gorilla in the tenure debate: academic freedom. What it means, who has it, and how actions in DC and in state houses around the country will impact it.

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“Finding Equilibrium” is coauthored by Jay Akridge, Professor of Agricultural Economics, Trustee Chair in Teaching and Learning Excellence, and Provost Emeritus at Purdue University and David Hummels, Distinguished Professor of Economics and Dean Emeritus at the Daniels School of Business at Purdue.

In this post we take on the arguments against tenure to see which have merit and which do not.

Do Faculty Quit Working After Tenure?

Perhaps the strongest conceptual argument against tenure is the possibility that post-tenure faculty work and produce less. This notion seems to be a motivating factor for stringent post-tenure review processes in states like Florida. On its face, the argument seems plausible. Who wouldn’t back off a bit from a job where effort cannot be monitored effectively and where protections against firing insulate you from the consequences of taking it easier?

Yet, there is little evidence in the research literature to support this hypothesis, though faculty may change the type of work they do, e.g. emphasizing quality over quantity. This tracks with our experience with our colleagues. Yes, a small number of faculty become unproductive, or “deadwood” in academic parlance, after earning tenure. But others become much more productive, freed from the ticking clock of an impending tenure review and able to go deeper into difficult research topics – topics that were too risky to explore given their focus on tangible results while in the probationary period.

The lack of evidence for systematic productivity decline is even more surprising given the changing work expectations of a tenured faculty member. Well-run departments insulate junior faculty from significant service obligations. But somebody has got to run the place, and the (long!) list of service and leadership obligations that post-tenure faculty must discharge can significantly reduce time for research and teaching.

To be clear, there are outliers, individuals who take advantage of tenure protections to coast, and others who just get tired and mail it in. We’ll discuss strategies for these outliers in a subsequent post, but the larger point here is that they are *outliers*… and productivity decline post-tenure is not a systemic problem.

Why Doesn’t Post-tenure Productivity Diminish More?

We think there are four reasons.

• One, we all learn by doing, and faculty a decade out from grad school are simply better at teaching and research than new PhDs. For many faculty it takes several years to build momentum in a research program. By the time of the tenure decision, the question of whether a faculty member can be productive is settled. After tenure we start to see faculty building scale (larger labs with more PhD students and post-docs), taking risks, and gaining the national recognition and visibility to lead/partner on bigger and more ambitious grants and projects.

• Two, as we discuss here, there are strong financial and professional motives for continuing to be productive. Raises, summer salary (whether internal or grant funded), additional promotions (to full or chaired/distinguished professor), and the prospect of outside offers can create very large differences in financial compensation for more productive faculty. Faculty who are not meeting basic responsibilities may see their appointments reduced and their compensation actually cut.

• Three, most faculty self-select into the profession because they love to research and teach, and this intrinsic motivation drives them to produce even if they are (somewhat) insulated from termination.

• Fourth, and perhaps most important, nobody dislikes “deadwood” faculty more than other faculty! As a result, tenure review processes focus as much on a forecast of future productivity as on past production. There are a lot of things that go into that forecast, including pipeline performance but also subjective assessments of whether a promotion candidate has the intrinsic motivation to continue doing the work.

Do Tenured Faculty Reduce Budget Flexibility?

This argument also has some surface plausibility. Let’s say we tenure someone at age 35 and they retire (of their own volition) at age 75. That’s a 40-year salary commitment! Accumulate that across hundreds or even thousands of faculty across a large university and it is a massive commitment indeed.

This commitment becomes most problematic when a department accumulates more tenured faculty than are justified by the teaching needs of the department, or when a surplus of tenured faculty in one area reduces the budget flexibility needed to provide resources for fast-growing units. That can happen, especially in departments that were once well-subscribed and now struggle for students.

This is not just a humanities issue…it would not surprise us if the current land-rush into computer science enrollments were to ebb, repeating the boom and bust cycle from 1995-2010. And if the Trump Administration makes good on its intention to severely slash research funding, colleges of Agriculture, Science, Engineering, and Medicine may have more tenured faculty than they know what to do with.

These large shifts in faculty demand notwithstanding, three factors argue strongly against budget flexibility as a major consideration for eliminating tenure.

• First, fewer and fewer of the credit hours delivered in undergraduate programs are delivered by tenured faculty! As we described here, non-tenured faculty have grown rapidly at nearly every university and now comprise nearly 2/3s of all faculty nation-wide. And since it is typical for non-tenured faculty to teach two to three times as much as tenured faculty, they (and graduate students) are delivering the lion’s share of undergraduate credit hours. We’re not so sure that’s a good thing for students, but if a university administration needs to adjust teaching capacity/budget at the margin, that is a vast reservoir of adjustment unimpeded by tenure contracts.

