# How Trump Is Bursting the $100 Billion Grad School Bubble

An episode of [Big Take](https://invisiblenetwork.ai/podcast/1578096201), 8 Jul 2026, 19 min.

Audio: https://podtrac.com/pts/redirect.mp3/tracking.swap.fm/track/UVBrz8bN8aM2Xe47PEPu/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/825d4e29-b616-46f4-afd7-ae2b0013005c/edbe0813-e2ce-44ba-bff8-b481010d1152/audio.mp3?utm_source=Podcast&in_playlist=8b1dd624-a026-43e9-8b57-ae2b00130066

For two decades, American universities have doubled down on master’s programs, relying on graduate degrees as their financial backbones. Now, the Trump administration’s policies are posing existential threats to that business model. On today’s Big Take podcast, education reporter Liam Knox joins host Sarah Holder to break down the administration’s three-pronged attack on graduate school and the impact it could have on students, universities and America’s place on the global stage. We have a special Bloomberg subscription offer for podcast listeners at Bloomberg.com/podcastoffer. Hosted by Sarah Holder; Produced by Julia Press; Reported by Liam Knox; Edited by Tracey Samuelson. Fact-checking by Victor Swezey; Engineering by Alex Sugiura. Senior Producer: Naomi Shavin; Deputy Executive Producer: Julia Weaver. Executive Producer: Nicole Beemsterboer. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Every fall, around three
[0:11] Speaker 1: million graduate students from all around the world start classes
[0:15] Speaker 1: colleges and universities across the US, but this year some
[0:19] Speaker 1: of their classrooms will be a little emptier.
[0:22] Speaker 2: Some of the even most leade institutions in the country
[0:25] Speaker 2: are seeing very significant declines in their grad enrollment.
[0:28] Speaker 1: Bloomberg Education reporter Liam Knox.
[0:31] Speaker 2: Cornell is down by over two hundred students. MIT is
[0:34] Speaker 2: going to admit five hundred fewer grad students in the fall.
[0:37] Speaker 2: It's a huge deal for a university which is known
[0:40] Speaker 2: for its graduate programs. Big flagships like the University of
[0:43] Speaker 2: Wisconsin they're seeing similar declines.
[0:45] Speaker 1: And Liam says the loss of those students could have
[0:49] Speaker 1: a big financial impact on the US higher education system.
[0:53] Speaker 2: Universities are not just a ivy clad center of academic
[0:57] Speaker 2: and intellectual enrichment. They're businesses, and over the past few
[1:02] Speaker 2: decades that business model has become increasingly leveraged on graduate programs,
[1:07] Speaker 2: in particular the master's degree.
[1:10] Speaker 1: As undergraduate enrollment has declined in recent years, many universities
[1:14] Speaker 1: have doubled down on their graduate programs, relying more and
[1:18] Speaker 1: more on tuition from graduate students to fill funding gaps
[1:22] Speaker 1: and support schools ever expanding offerings. Today, the US market
[1:28] Speaker 1: for grad school is worth about one hundred billion dollars,
[1:32] Speaker 1: but that could all change right now.
[1:35] Speaker 2: The Trump administration is the biggest threat to that business model.
[1:38] Speaker 1: The White House is on a mission to reshape the
[1:40] Speaker 1: country's higher education system, and liam says its policy agenda
[1:45] Speaker 1: is hitting grad school programs in a few key ways.
[1:49] Speaker 2: They're policies that would make master's programs harder to pay for,
[1:54] Speaker 2: that would make it much harder for international students to
[1:57] Speaker 2: come and pursue these degrees, that make federal funding for
[2:01] Speaker 2: grad programs a lot less certain Those things hit at
[2:04] Speaker 2: the financial heart of the modern American university and its
[2:08] Speaker 2: business model, and in a lot of ways that has
[2:10] Speaker 2: a more widespread and sweeping effect on what American campuses
[2:14] Speaker 2: might look like, what kind of power they have then
[2:17] Speaker 2: going after specific lead institutions.
