American Higher Education in a Survival War
Declining student population and mounting financial strain
Layoffs of faculty and inevitable campus closures

A new form of “Rust Belt” has begun to take shape in the United States, and the epicenter is the nation’s colleges. Once anchors of local economies, universities are now shuttering under the dual pressures of shrinking student populations and intensified concentration of enrollment in elite institutions. The fallout is devastating nearby communities, with shuttered campuses hollowing out surrounding businesses, creating what analysts describe as a “new Rust Belt.” With demographic decline and economic pressures expected to persist for at least another decade, closures, layoffs, and broad restructuring across higher education appear unavoidable.

Half a Million Fewer Graduates by 2041, Urban Populations Decline Amid Low Birthrates and High Inflation

According to the Western Interstate Commission for Higher Education (WICHE)’s 2024 High School Graduate Projections released earlier this year, the U.S. will see high school graduates peak at 3.9 million in 2024 before declining to below 3.4 million by 2041.

The trend is already visible. A Brookings Institution study found that from 2019 to 2022, enrollment in urban public schools nationwide fell by more than 5% (about 84,000 students). During the same period, 68 city schools closed, marking a 0.3% contraction rate.

The primary drivers are both demographic and economic. Persistently high interest rates and elevated living costs are prompting residents to leave cities in search of affordability, further eroding the urban student base. Parents are also increasingly steering children toward cheaper education options. “Conditions in higher education are not improving—if anything, they are deteriorating,” warned Patrick Lane, WICHE’s vice president for policy analysis and research. “Elementary schools are already experiencing this reality.”

When Campuses Close, Local Economies Collapse

Experts predict the sharpest enrollment declines in the Northeast and Midwest, regions most vulnerable to declining birthrates. Western Illinois University in Macomb, Illinois, epitomizes this transformation. Once home to 800-student dormitories, those buildings have now been repurposed into police training facilities, with others demolished into overgrown lots. This summer, two more dormitories are set to close, according to The Wall Street Journal.

During the baby-boom era of the 1960s and 70s, Western Illinois thrived, with enrollment peaking at 15,469 in 1973. Since 2010, however, enrollment has halved—from 10,377 students in 2010 to 5,511 in 2023. Faculty headcount shrank 38% over the same period.

As the university declined, so too did its host city. Macomb’s population dropped 23% over the same span, falling to 14,765 residents. The trend extends nationwide. According to The Hechinger Report, between 2011 and 2023, three-quarters of college-dependent towns grew at slower rates than the national average, a sharp reversal from a decade earlier when they had been outperforming the rest of the country.

Financial Strain Driving Institutional Closures

The crisis is also being compounded by widening inequality between institutions. A growing number of students are opting out of college altogether, calculating that the burden of tuition combined with forgone wages makes enrollment in lower-tier schools an unattractive investment. Meanwhile, enrollment is becoming further concentrated in prestigious universities, seen as a guarantee of higher-paying jobs. “More and more students who choose to attend college are aiming for elite institutions,” noted Richard Vedder, professor emeritus of economics at Ohio University. “They believe those diplomas will secure them better employment.”

A Washington Post analysis of 748 four-year public universities across 50 states found that from 2015 to 2023, enrollment at flagship state universities rose 9% on average, while all other state campuses saw a 2% decline. In Tennessee, the University of Tennessee’s enrollment surged 30% over the period, while the other 10 state campuses combined posted a 3% decline. Wisconsin exhibited a similar pattern: the flagship University of Wisconsin rose 16%, while the rest of the system dropped 9%.

More institutions are now succumbing to financial pressures and announcing outright closures. In May, St. Andrews University, a branch of Webber International University, declared it would cease operations. “We exhausted every possible alternative, but the financial and enrollment challenges St. Andrews faced were insurmountable with internal measures alone,” explained Webber President and CEO Nelson Marquez, calling the closure “a painful but inevitable decision.” According to the National Center for Education Statistics, St. Andrews had only 832 students enrolled in fall 2023.

Within days of that announcement, Limestone University in Gaffney, South Carolina—an institution with 180 years of history—also declared closure. Board chair Randall Richardson stated in a letter posted to the school’s website: “Despite all efforts to secure necessary funding, we reached the conclusion that sustaining operations was no longer viable.”

Ninety-five percent of companies adopting AI programs report little to no tangible performance gains
Even OpenAI is expanding its business lines in an effort to shore up profitability
What revenue-generation strategies are global big tech firms pursuing?

A recent study from the Massachusetts Institute of Technology (MIT) revealed that 95% of companies running pilot programs with generative AI saw little to no improvement in profitability. In most cases, the adoption of AI models did not translate into measurable business growth. The findings come as AI firms themselves, including OpenAI, continue to struggle with monetization—highlighting how both providers and their clients are finding it difficult to turn AI into sustainable profits.