• Second, while there can be short term fluctuations in demand for certain degree areas, most of the changes we see in enrollments reflect slow moving, long run trends. This usually provides leadership with ample time for adjustment in tenure lines, making use of the steady process of attrition and faculty turnover, provided leadership is even a little bit forward looking.

• Three, if push comes to shove, departments can be disbanded, majors discontinued, and tenured faculty laid off. If federal funds used to buy out faculty time dry up, affected faculty can simply teach more.

In short, we think the budget flexibility argument against tenure is wildly overstated, except in cases where smaller colleges really have loaded themselves up with vastly more tenured faculty than they can use. When it comes to the operations of nearly all comprehensive universities today, budget inflexibility stemming from tenure is a red herring.

Do Tenured Faculty Stand in the Way of Needed Change?

This brings us to what we believe is the real source of opposition to tenure: tenured faculty constrain the ability of university leadership to remake the university in the way they please. This constraint is real: it flows from the combination of shared governance, particularly faculty control of the curriculum, and tenure protections which prevent administrators from firing faculty who disagree with their preferred approach.

Unhappiness with recalcitrant faculty abounds among executive leadership. Former Purdue president (and our former boss) Mitch Daniels published an op-ed in the Washington Post pointing to tenure as a barrier to innovation. The former president of Macalester, Brian Rosenberg, wrote a provocatively titled, thoughtful and entertaining book Whatever It Is, I’m Against It, pointing to tenured faculty as standing in the way of any kind of change at the university. Former Berkeley chancellor Nicholas Dirks’ book City of Intellect: The Uses and Abuses of the University also strongly criticizes the unwillingness of his faculty to be reasonable in their response to budgetary crises. And now we have a survey saying two-thirds of college presidents seem to agree with this negative sentiment. Ouch.

Look we get it. Shared governance means that tenured faculty can resist change, they can slow and, in some cases, even stop what administrators think is progress. Sometimes that happens with overt votes. Sometimes it happens by slow walking proposals in the hopes that administrators will lose interest (or leave). There were certainly times when we, as university leaders, were really frustrated by faculty who had different ideas than we did.

The question is, what approach to governance would you prefer?

Be More Like Business?

It is often argued that universities need to be more like business: more nimble, more agile. Implied in this notion is that if faculty can’t or won’t be nimble and agile, strong central leadership can and will. If we simply let powerful boards and presidents act like corporate CEOs and drive aggressive change without faculty obstruction, perhaps universities would move rapidly and get better.

Speaking as two economists, let’s be clear about a couple of things.

• First, private business isn’t always agile and disruptive, and the more successful a company has been with past innovation the less likely it is to continue to innovate. The tendency to stick with successful existing lines of business in lieu of forward-looking innovation was famously named the “Innovator’s Dilemma” and extensively documented by Clayton Christensen, the late guru of business disruption. Kodak anyone? Xerox?

• Second, when it does innovate, private business screws up all the time! Christensen and coauthors wrote that repeated studies have found 70-90% of mergers and acquisitions are failures. The vast majority of new product launches fail to gain sizeable new markets. A great deal of corporate investment in innovation generates nothing of market value. For example, in the vital pharmaceutical sector only about 10% of new molecules that are even promising enough to test in clinical trials make it through those trials to be granted regulatory approval.

• Third, perhaps owing to the difficulty of successfully leading large businesses, CEOs don’t stick around long. The median tenure of S&P500 CEOs is 4.8 years, a number that has been steadily declining and is remarkably similar to the average tenure of university presidents (5.9 years). Governing boards frequently make big mistakes in hiring their strong central leaders: one in seven CEOs of large public firms are out of the job within a year.

We’re not saying universities are currently as innovative and nimble as they need to be – they aren’t. (Christensen was also pretty critical of universities. We’ll come back to this in a future post.) And we are not being critical of private business leadership or second-guessing their strategic choices. These are hard jobs! We’re just saying, there is nothing magical about strong CEOs or a private business approach that guarantees success.

Rather, the magic of the market is that successes are rewarded and screwups are punished. Firms that make bad decisions lose their shareholders’ money or go out of business. And at a really high rate! About 20% of business startups close shop in the first year and only half make it five years. In the strong economy of 2022, almost half a million US firms went out of business, leading to over 5 million employees losing their jobs.