[2:25] Speaker 1: I'm Sarah Holder, and this is the big take from
[2:28] Speaker 1: Bloomberg News today on the show, how the US graduate
[2:31] Speaker 1: school bubble grew and the Trump administration policies that could
[2:36] Speaker 1: make it burst. Getting an advanced degree like a PhD
[2:45] Speaker 1: has long been a status symbol an extra boost for
[2:49] Speaker 1: a resume, something that can lead to a pay bump
[2:51] Speaker 1: or a fancier title in some professions. But the growing
[2:55] Speaker 1: emphasis that colleges and universities have put on masters programs
[3:00] Speaker 1: is actually a relatively recent phenomenon.
[3:03] Speaker 2: Master's programs have exploded in the past two decades. They've
[3:06] Speaker 2: grown by double the rate of other degrees in the country.
[3:09] Speaker 2: They are now the most commonly held advanced degree.
[3:12] Speaker 1: There's a wide range of master's programs out there. You
[3:16] Speaker 1: can go get a master's degree in public health, computer science,
[3:20] Speaker 1: or social work, or you can get what's considered a
[3:22] Speaker 1: professional degree by going to medical school or law school.
[3:26] Speaker 2: Master's degrees have become kind of part of the financial
[3:30] Speaker 2: foundation of the higher ed system and a huge part
[3:34] Speaker 2: of how employers look for highly skilled workers in certain fields.
[3:39] Speaker 1: What explains that why over the past few decades have
[3:43] Speaker 1: master's degrees become so important.
[3:46] Speaker 2: Well, the explosion of master's degrees really kind of started
[3:49] Speaker 2: in the mid two thousands for a number of reasons.
[3:53] Speaker 2: In two thousand and six, the federal government created what's
[3:56] Speaker 2: called the GRAB Plus program, which is essentially a stream
[3:59] Speaker 2: of capped on limited loans for graduate students that would
[4:04] Speaker 2: allow any student going to an advanced program to take
[4:07] Speaker 2: out not only up to the cost of tuition, but
[4:09] Speaker 2: also room board, sometimes cost of living expenses in order
[4:13] Speaker 2: to kind of get them through going back to school
[4:16] Speaker 2: before they enter the workforce again. Now, that made what
[4:19] Speaker 2: might have been a difficult financial decision a lot more
[4:22] Speaker 2: feasible for a lot of people. It also created a
[4:25] Speaker 2: pretty big pool of federal money that universities were very
[4:28] Speaker 2: keen to dive into.
[4:30] Speaker 1: When the Great Recession hit just a couple of years later,
[4:33] Speaker 1: many workers opted to weigh out the bad job market
[4:36] Speaker 1: by going back to school, hoping both the economy and
[4:40] Speaker 1: their job prospects would be better once they had a master's.
[4:44] Speaker 1: Schools responded to this new demand for the degrees by
[4:47] Speaker 1: creating new master's programs.
[4:50] Speaker 2: It wasn't just the major research universities multiplying their offerings,
[4:55] Speaker 2: it was also liberal arts colleges becoming universities that had graduates,
[5:00] Speaker 2: and that trend continued in part because the number of
[5:04] Speaker 2: traditional undergraduate students eighteen year olds coming out of high
[5:07] Speaker 2: school going to college started to decline at around the
[5:09] Speaker 2: same time, so they.
[5:10] Speaker 1: Were relying more and more on these master students.
[5:13] Speaker 2: They had to fill the gap somehow, they needed alternative
[5:16] Speaker 2: sources of revenue, and so you see colleges kind of
[5:19] Speaker 2: put a lot of their eggs in that basket and
[5:21] Speaker 2: really invest heavily in master's programs, which were often really
[5:25] Speaker 2: big cash cows because students could get federal loans, there
[5:29] Speaker 2: wasn't a lot of aid involved from universities. They were
[5:33] Speaker 2: often very expensive, and they created this very lucrative cash
[5:38] Speaker 2: flow for universities. It seemed like the master's was the
[5:41] Speaker 2: new bachelor's. Right.
