The Trump administration delivered a document titled the Compact for Academic Excellence in Higher Education in October 2025. It was sent to a handful of U.S. colleges and universities with the promise of preferential federal funding if the institutions agreed to a set of policy changes. Those changes ranged from merit-based admissions criteria to caps on international enrollment, a five-year tuition freeze, and even tuition-free instruction for hard-science majors at the wealthiest schools. The compact offered no concrete dollar amount and left the funding preferences deliberately vague. As a result, the majority of invited schools declined to sign.
Why the 2025 compact fell short
Universities balked because the agreement placed ideological conditions on core campus functions while providing uncertain financial rewards. Without a guaranteed funding stream, schools could not plan long-term investments in facilities, faculty, or student-aid programs. The lack of specificity also meant that future administrations could reinterpret or withdraw the promised preferences at any time, leaving institutions vulnerable to policy swings.
What a constructive federal compact could contain
Rather than demanding concessions, Washington could issue a list of twelve commitments that would give colleges stable, predictable support. The first pillar would be stable student aid the Federal Pell Grant—originating in 1972 as the Basic Educational Opportunity Grant and first awarded in the 1973-1974 academic year—should become a fully mandatory entitlement indexed to the CPI-U. The grant’s maximum award has sat at $7,395 since the 2023-24 award year and remains unchanged through 2026-27. Indexing to inflation would automatically restore its purchasing power, and doubling the ceiling would further close the aid gap for low-income students.
Predictable loan limits tied to earnings
Current federal loan caps are set by Congress and have not risen for undergraduate borrowers since 2008. A more rational approach would tie annual and aggregate loan limits to the earnings of recent graduates, using data from the Bureau of Labor Statistics or the U.S. Census Bureau. This would prevent loan limits from inflating tuition prices and would ensure borrowers can realistically repay what they owe.
Rewarding state investment in public colleges
Federal aid should complement, not replace, state spending. By offering incentives to states that maintain or raise per-student funding, the federal government can encourage a balanced partnership that safeguards public higher-education budgets when federal dollars fluctuate.
Securing research, autonomy, and openness
Long-term federal research funding is essential for scientific progress. Multiyear appropriations for agencies such as NSF, NIH, CDC, DOE, DARPA, ONR, USDA, NIST, NOAA, and NASA would give universities the confidence to commit to large-scale projects, recruit top talent, and maintain cutting-edge laboratories. The award process must remain merit-based, relying on independent peer review free from political interference.
Open and reproducible science
Funding should also cover the creation of a national data archive where researchers deposit raw data, code, and documentation. Making federally-supported research openly accessible would reinforce the principle of reproducibility and accelerate discovery across disciplines.
Protecting academic freedom
Federal dollars must not become a lever for dictating curriculum, hiring, admissions, or speech. Except where federal law mandates protections for civil rights or safety, the government should impose no strings on how institutions manage their academic affairs.
Consumer protection, transparency, and tax modernization
Students face predatory loan schemes and misleading cost disclosures. A standardized, mandatory aid offer—similar to the auto industry’s Monroney sticker or the mortgage Closing Disclosure—would require colleges to present a clear net-price calculation, separating grants, scholarships, and loan components. This transparency, combined with consistent enforcement against deceptive practices, would empower families to make informed choices.
Federal tax policy also needs an update. The $5,250 employer-paid education exclusion and the $2,500 student-loan-interest deduction have remained static for decades, eroding their real-world value. Replacing the endowment excise tax with incentives that reward institutions for expanding need-based aid, and indexing these deductions to inflation, would restore their effectiveness and align tax benefits with today’s college costs.
Building a unified data infrastructure
A centralized, privacy-protected repository of student-level outcomes—covering access, affordability, retention, graduation, debt, employment, and return-on-investment—should be funded and maintained at the federal level. Open access to this longitudinal data would enable researchers, policymakers, and families to evaluate program performance and make evidence-based decisions.
Stable regulatory calendar
All major changes to higher-education regulations should follow a master calendar that finalizes rules by November 1 for implementation on July 1 of the following year. This predictable timetable gives institutions adequate time to adjust policies and ensures that regulatory shifts are not driven by short-term political cycles.