There is no reason to think that a more business-like, strong CEO approach to university governance would generate higher success rates than it does when applied to business itself. For every Michael Crowe of Arizona State, there is a Ben Sasse of Florida.

Move Fast and Break Things?

There is, however, a huge difference between universities and business in the consequences of failure. The problem with “move fast and break things” in a university context is that the “things” are students. And for most of them, the time they spend in college has more impact on their career and life outcomes than any other thing they will do in their lives.

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And it’s not just the students, there are other important stakeholders. Wild swings in the scope and focus of university activity directly affect non-tenured faculty and staff, the communities that host universities, and the employers who rely on them to supply talent and research.

Alumni have a stake in university choices as well. If Frito-Lay discontinues Flaming Hot Nacho Doritos you might be a little sad but you can switch to classic Nacho Cheese Doritos, or perhaps Fuego Takis instead. No great loss.

But if a university discontinues a degree program, that is a loss felt by all the alumni who received that degree. A degree is not a one-off consumption decision. It is an investment whose value depends not only on what happened while you took the degree, but on the public perception of the value of that degree in the years since graduation. Why else do alumni get so worked up about, e.g. MBA rankings? It’s not just pride in their alma mater. It is a perception that falling rankings affect the ongoing value of their degree and its associated human capital.

People who run universities hear from all these stakeholders all the time. You think faculty are the only ones who resist change?

Improving Shared Governance

None of this is meant to excuse faculty recalcitrance, which is a real thing. But it does suggest that the actual problem lies not with tenure but instead with an imbalance in shared governance.

Shared governance between university leadership and faculty plays out in many different ways across institutions. But at its core is the idea that disciplinary faculty know things about their discipline that leadership does not, and leadership has perspectives on broader issues that faculty do not.

This seems to suggest a pretty clear delineation of roles. Faculty voices should be strongest in matters that require deep disciplinary knowledge: the content of courses and curricula, and yes, what scholarly records demonstrate sufficiently impressive accomplishment that they deserve tenure. Administrative voices should be strongest in matters that concern the allocation of resources across different areas of the university. And, both faculty and administrators benefit when decisions in their realm are informed with information from the other.

Reading Dirks’ and Rosenberg’s accounts, it seems to us that their frustrations arose because faculty had been granted more power over budgetary matters than was warranted.

All this is solvable, and we’ll have more to say about this in a few weeks. But there is no reason to think that abolishing tenure as a first step in giving university leadership unconstrained power over all decisions, academic or otherwise, is a reasonable or necessary part of that solution.

Next Week

In summary, we don’t think these common arguments against tenure hold a lot of water. But what about the arguments in favor of tenure? We tackle that next.

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“Finding Equilibrium” is coauthored by Jay Akridge, Professor of Agricultural Economics, Trustee Chair in Teaching and Learning Excellence, and Provost Emeritus at Purdue University and David Hummels, Distinguished Professor of Economics and Dean Emeritus at the Daniels School of Business at Purdue.

Well, that’s just not true. But, there are arguments for and against this unique element of the academic enterprise.

We’ll focus our next few posts on what tenure is, the benefits of tenure (for faculty, institutions, and society), and the costs (to same). We start with this explainer on the what, who, how, and why of tenure.

What is Tenure?

Tenure is awarded and protected as a matter of institutional policy, so there are variations in how it is defined from institution-to-institution. Most definitions encompass key elements from the 1940 AAUP Statement of Principles on Academic Freedom and Tenure as summarized below:

• “A tenured appointment is an indefinite appointment – that is, an appointment that is not subject to annual renewal and that can be terminated only for adequate cause or under extraordinary circumstances such as financial exigency or program elimination.”

Basically, this says that a faculty member with tenure has a job as long as the university is financially viable, their specific program is financially viable, and the faculty member doesn’t give the university a good reason to fire them. At our university, this is stated as follows:

• “…it is the policy of the University to renew appointments of faculty members who have obtained Tenured status, subject always to the availability of funds, the continuance of activities in the area of employment, and the absence of circumstances which would otherwise entitle the University to terminate the appointment for cause.”

Let’s look at each part of this definition in turn.

Can Tenured Faculty be Let Go if Universities or Programs are not Financially Viable?