AI Brings Little Improvement to Corporate Performance

According to reports from major outlets on August 22, MIT released a study on August 18 titled “The GenAI Divide: State of AI in Business 2025.” The report, compiled by the MIT NANDA (Networked Agents and Decentralized AI) Initiative, drew on 52 interviews with corporate leaders, analysis of more than 300 AI plans and announcements, and a survey of 153 business executives.

The findings show that companies are pouring between $30 billion and $40 billion into generative AI adoption. More than 80% of firms have tested or experimented with tools like OpenAI’s ChatGPT and Microsoft’s Copilot, while about 40% are actively deploying them.

Yet, 95% of companies using generative AI reported no meaningful improvement in profitability. Only about 5% of early adopters generated millions of dollars in measurable value, while the vast majority saw little to no bottom-line impact. The report noted, “These tools are primarily enhancing individual productivity rather than boosting overall corporate performance,” adding that fragile workflows, lack of contextual awareness, and poor integration into day-to-day operations have left most AI initiatives falling short of delivering real financial gains.

Even OpenAI Struggles to Secure Profitability

The profitability challenge extends to the providers of generative AI services themselves. OpenAI, the industry’s frontrunner, doubled its revenue in 2024 to $3.7 billion, yet still posted a $5 billion loss over the same period. This year, its annual recurring revenue (ARR) is projected to surpass $20 billion, but analysts say the company will remain mired in losses.

To close the gap, OpenAI is exploring new business models. In a recent interview reported by Bloomberg on August 21, CFO Sarah Friar noted, “We’ve built significant expertise in designing and constructing data centers optimized for AI workloads. While we’re currently focused on meeting our own computing needs, we are also looking at opportunities to commercialize this capability in the long term.” The idea mirrors the trajectory of Amazon Web Services (AWS), which grew by leasing out surplus cloud computing capacity.

OpenAI’s urgency is driven by massive upcoming investments in AI infrastructure. On August 15, CEO Sam Altman told reporters, “We’re going to spend trillions of dollars building data centers in the not-so-distant future. Economists may say it’s crazy or reckless, but our answer will be: ‘We’ll take care of it.’” If realized, such a plan would reduce OpenAI’s reliance on partners like Microsoft and Oracle, which currently support its infrastructure. But without a sustainable revenue model, the company risks undermining its long-term viability.

AI Firms’ Survival Strategies

Global tech giants are also intensifying efforts to monetize AI, with premium subscription tiers emerging as a leading tactic. Google has rolled out “Google AI Ultra” at $249.99 per month for its Gemini model, while Elon Musk’s X offers “SuperGrok4 Heavy” at $300 per month. With many AI companies now unveiling more advanced agent features, even higher-priced tiers are expected to follow.

Another strategy is weaving AI more tightly into advertising and commerce. Google has begun integrating ads into its Gemini-powered AI Overview search results. OpenAI earlier this year added a “shopping” feature to ChatGPT to showcase products and reviews, and is now developing a checkout system that would allow users to search and pay without leaving the platform. Merchants processing orders through the system would pay fees to OpenAI, effectively turning ChatGPT into a closed-loop commerce hub.

Meta is likewise leveraging generative AI to raise ad prices and improve efficiency, boosting revenue that is then funneled back into further AI investment. CEO Mark Zuckerberg underscored this shift, saying, “Now is the time to invest aggressively in AI for future growth. AI-driven advertising is already delivering strong results.”

Lax oversight of seasonal worker and family-invitation schemes
Illegal stay on the rise, broker involvement expanding
Universities scrambling to recruit foreign students also exploited as illegal stay channels

As the United States steps up investigations into forced labor practices across Asia, including South Korea, concerns are mounting that weak oversight of foreign labor could jeopardize exports of Korean goods and agricultural products. Against this backdrop, foreign workers are increasingly exposed to incentives to remain illegally. In particular, as domestic universities—strained by frozen tuition and shrinking applicant pools—aggressively recruit foreign students, cases of individuals entering on student visas and then working illegally have also been rising. Experts warn that if large-scale crackdowns materialize, sweeping restructuring across agriculture, education, and the broader industrial landscape will be unavoidable.

Preference for Illegal Stay Over the Formal System

According to the agricultural sector and legal community on the 21st, the foreign seasonal worker program (E-8 visa), designed to alleviate labor shortages during peak farming seasons, has increasingly devolved into a conduit for illegal stay. Short contract periods and wages lower than those in manufacturing encourage workers to enter as seasonal laborers and then seek other jobs. Many seasonal workers incur debts to brokers during the entry process, and the pressure to repay those debts quickly is another factor driving them toward illegal stay. Interest rates charged by brokers commonly reach several tens of percent annually.