[5:43] Speaker 1: Between nineteen ninety one and twenty nineteen, the number of
[5:46] Speaker 1: master's degrees awarded annually grew by over one hundred and
[5:49] Speaker 1: forty percent. That's nearly double the rate of increase of
[5:53] Speaker 1: bachelor's degrees in the same time period. But since the
[5:56] Speaker 1: start of President Trump's second term, his administration has run
[6:00] Speaker 1: out a suite of new policies that are hitting universities
[6:04] Speaker 1: and their master's programs hard.
[6:07] Speaker 2: The three major stressors are attacks on international students, who
[6:11] Speaker 2: make up a huge amount of these programs, new caps
[6:15] Speaker 2: on previously unlimited federal lending for grad programs, which have
[6:19] Speaker 2: really fueled the explosion in master's degrees. And then there's
[6:23] Speaker 2: the reduction in federal research funding, where even the most
[6:27] Speaker 2: elite universities are seeing double digit percentage point to clients
[6:31] Speaker 2: in their federal funding for these programs.
[6:34] Speaker 1: So let's go through each one in a little bit
[6:36] Speaker 1: more detail. You mentioned this idea of the restrictions on
[6:39] Speaker 1: international students. How has that been impacting graduate programs and
[6:43] Speaker 1: are there certain types of programs that are being hit
[6:46] Speaker 1: harder than others.
[6:47] Speaker 2: Across the board, international students are more represented at graduate
[6:52] Speaker 2: programs than at undergraduate colleges. Some of these programs have
[6:56] Speaker 2: more than half of their seats are filled by student
[6:59] Speaker 2: visa holders, and there are big worries about the sustainability
[7:03] Speaker 2: of that. If we see twenty thirty even more percent
[7:08] Speaker 2: declines in foreign students coming to this country in the
[7:10] Speaker 2: next few years, the decline in international students is going
[7:13] Speaker 2: to specifically hit STEM programs very hard, where students from
[7:18] Speaker 2: India and China and other countries in Africa and in
[7:22] Speaker 2: South Asia where visa crackdowns are having the biggest effect.
[7:26] Speaker 2: The universities are going to have to completely kind of
[7:29] Speaker 2: reshape the way they're thinking about how they fund and
[7:31] Speaker 2: enroll in those programs, and that's a big deal. Because
[7:35] Speaker 2: a lot of the emerging fields that even the Trump
[7:37] Speaker 2: administration says they want to continue to invest in, like say,
[7:41] Speaker 2: semiconductor engineering, the pipelines to those programs of global talent
[7:46] Speaker 2: run through these master's degrees, and so there's a lot
[7:50] Speaker 2: of concern about what that could mean for American competitiveness
[7:52] Speaker 2: and innovation moving forward.
[7:54] Speaker 1: And another blow to science and to research generally has
[7:59] Speaker 1: been the reductions in federal research funding. I'm wondering, Liam,
[8:03] Speaker 1: how much have these institutions historically relied on federal funding
[8:08] Speaker 1: to sustain their research programs, and what's changing.
[8:11] Speaker 2: Now, specifically in technology, specifically in medicine. The amount of
[8:15] Speaker 2: funding from the National Institutes of Health or the National
[8:17] Speaker 2: Science Foundation flowing to universities that creates these pools of
[8:22] Speaker 2: research money that is, have the draw for students, Right,
[8:25] Speaker 2: you go and you get a master's degree in some
[8:28] Speaker 2: biomedical science field, and half of what you expect to
[8:32] Speaker 2: be able to do is work with your hands in
[8:34] Speaker 2: a lab, is have the resources to pursue exciting new
[8:37] Speaker 2: research with groundbreaking areas. And if federal support for that
[8:44] Speaker 2: starts plummeting as it has been, or if even there's
[8:48] Speaker 2: uncertainty around it as there certainly is. That's going to
[8:51] Speaker 2: have an effect on students appetite for those kinds of programs,
[8:54] Speaker 2: and it's also just going to have a big effect
[8:56] Speaker 2: on university's ability to provide the same kind of value
[9:00] Speaker 2: and education as they had before.