Yes, and there has been plenty of this going on lately: Sonoma State released 46 tenured and adjunct faculty members in 2025 to deal with a 38% decline in enrollment; Manhattan College laid off 19 tenured faculty members and eliminated 20 majors and minors; the University of Wisconsin-Milwaukee laid off 32 tenured faculty members when they eliminated their College of General Studies due to ‘financial pressures including lagging enrollment and inadequate state aid’. It would not surprise us if there were many more stories like this in the months and years ahead.

Can Tenured Faculty be Fired for Cause?

Again, yes, violating laws/university policy and not doing their job can lead to a tenured faculty member’s dismissal. At our institution these reasons are defined as:

• “proven incompetence, gross neglect of duty, moral turpitude, or improper conduct injurious to the welfare of the University.”

For those of you (like us) who are not legal scholars, ‘moral turpitude’ is characterized in the AAUP Statement of Principles as “a standard of behavior that would evoke condemnation by the academic community generally”. That definition covers a lot of ground…

As a result, in practice these conditions can be far from clear, particularly whether the conduct is sufficiently ‘injurious’ to merit firing. How often are faculty fired for cause? The only comprehensive study we are aware of reports a minimum of 14 terminations per year across U.S. 4-year institutions over the 2000-2021 period with the caveat “there are many reasons to think that …this estimate …is deceptively low” (page 30).

The bottom-line: tenured faculty can be dismissed from a university for cause – under a set of carefully defined conditions, and subject to a set of procedures designed to include faculty review and input into the termination decision.

This review process amounts to a trial in front of a jury of faculty peers. For this reason, in our experience, most such cases get resolved via resignation or retirement before the case ever gets to the review process. Faculty members who have committed ‘moral turpitude’ don’t want the public humiliation that comes with having the details shared with their fellow faculty.

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What Happens if A Faculty Member Isn’t Doing Their Job?

Let’s say they are basically well-behaved, does this mean a tenured faculty member can get away with not doing any work? No. A faculty member’s performance is typically evaluated and recognized through an annual merit raise program – so subpar work means a limited raise or no raise.

Low/marginal performers also face the loss of other sources of support: summer salary support, graduate student funding, research resources, etc. When you look across tenured faculty you will find sizeable differences in salaries and support that are highly correlated with past performance.

Under more extreme circumstances, a tenured faculty member’s appointment and their compensation can be reduced substantially (using the review process described above). If they are only giving half-time effort, their salary can be reduced by half. And yes, this happens.

In addition, more than half (58 percent) of U.S. universities have instituted some form of post-tenure review. This is a periodic review process separate from the typical annual review. A poor showing in a post-tenure review can have compensation/employment consequences. At the University of Florida (in what looks to be an extreme case), about 1 in 5 faculty going through the post-tenure review process either quit, retired, or gave up research to take on full-time (untenured) teaching appointments.

Of course, if the faculty member is really doing nothing of value for the university, they can be terminated for cause (i.e., at our institution for “gross neglect” of their duty). We don’t have (nobody has) the data to know whether such terminations/dramatic salary cuts for low performance are common. We suspect they are less common than in the private sector and in our next post we explain why.

All that said, in our experience most tenured faculty at reputable universities work hard at their job…but there are consequences if they don’t.

Who has Tenure?

Not as many as once did… In 1987, about 53% of (non-medical) faculty in the U.S. were full-time, tenure-track/tenured. By 2022, that number had fallen to 33%. Over the same period, the number of full-time non-tenured faculty went from 13% to 20%. The big change was in part-time, non-tenured faculty which represented 33% of faculty in 1987, but 48% in 2022.

So, about 1/3 of the faculty workforce (not counting graduate students) have tenure/are on a tenure track and about 2/3’s are in part-time/full-time non-tenured appointments. (Note: the definition of ‘faculty’ does vary across institutions, with some classifying part-time/non-tenured instructors as ‘staff’.)

Source: AAUP

Where do these tenure-track/tenured faculty work? The so-called R1 (research intensive) universities employ the highest percentage of tenure-track/tenured faculty – about 50%. At the other extreme are baccalaureate/associate and associate degree colleges at 25% and 18% respectively.

Source: AAUP

Men hold a greater proportion of tenure-track/tenured jobs than women and Asian faculty hold a higher proportion of tenure-track/tenured jobs than white and URM faculty. Interestingly, the number of graduate student employees has skyrocketed since 2002 – up more than 44%.

To summarize, U.S. universities have aggressively moved away from tenure-track/tenured appointments over the past 35 years to non-tenure/part-time positions and graduate student employees. Why? Cost (part-time faculty are cheaper) and flexibility (no long-term contractual relationships with non-tenured faculty).