By contrast, non-professional foreign workers in manufacturing (E-9 visa holders) may stay for four years and ten months, with the option to extend once—after a six-month return to their home country—allowing up to nine years and eight months of total employment in South Korea. Seasonal workers, however, are not eligible for extensions. For workers in need of income, remaining illegally becomes a rational choice after overcoming the hurdle of entry.

Low wages and irregular working hours further heighten the temptation. Most seasonal workers nationwide are employed about 35 hours per week at the statutory minimum wage—approximately $7.70 per hour this year—earning roughly $1,080 to $1,150 per month. Manufacturing workers, while also paid at the minimum hourly rate, often log longer hours and earn additional overtime pay, bringing monthly income to around $2,300 in many cases.

Family-Invited Entrants Also Turning Illegal

An increasing number of individuals who enter South Korea as seasonal workers through family invitations—extended by marriage migrants—are also remaining illegally. The family-invitation visa was designed to support labor-short rural communities while reducing worker attrition, based on the assumption that proximity to family would lower defection rates. Indeed, the attrition rate among seasonal workers fell from 17.1% in 2021 to 1.6% last year.

However, relatively loose entry procedures for family-invited seasonal workers have led to a rise in illegal entries. The seasonal worker program operates through two main channels: local governments recruiting workers via agreements with overseas municipalities (E-8-1 or E-8-3 visas), and foreign residents in South Korea inviting overseas family members (E-8-2 or E-8-4 visas). While local governments rigorously review documentation for municipally recruited workers, family-invited cases rely heavily on employer input. This creates openings for brokers with employer connections to bring workers into the country with relative ease.

Under program rules, if an invited family member absconds, the recommender faces a one-year suspension from making recommendations, and permanent disqualification if false recommendations are proven. Absconded workers are subject to deportation and reentry bans upon detection. Yet brokers often manipulate documents—such as falsifying residence registrations of marriage migrants—to link employers and workers. Required documentation can also be fabricated. To qualify as a seasonal worker, applicants must submit proof of at least one year of agricultural or fisheries work, or relevant certifications or degrees. One broker affiliated with an administrative agency office said of such proof, “As long as the applicant takes photos in front of rice paddies or fields back home, there’s no problem.”

Workers entering through brokers pay substantial fees. In one case reported by a migrant advocacy group, a foreign worker identified as A paid brokerage fees totaling about $1,550 over five months after entering on a family-invitation visa. A also transferred roughly $155 per month to the relative who sponsored the recommendation and paid additional fees to an administrative agent for paperwork. Burdened by excessive fees, such workers are driven to seek higher earnings, often slipping into illegal stay.

Students Work Illegally, Schools Falsify Attendance

Provincial universities have long been exploited as channels for illegal stay. Last year, a professor at a university in Gangwon Province was referred to prosecutors after falsifying attendance records 182 times for 112 foreign students from Vietnam, Mongolia, Uzbekistan, and other countries. Using the fabricated attendance confirmations, the students obtained extensions of stay or changes in visa status, all in violation of immigration law. An affiliated recruitment agency also arranged illegal employment for the students. On the 3rd of this month, the professor received a 10-month prison sentence suspended for two years on charges including obstruction of official duties by fraud and violations of the Immigration Control Act.

According to the Ministry of Justice, foreign nationals holding student (D-2) or general training (D-4) visas are, in principle, prohibited from engaging in profit-making or employment activities. Limited part-time work is allowed, but only with prior approval based on submitted documentation such as admission letters, enrollment certificates, and Korean language test scores. Permitted working hours vary by academic level and language proficiency.

Despite strict rules, foreign students and their employers say compliance is rare in practice. Employers struggle to track total working hours when students work at multiple locations, while students seek to exceed permitted hours. Most student employment occurs in restaurants and convenience stores, making close supervision by authorities difficult. Ministry of Justice data show that as of the end of 2023, only 21,437 foreign students—about 9.5% of the total—had official permission for part-time work, underscoring the gap between regulation and reality.

Experts predict that if authorities proceed with comprehensive crackdowns on illegal residents, South Korea’s labor market will undergo profound restructuring. Labor shortages in agriculture would push up wages, driving higher prices for farm products. Farms that have long depended on low-cost foreign labor would face sharply rising employment costs, with inevitable price spillovers. At the same time, provincial universities that have relied on foreign student recruitment for survival would see that dependency unravel, threatening their very existence. The mass expulsion of illegal residents is increasingly seen as a potential inflection point that could reshape South Korea’s production structure and industrial strategy as a whole.

