While the ideological battle over the Trump administration’s “compact” has captured the headlines, the proposal’s dry financial mandates—a tuition freeze and control over endowments—could have equally profound and lasting effects on the structure of American higher education. These economic provisions would significantly increase federal control over the business model of universities.
A federally mandated five-year tuition freeze would be a radical intervention in the market. While appealing to students, it would force universities to find other ways to cover rising costs, potentially leading to larger class sizes, fewer student services, and a greater reliance on lower-paid adjunct faculty. It could also make universities even more dependent on federal funding, as other revenue streams are choked off.
The move to dictate endowment spending is even more revolutionary. It would shatter the wall between public funds and private philanthropy, effectively giving the government a say in how universities manage their own savings. This could discourage private donations and would give the administration immense leverage to direct university priorities by controlling both public and private purse strings.
Together, these financial mandates would shift universities toward a model that looks more like a regulated public utility than an independent non-profit. The government would have control over pricing (tuition), investment (endowment), and subsidies (federal grants), leaving university leaders with very little financial autonomy.
This economic restructuring is a crucial, if less dramatic, part of the administration’s plan. It complements the ideological goals by creating a system of financial dependency that ensures long-term compliance. By controlling the economics of the university, the administration can indirectly control its behavior, a subtle but powerful form of command and control.