How Does A Faculty Member Earn Tenure?

The short version is work your butt off for some extended period of time, submit everything you have ever done as a faculty member to a committee of faculty who have tenure, then another committee, then likely a third. If your career accomplishments make it through the gauntlet, then you pray the university senior leadership and Board of Trustees will bless you with tenure…

Okay, that’s a bit crude – but not far off the process at most places. Those faculty fortunate enough to be hired into ‘tenure-track’ positions begin a probationary period of several years – the average is about 6 years. During this time they work (hard) to establish themselves as professionals and build a record that will ultimately be evaluated for tenure.

Tenure review committees want to see (a lot of) evidence that you are intellectually alive and are contributing in some substantive way to what the world knows about your specific area of expertise. Beyond the candidate’s personal academic record, multiple scholars at other institutions are asked to write letters evaluating the candidate and comparing the candidate’s record to peers nationally. Talk about scrutiny!

Faculty take this process and the decision to grant tenure (and promotions in rank) very, very seriously. We have both served on promotion and tenure committees at every level of the university and, in general, the discussions are robust and the decisions carefully considered. Some evidence of importance is the time invested in the process. At a major research university like ours, a conservative estimate would be 18,000 faculty hours annually – almost 10 work years!

A few other points regarding the process are in order. First, what faculty actually ‘do’ in their scholarly work varies dramatically across a university. Many faculty do research, for some the primary focus is teaching. Some faculty write books; other faculty publish journal articles. Some faculty create works of art or music; other faculty obtain patents for their inventions. Even within these highly varied categories, there is much scrutiny as to what ‘counts’ for tenure: just how high profile is that journal? Just how important is that book? Should scholarship include work related to teaching or engagement?

Second, across disciplines, it is virtually impossible for a faculty member in one field to truly understand the scholarship in a different field. As economists, how much would we understand about leading-edge paleogenomics (and vice versa)? This presents real challenges once a tenure case gets beyond the disciplinary unit: how good is that faculty member, really? A Provost or President has to lean heavily on the unit-level evaluation of a faculty member’s scholarly productivity.

Third, where the tenure ‘bar’ is set will vary dramatically with the institution and according to its mission. Tenure at an elite private research university may mean you need to be on the path for a Nobel Prize. The bar will look different for a faculty member at a regional public university. But few faculty at any given institution think the bar is easy to reach – standards may differ, but they are high for each institution in the context of its mission.

(Whew – writing this section made us both twitch thinking about our experience going through the tenure and promotion process…and it hasn’t gotten any easier.)

Why Do We Even Have Tenure?

Tenure as we know it today in academe is a relatively recent concept – dating back to 1940 and the of guidelines (mentioned earlier) put forward by the AAUP in the Statement of Principles on Academic Freedom and Tenure. The objectives of tenure were defined as follows:

• “Tenure is a means to certain ends; specifically: (1) freedom of teaching and research and of extramural activities, and (2) a sufficient degree of economic security to make the profession attractive to men and women of ability. Freedom and economic security, hence, tenure, are indispensable to the success of an institution in fulfilling its obligations to its students and to society.”

The concept of ‘tenure’ was formalized to address two long-simmering issues: one was providing protections against firing/persecution based on criticisms of faculty work (‘academic freedom’) and the second was extending the term of employment beyond an annual contract. We’ll talk more about these issues in the coming weeks.

Where Are We Now?

Maybe back where we started before tenure existed – or at least on the way. Most faculty work part-time and are not protected by tenure. They have annual contracts and no longer-term assurances about employment. These individuals do not enjoy ‘academic freedom’ – at least they don’t enjoy whatever freedoms tenure provides.

At the same time, despite higher education moving dramatically away from the concept, it appears the cries to end tenure have never been louder. Why and does it matter? What are the pros and cons of tenure for faculty, universities, and society more broadly? What happens if it goes away? We will take up these questions and more about tenure over the next few posts.

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Research assistance provided by Marley Heritier.

“Finding Equilibrium” is coauthored by Jay Akridge, Professor of Agricultural Economics, Trustee Chair in Teaching and Learning Excellence, and Provost Emeritus at Purdue University and David Hummels, Distinguished Professor of Economics and Dean Emeritus at the Daniels School of Business at Purdue.

What’s the Issue?

We’ll get into ‘indirect costs’ below, but at issue is how much of these indirect costs NIH wants to pay. According to NIH, in 2023 the agency invested $35B in research through 50,000 competitive grants to more than 300,000 researchers at 2,500 universities/research institutions.