A total of 40,000 visas have been revoked, 2.5 times the level under the Biden administration
Trump’s anti-immigration agenda spills over into university campuses
Warnings grow that the policy is severing America’s talent pipeline

The administration of U.S. President Donald Trump has revoked more than 6,000 student visas so far this year, a development aligned with his broader anti-immigration stance. The government has adopted a hardline approach to student visas, intensifying social media scrutiny and effectively placing new barriers to American higher education. Yet, as overseas students represent a crucial source of funding for U.S. universities, heightened visa restrictions risk undermining the competitiveness of American education. Analysts warn that curtailing access for foreign nationals could dismantle the talent pipeline that has long underpinned U.S. innovation.

State Department Cites Legal Violations and Terrorist Support

According to Fox News and the BBC on the 19th (local time), the U.S. State Department announced that more than 6,000 student visas were canceled this year due to violations of U.S. law and overstays. Most infractions were cited as assault, drunk driving, robbery, and support for terrorism. A senior State Department official told Fox News that roughly 4,000 visas were revoked solely for legal violations such as assault or drunk driving while in the U.S. About 800 students lost their visas over assault charges, many facing arrest or indictment.

Visa cancellations on grounds of protests and support for terrorism involved 200 to 300 students, reportedly linked to activities such as fundraising for Hamas, a Palestinian militant group designated as a terrorist organization by Washington. The Immigration and Nationality Act (INA 212 3B) broadly defines “terrorist activity” to encompass illegal acts under U.S. law that threaten life or property.

Meanwhile, the aggressive conduct of Immigration and Customs Enforcement (ICE) officers has sparked controversy. A notable case involved Rümeysa Öztürk, a PhD candidate at Tufts University. The BBC reported that on March 25, numerous agents surrounded Öztürk near her home, prompting her to scream in terror — an incident captured on video that drew national outrage.

Visa Interviews Suspended, Social Media Scrutiny Intensified

The latest wave of cancellations forms part of Trump’s effort to restrict foreign entry. Student visa screenings have been significantly toughened. In April, U.S. Citizenship and Immigration Services (USCIS) announced it would review applicants’ social media accounts for anti-Semitic content. Applicants are now required to disclose social media handles, with authorities examining whether they have expressed hostility toward U.S. government, institutions, or culture. This effectively grants the administration grounds to deny visas based on political expression.

On the 19th, USCIS issued further guidance instructing adjudicators to weigh heavily any evidence of an applicant’s links to anti-American or terrorist organizations when assessing applications for green cards, work permits, or visas. The directive cites the 1952 Immigration and Nationality Act, which bars communists and anarchists from naturalization.

Observers note that the Trump administration is not merely reducing immigration numbers but attempting to filter entrants by ideology. The government has already imposed harsh measures targeting foreign students who joined pro-Palestinian protests. In total, 40,000 visas have been revoked this year, more than double the 16,000 recorded during the same period under President Joe Biden. The cancellations extend beyond students: one Korean professor reportedly had his visa abruptly canceled, forcing him to cease lectures and return home.

In June, the administration also suspended for six months all nonimmigrant visas — including F (academic study), M (vocational training), and J (research and cultural exchange) categories — for foreign nationals seeking to study at Harvard University. This halted all programs under Harvard’s Student and Exchange Visitor Program (SEVP). Trump further authorized the Secretary of State to review whether existing visas held by Harvard students under these categories should be revoked.

Since taking office, Trump has repeatedly clashed with elite institutions such as Harvard and Columbia, leveraging threats to withdraw federal funding. While the administration frames the dispute around universities’ handling of anti-Israel protests, critics argue the deeper aim is to purge elite campuses of progressive values that run counter to Trump’s “America First” agenda.

Surge in U.K. Interest, Mounting Fears Over U.S. Competitiveness

As U.S. pressure on foreign students intensifies, interest in U.K. higher education is rising. Studyportals, a global study-abroad search platform, reported a 25% year-on-year increase in searches for U.K. degree programs by U.S. students in March, while demand for American universities fell 15% and British institutions rose 13%.

The shift is benefiting the U.K., which has maintained relatively stable policy. Mark Bennett, director at Keystone Education Group, said, “With Canada and Australia restricting visa issuance, the U.K. is emerging as a stronger alternative.” He emphasized that Britain’s explicit message of welcoming international students sets it apart from Trump’s America.