[9:03] Speaker 1: Meanwhile, the Trump administration is also placing strict borrowing limits
[9:07] Speaker 1: on federal student loans for grad school and what Secretary
[9:11] Speaker 1: of Education Linda McMahon has said is an effort to
[9:14] Speaker 1: pressure universities to lower the costs of their programs.
[9:17] Speaker 2: Every single master's program relies disproportionately on federal lending to
[9:24] Speaker 2: fund students tuition. It used to be that you could
[9:27] Speaker 2: borrow unlimited amounts of money from the federal government to
[9:30] Speaker 2: pay for your grad program. Now there is a twenty
[9:34] Speaker 2: thousand dollars a year cap on almost all grad programs.
[9:37] Speaker 2: There's an additional cap for some programs that have been
[9:41] Speaker 2: categorized as professional, so that includes law school, medical school,
[9:45] Speaker 2: a couple of other things. They have a higher cap
[9:48] Speaker 2: of fifty thousand a year.
[9:50] Speaker 1: Liam says those types of professional programs tend to be
[9:53] Speaker 1: more expensive, so even with the higher cap, loans are
[9:57] Speaker 1: unlikely to cover the full cost of tuition.
[9:59] Speaker 2: Anymore, students are going to have to turn to other
[10:02] Speaker 2: sources to try to fill the gap, including private lenders,
[10:05] Speaker 2: which are starting to create new lending products to try
[10:07] Speaker 2: to enter this space, but which have much less forgiving
[10:11] Speaker 2: repayment options and are unlikely to be dispersed to students
[10:15] Speaker 2: pursuing expensive degrees and fields that have low income outcomes,
[10:20] Speaker 2: So like social work, teaching, nursing, these are really high
[10:25] Speaker 2: need areas where students are extremely dependent on federal lending
[10:28] Speaker 2: to pursue their degrees, and which often have more forgiving
[10:33] Speaker 2: repayment options on the back end, in part because these
[10:35] Speaker 2: are seen as a public good and that's not going
[10:38] Speaker 2: to be around anymore. And the US has already pretty
[10:41] Speaker 2: bad workforce shortages in nursing and teaching especially, and these
[10:46] Speaker 2: caps are going to exacerbate that issue.
[10:50] Speaker 1: I mean, it's worth noting that student debt is a
[10:53] Speaker 1: real issue in this country right Graduate programs make up
[10:56] Speaker 1: forty percent of the one point seven trillion dollars Americans
[11:00] Speaker 1: oh in federal student debt. Is the counterpoint that the
[11:03] Speaker 1: issue here is really the cost of these programs, not
[11:06] Speaker 1: the loan cabs.
[11:07] Speaker 2: It's a great point, and it's the justification behind the
[11:11] Speaker 2: Trump administrations in Congressional Republicans' efforts to cap these loans,
[11:15] Speaker 2: they say that it's going to push colleges to drive
[11:18] Speaker 2: down their tuition prices. They say that it's the only
[11:21] Speaker 2: way to stop higher education from leaning on the federal
[11:26] Speaker 2: government to continue, you know, jacking up prices for American families.
[11:33] Speaker 2: The reality is that that's not really how the higher
[11:35] Speaker 2: ed market works. Not a lot of students pay full
[11:38] Speaker 2: sticker costs for undergraduate degrees. A lot of colleges, even
[11:42] Speaker 2: if they charge eighty ninety thousand dollars a year sticker
[11:46] Speaker 2: price for tuition, are struggling financially and so taking away
[11:51] Speaker 2: the ability to fund these master's programs. The actual effects
[11:56] Speaker 2: are very unclear, and so far, very few colleges have
[11:58] Speaker 2: given any indication that what they're going to do in
[12:00] Speaker 2: response is lower their costs.