Of the $35B, $26B was for the ‘direct cost’ of the research and $9B (26%) was for ‘indirect costs’. Evidently now, NIH thinks the $9B is too much – either they want someone else to pay the indirect cost or they think universities could operate their research enterprises more efficiently.

We aren’t talking about chump change here – the reduction to 15% from the current average 27-28% would cut about $4B in indirect costs, most from university budgets. Universities in our home state of Indiana would lose about $69 million, Texas - $310 million, New York - $632 million, California - $804 million.

Source: Murphy

Before digging further, let’s set the context with some background on university finances and research funding.

How are Universities Funded?

Research universities are complex organizations with complex funding streams. Students pay tuition for educational services. Universities receive funds from operating auxiliary units: residence halls/food service, hospitals, sports programs, etc.

For public universities, states provide recurring revenue – primarily to subsidize the cost of education for their residents. (A typical out-of-state student pays 2.5 – 3 times the tuition of an in-state student.) For research (flagship) universities, some state funding supports their research enterprise. States also invest in repairs/rehabilitation to help a campus keep facilities in working order and they invest in new construction.

Donors invest in universities and a very small number of university endowments are very large. These outsized endowments are atypical – a NACUBO study on 658 universities showed 29 (4%) with endowments over $5B with more than half (335 universities) reporting endowments less than $250 million.

More importantly, returns on endowment investments are not available for the university to use at its discretion/plug budget gaps that other shortfalls create. Most large gifts are tied through a legally binding agreement to a specific investment as directed by the donor: student scholarships, facilities that support some interest/passion, etc. The very largest endowments (assets greater than $1B) are able to spend more of their endowment returns on operating expenses (about 18%) while virtually all public endowment funds (98%) are restricted in some way (APLU).

Beyond tuition, auxiliary revenue, and state and donor support, research funding makes up the other big bucket of funds.

Source: NCES (federal funding related to COVID-19 included in this figure)

How is University Research Funded?

For some research disciplines (economics for example) research costs are relatively modest and primarily involve faculty and grad student salaries. Universities can self-fund much of this research without external sponsors, so we’ll ignore these disciplines for the rest of this post.

Other disciplines such as the life and physical sciences, engineering, and agriculture require much larger outlays to fund experiments, clinical trials, and investments in facilities and equipment, in addition to salaries. These expenses are so large the university seeks partners to sponsor the research through grants

Research grants come from industry, private foundation, and government sources. But the most important sources are the federal research agencies: National Institutes for Health, National Science Foundation, Department of Energy, Department of Defense, National Institute for Food and Agriculture, NASA, etc.

Securing funds through grants is highly competitive: most federal grants have success rates of 5-10% - which means for every 100 grant applications the agencies receive, they fund 5-10 of them. (Talk about meritocracy!)

The path to landing a federal grant is a long one for a faculty member. After a Ph.D. student has spent 4-6 years in their academic program and another 1-3 years in a post doc, (some) get hired by a research university. Upon hiring, the university invests in ‘start-up package’ of funds (people and equipment) to help their new faculty member get their lab up and running and their research started. Such start-up packages can easily run $1 million or more in the life/physical science and engineering disciplines.

These start-up packages represent a major financial commitment by the university, and a high-stakes bet on whether new faculty will be competitive for federal grant funding. Those hoped-for grant funds are essential not only to support future work, but also to pay the salaries of grad students who will ultimately become the next generation of researchers!

Source: AAAS

Many federal grants require the institution match the funds provided by the government at some level – 50% is common. So, if the federal government invests $100,000 in a project, the university has to come up with another $50,000. This match may be the cost of faculty time or funding for graduate students to work on the grant. The bottom-line: universities have skin in the game for any grants that require a match and for all the money they invest in start-up for new faculty.

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What are Direct and Indirect Costs?

Grants cover direct and indirect costs. The direct costs of research include faculty and staff time, post docs, graduate students, clinical costs, computing, travel, supplies, small equipment, etc. But there are a lot of other costs incurred by the university that make it possible to actually do the research. These are called indirect cost or facilities and administrative expense (F&A) or overhead.

Think about a company manufacturing cars. The assembly line labor, parts, and materials are direct costs and make up a fair amount of the total cost of the car. But producing that car requires indirect costs as well: a production plant and all the equipment inside; designers, marketers, and advertising; lawyers, accountants, and finance types; HR professionals and executives.

Same for university research – it takes a tremendous investment in physical and human infrastructure before one can even compete for a federal grant. It takes labs and powerful computers and expensive equipment (you take a deep breath when you sign off on a multimillion-dollar atomic force microscope). It takes cybersecurity and IT experts, accountants to manage funds, and an army of staff to meet all the federal regulations and requirements. It takes power for the lights and heat/AC, water,… And, yes, it takes a President and managers to keep all of this stuff moving.

The bottom-line here: the term ‘indirect cost’ is a misnomer – these costs are just as real, just as important, and as such, just as direct, to conducting research as so-called ‘direct’ costs.

Source: AAAS

How Does the Indirect Cost Rate Work?

Universities recoup some of these indirect costs when the agency adds additional funds to the direct cost of the grant. (Check out this video for an excellent tutorial.) This partnership with the federal government was established long ago: universities build the physical plant and infrastructure to conduct research with the assurance that the federal government will reimburse them for part of these costs if the university successfully competes for funds. The amount of these added funds/reimbursement is determined by the indirect cost rate.

If the indirect cost rate is 45%, it means that for a $1 million grant, the funding agency would send the campus $1 million for the direct cost of the research and $450,000 to cover the indirect cost. (It’s actually more complicated than that, but we aren’t getting into Modified Total Direct Costs here!) NIH specifically takes to task some institutions with very high indirect cost rates including Harvard (69%), Yale (67.5%), and Johns Hopkins (63.7%).

Each university negotiates their indirect cost rate on a multi-year cycle with the federal government, so there is a wide range of rates. Rates vary with the kind of research being performed (human/animal trials are more costly than computational research), where it is performed (cost of living differences matter), etc.

Strict cost accounting rules are required to determine what the true indirect costs are. You need such rules to figure out how much of the cost of operating a 150,000 sq. ft. building full of offices, classrooms, and labs is actually used for research. Universities then use this information in a negotiation with the federal government to determine how much of the indirect costs the federal government will pay.

The negotiated indirect cost rate is typically less than the university’s full indirect cost. So, on top of their direct investments in research discussed earlier, universities must make up the difference between the negotiated indirect cost rate and their actual indirect cost.

What’s the Issue Again?

NIH says universities take grants at indirect cost rates lower than the federal government rate – so why should the federal rate be so high? Of course universities do this!

Think about our car manufacturer – yep, many vehicles are sold at list price, but for a myriad of reasons they will also sell below the list price – fleet sales, government sales, inventory clearance sales. The car manufacturer would go broke (or at least see their stock price plunge) if they sold every vehicle at their fleet price, but as part of an overall revenue strategy, it works.

NIH specifically calls out private foundations that pay lower indirect cost rates – say 10-12%. What’s going on? First, private foundation funding accounts for a relatively small proportion of total university research. Second, private foundation grants may only allow 10% indirect costs, but in many cases allow some costs to be included as direct costs the federal government would not – so the indirect cost rates aren’t as different as they might appear. Finally, the federal overhead rate is high in part because universities must meet a set of exacting federal standards to be eligible for grants – found in the Uniform Guidance. Contrast this massive set of requirements with the 5-page agreements that are common with private foundation funding.

The fact that federal agencies at least come close to fully funding indirect costs makes it possible for universities to accept grants at lower indirect cost rates from other funding sources - which in a real sense leverages the federal investment in research.

Who Then Foots the Bill?

At some level, this reduction to 15% sound like a good idea – who wants to invest in overhead? Faculty detest indirect cost charges – they want every single grant dollar available to pay the direct costs of research. Obviously, NIH doesn’t want to pay indirect costs.

But can you get rid of indirect costs? No. If a university is going to continue to do research of the kind that leads to scientific, engineering, and health breakthroughs, someone must pay for the labs, the equipment, the utilities, the insurance, the oversight, and the administrative support for all of it.

How Might Universities Adjust? Actions and Implications

By now it should be clear this is a really big deal (assuming it sticks). If funding for research infrastructure is reduced – or if there is uncertainty about future funding for that investment – universities will adjust by making decisions on how to best use the funds they do have. Let’s look at possible short and long run actions and implications.

Short-Run

• Most (but not all) universities will find some way to keep NIH research going. Facilities and equipment don’t have to be replaced overnight, and once made this spending is “sunk” and largely irreversible (you can’t un-build or sell-off a laboratory). You’d rather take grants with lowered indirect costs rates than take none at all.