[12:04] Speaker 1: Coming up, we hear from a university administrator about how
[12:07] Speaker 1: his school is navigating these challenges and how the decline
[12:11] Speaker 1: in graduate enrollment could lead to a great shrinking of
[12:15] Speaker 1: American universities. Stephen's Institute of Technology sits on the Hudson
[12:31] Speaker 1: River in Hoboken, New Jersey, with a view of the
[12:33] Speaker 1: Manhattan skyline. Stephens dates back to eighteen seventy, and like
[12:38] Speaker 1: many private research universities, it's invested heavily in its graduate
[12:42] Speaker 1: programs in recent decades. Between twenty thirteen and twenty twenty two,
[12:47] Speaker 1: Stephen's grad school enrollment more than doubled.
[12:50] Speaker 3: It's almost a fifty to fifty split grad students to
[12:53] Speaker 3: undergrad students, or at least was recently perform some of
[12:55] Speaker 3: the changes that took place here.
[12:57] Speaker 1: That's Rob Towner, the chief Business Officer for the school's
[13:00] Speaker 1: College of Professional Education, a new initiative Stevens launched a
[13:05] Speaker 1: few years ago. Rob started last year and was hired
[13:09] Speaker 1: in part to find new ways to bring in business
[13:12] Speaker 1: as the school saw traditional revenue streams drying up.
[13:15] Speaker 3: So it's no surprise that Stevens, like many institutions, has
[13:19] Speaker 3: faced enrollment challenges from international graduate students. International students, whether
[13:23] Speaker 3: it's here at Stevens or other institutions, tend to be
[13:26] Speaker 3: full pay students and tend to be a large amount
[13:28] Speaker 3: of revenue that comes into a university. We had to
[13:30] Speaker 3: figure out ways to plug that gap, going after new
[13:33] Speaker 3: markets that were not addressed before.
[13:35] Speaker 1: One approach Stevens has taken is leaning into online degree offerings,
[13:40] Speaker 1: which are easier to scale. It's also launching more targeted
[13:43] Speaker 1: certificate programs, which for students, are shorter commitments than a
[13:47] Speaker 1: master's degree.
[13:48] Speaker 3: People don't have the kind of money they used to
[13:50] Speaker 3: have to go afford to go to grad school. On
[13:52] Speaker 3: top of that, there's an obvious debate and conversation in
[13:56] Speaker 3: this country of is higher ed worth it? When you're
[13:58] Speaker 3: asking people, hey, two to three years now, when you
[14:00] Speaker 3: finish this degree, what is your job role going to
[14:02] Speaker 3: look like? With AI, there's a lot of uncertainty there
[14:05] Speaker 3: for a lot of roles in what we're trying to
[14:07] Speaker 3: do with these shorter form credentials. They say, you don't
[14:09] Speaker 3: need to commit the next two to three years. Just
[14:11] Speaker 3: come grab one of these short form CERTs. Do that
[14:13] Speaker 3: and then come back to us later on if you
[14:15] Speaker 3: need another, certain another and stack it to a degree
[14:17] Speaker 3: whatever it might be.
[14:18] Speaker 1: And as students face new federal borrowing caps, Stevens has
[14:22] Speaker 1: adjusted tuition for its online offerings accordingly. It's cut the
[14:26] Speaker 1: cost of its online MBA degree in half. Now students
[14:30] Speaker 1: pay as little as thirty six thousand dollars for a
[14:33] Speaker 1: two year online degree that helps the federal loans go farther.
[14:37] Speaker 3: So over the two years, you would have more than
[14:40] Speaker 3: enough cushion to be able to use the twenty thousand,
[14:42] Speaker 3: five hundred to fund that.
[14:44] Speaker 1: Stevens isn't alone. Purdue and UC Irvine have slashed the
[14:48] Speaker 1: costs of some of their MBA programs too, but liam
[14:51] Speaker 1: says it's been more common to see universities shrink their
[14:54] Speaker 1: offerings than their tuition.