• Any available indirect cost dollars will be used for essential research support staff. What is essential – depends on the university/research. Research technicians or others involved in doing research would likely keep their jobs, but staff who support faculty as they obtain and administer grants might be let go.

• Staff cuts don’t mean necessary administrative work stops - it means administrative work will be pushed back on faculty. This has two important implications: faculty aren’t efficient at doing these administrative tasks and time will be taken away from what they should be doing, research. So, in an effort to improve “government efficiency”, these cuts will hand work that could be done by someone making $80,000 a year to faculty getting paid twice that (or more), and who are worse at doing it! And as an added bonus, research productivity will decline.

• The university will reallocate its research funds and divert start-up funds, graduate student support, etc. to cover essential research support. A quick way to save a lot of money would be to cut the number of graduate students the university brings on and/or immediately freeze all new hiring in fields requiring large start-up packages (in part because you don’t know if the new hires will be able to secure grant funds anyway). If you typically hire 50 people a year who need $1 million start-up packages and don’t hire any, you’ve saved $50 million (over time). Of course, you’ll have to do that again the next year and the next because the cut in indirect costs has created a recurring budget deficit…and research output will steadily decline.

Longer-Term:

• Universities will look for ways to get more efficient in conducting and managing research. There are likely modest opportunities here – but we seriously doubt anyone is going to find enough efficiencies to bring their indirect cost rate down to 15% (at least for science and engineering research).

• Universities could reallocate funds from other functions: reduce student services, increase student-to-faculty ratios, dump student success programs, etc. No free lunch here – simply starving one part of the university to make up for short falls in another.

• Universities will try to shift research to funding sources that will cover indirect costs. Those sources look few and far between – private foundations already pay a lower indirect cost rate. Perhaps sponsored research from industry could grow, though for many reasons industry has largely retreated from basic science.

• Universities will look for other fund sources to cover indirect costs. This isn’t easy either: as discussed earlier, the folks who write checks to universities have strong opinions about where their money goes. Many university fund sources are tied down by legally binding agreements, but others that could be legally shifted would border on the unethical. You could, for example, sharply raise tuition and use all the new revenue to pay for research overhead instead of improving students’ educational outcomes. (We don’t really want to think about how that will play with a state legislature…)

• While there has been some speculation that this cut was aimed at elite private universities, the reality is that the size of their unrestricted endowments, and their tuition pricing power, means they may be able to emerge from all this relatively unscathed. Options are fewer in places where budgets are already stretched – mainly public universities and privates outside the elites.

• These other universities will gradually retrench and narrow their research footprint – perhaps focusing on research areas where indirect costs are lower, moving from clinical to computational research for example. Hiring freezes to avoid start-up packages will steadily winnow down science and engineering faculty. Physical infrastructure will depreciate and capacity will be lost. When that multi-million-dollar atomic force microscope needs replaced, where will the money come from?

• If research capabilities are reduced at universities, the best scientists will look for other places to work – perhaps industry or in the country they were born.

Possible Funding Agency Actions?

• If transparency around indirect costs is an issue, federal agencies could deal with that in their indirect cost negotiation – bring the hammer down on ‘offenders’ instead of on everyone. Or they could change the way they reimburse indirect costs – ask universities to itemize those items as direct costs in grants the way some private foundations do.

• Federal agencies could also do something useful and drop some of the regulatory/reporting burdens they impose to cut the cost of compliance for universities. Some of these rules and regulations are essential for basic accountability, but perhaps the federal government could learn something from private foundations here.

Source: COGR

Final Comments

Please understand: we are economists so we like efficiency! If there are solutions out there that help our US biomedical research enterprise operate more efficiently and effectively, by all means we need to pursue them. However, we believe such work is best done with a scalpel and not a chain saw…

Our research ecosystem has evolved to the point that most basic/fundamental research happens at research universities and most development/commercialization research happens in the private sector. Ultimately, if funds aren’t found to cover indirect costs, we unwind (or at least severely degrade) an ecosystem that supports innovation and drives growth in our GDP.

Next Week

Back to our regularly scheduled programming: we’ll take a look at the impact rankings have on universities and university decision-making (unless another bomb is dropped on higher education that we feel compelled to write about).

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Research support provided by Marley Heritier

“Finding Equilibrium” is coauthored by Jay Akridge, Professor of Agricultural Economics, Trustee Chair in Teaching and Learning Excellence, and Provost Emeritus at Purdue University and David Hummels, Distinguished Professor of Economics and Dean Emeritus at the Daniels School of Business at Purdue.