[14:56] Speaker 2: Almost every major university, from research institution to technical institutes.
[15:02] Speaker 3: Too.
[15:02] Speaker 2: Small colleges are looking into short term AI credential programs
[15:07] Speaker 2: or other kind of emerging fields, but not one to
[15:12] Speaker 2: two year master's degrees where the student comes onto campus
[15:15] Speaker 2: and lives there and works in a lab. Often they're online.
[15:18] Speaker 2: Sometimes there's a hybrid component, and there's a lot of
[15:21] Speaker 2: investment in what a lot of higher education leaders say
[15:24] Speaker 2: is the future of advanced education in this country, which
[15:28] Speaker 2: is these stacked skills. What all of this means, potentially
[15:33] Speaker 2: is the shrinking of the American college. You've already started
[15:38] Speaker 2: to see a lot of universities sell off parts of
[15:41] Speaker 2: their campuses try to kind of downsize.
[15:44] Speaker 1: Are we seeing layoffs at the universities.
[15:47] Speaker 2: We are certainly seeing layoffs at universities. We've been seeing
[15:49] Speaker 2: laofs for a couple of years, but they're really exploding now.
[15:52] Speaker 2: I talk to the president of Portland State University. They
[15:55] Speaker 2: offer a lot of social work degrees, they have a
[15:58] Speaker 2: lot of international students. They actually train more than half
[16:02] Speaker 2: of the social workers in the state of Oregon, and
[16:05] Speaker 2: they're laying off staff. The cuts there are very painful
[16:09] Speaker 2: to faculty and to students, and that's happening all across
[16:12] Speaker 2: the country. And in part that's a response in some
[16:15] Speaker 2: ways to market forces, to American families being less willing
[16:20] Speaker 2: to pay the astronomical costs of colleges, to kind of
[16:24] Speaker 2: the changing demands of a workforce increasingly shaped by rapidly
[16:28] Speaker 2: evolving technology that colleges are struggling to keep up with.
[16:31] Speaker 2: But in large part it's also because of what's happened
[16:34] Speaker 2: over the past year under the Trump administration, and just
[16:37] Speaker 2: the intensification of those pressures has put a lot of
[16:41] Speaker 2: colleges into crisis mode.
[16:43] Speaker 1: I'm wondering, are there any people within the academic universe
[16:48] Speaker 1: who say, you know, this was a bubble that was
[16:50] Speaker 1: bound to burst, and we do need to take a
[16:52] Speaker 1: hard look at our budgets, our finances, our reliance on
[16:57] Speaker 1: federal student loans, and create like a healthier atmosphere and
[17:01] Speaker 1: a healthier long term path for the sake of the
[17:04] Speaker 1: future of academia.
[17:06] Speaker 2: They certainly would. That's a huge contingent among academics themselves.
[17:10] Speaker 2: I know based on my conversations with many of them
[17:13] Speaker 2: that they would take issue with the way it's being pursued.
[17:18] Speaker 2: But there is a real frustration with how universities have
[17:22] Speaker 2: operated as businesses over the past many decades, with how
[17:26] Speaker 2: they've treated costs, with how they've put more and more
[17:29] Speaker 2: money into more and more expensive programs, more and more amenities,
[17:34] Speaker 2: and new campus buildings and new everything. And there's this
[17:39] Speaker 2: idea of the ever growing American university that has been
[17:44] Speaker 2: a real source spot for not just Republicans in Washington,
[17:48] Speaker 2: but academics across the country who see it as unsustainable
[17:52] Speaker 2: and who are afraid of a kind of backlash which
[17:57] Speaker 2: is coming. Now.
[18:04] Speaker 1: This is the Big Take from Bloomberg News. I'm Sarah Holder.
[18:07] Speaker 1: To get more from The Big Take and unlimited access
[18:10] Speaker 1: to all of Bloomberg dot com, subscribe today at Bloomberg
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[18:24] Speaker 1: Thanks for listening. We'll be back tomorrow

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