Keystone’s master’s program search data similarly showed a 27% decline in U.S. study interest and a 23% rise in U.K. study interest in the first quarter of this year. Given U.K. universities’ reliance on international tuition revenue, this trend is seen as a positive signal. According to the Higher Education Statistics Agency (HESA), there were 23,250 U.S. students in the U.K. in the 2023–2024 academic year, ranking as the fifth-largest group of foreign students.

In the U.S., academia and business leaders warn that restricting foreign enrollment threatens university competitiveness. Reduced student inflows will inevitably strain university finances. Harvard International Office data show that about 6,800 international students — 27% of total enrollment — attended Harvard in the 2024–2025 academic year. National Center for Education Statistics (NCES) data reveal 43 other universities with even higher proportions of foreign students. According to NAFSA, international students contributed $43 billion to the U.S. economy in 2023–2024, mostly through tuition and housing.

Longer term, critics fear America’s talent competitiveness will erode. Simon Marginson, professor at Oxford University, called Trump’s attack on Harvard “a disastrous policy blunder” that could undermine America’s leadership in research and development since World War II. He warned that the measures jeopardize U.S. universities’ talent pipelines while advantaging competitors in China and Western Europe. John Aubrey Douglass, senior research fellow at UC Berkeley’s Center for Studies in Higher Education, similarly cautioned that attracting academic talent to the U.S. would increasingly diminish under Trump’s policies.

This article is based on ideas originally published by VoxEU – Centre for Economic Policy Research (CEPR) and has been independently rewritten and extended by The EduTimes editorial team, in collaboration with SIAI’s Global School of Business (GSB). While inspired by the original analysis, the content presented here reflects a broader interpretation and additional commentary. The views expressed do not necessarily represent those of VoxEU or CEPR.

In 2017, China formally registered 395 university-affiliated research centers and 42 training facilities dedicated to what it terms “country and regional studies.” Five years later, in September 2022, this field was elevated to a first-level interdisciplinary discipline that grants degrees, a bureaucratic advancement that secures funding sources and faculty pathways. Meanwhile, during this same timeframe, the United States continued to support its Cold War–era frameworks, specifically Title VI programs, which have funded area and language expertise with annual investments of $75–86 million across National Resource Centers, Foreign Language and Area Studies fellowships, along with related initiatives. These two snapshots—China’s extensive registration and official elevation alongside the U.S.'s ongoing financial support—illustrate a straightforward reality that we have hesitated to acknowledge: area studies flourish when nations act like empires, as private markets typically do not invest in what is dictated solely by strategic interests. As policymakers, your role is not just to finance area knowledge, but to oversee it effectively without stifling scholarly pursuits.

From Subsidized Niche to Strategic Infrastructure

There has been a significant shift in the perception of area studies. Once considered a soft, underemployed mix of humanities and social sciences, it is now viewed as a strategic infrastructure. This transformation, driven by Chinese policy, has tasked area studies with 'serving national strategy' and supplying universities and ministries with targeted expertise. The upgrade in 2022, when area studies became a first-level discipline, marked a significant change. It moved from a curricular curiosity to a degree program with quota seats, promotion ladders, and budget lines. This shift is not accidental. Since Xi Jinping’s 2016 directive to 'accelerate the construction of philosophy and social sciences with Chinese characteristics,' universities have been pushed to align knowledge production with state priorities, including the Belt and Road and a more assertive foreign policy. Elevation brings resources—and supervision. The crucial point is not censorship per se but instrumentalization: states now see area knowledge as a mobilizable capability, like chips or shipyards, and they are building it accordingly.

The United States is hardly exempt from strategic framing. Title VI was born as a national-security program in 1958, and its institutional descendants—National Resource Centers and FLAS fellowships—still anchor US capacity in less-commonly-taught languages and regional expertise. The scale is modest by defense standards, but the design logic is the same: markets undersupply slow-burn expertise, so the state tops it up. Contemporary rulemaking in 2024 even modernized NRC/FLAS regulations, a reminder that Washington intends to keep this architecture tuned. Suppose we continue to debate whether public funding “politicizes” area studies. In that case, we will miss the fundamental policy question: how to fund it legitimately, with guardrails strong enough to prevent capture but flexible enough to meet real strategic needs. This flexibility in funding is crucial to meet the ever-changing strategic needs.

Follow the Money: Public Financing and Empire Logics

When private donors and firms look at area studies, they see weak private returns: long language ramps, uncertain IP, and outputs that are public goods. States, by contrast, see option value—fewer surprises abroad, better crisis sensemaking, smoother commercial diplomacy. That is why the US system still invests $86 million in FY2024 across Title VI programs, even after the post-2011 contractions that scholars lament. It is also why advocacy groups and research universities pressed back in 2024 when regulatory changes risked weakening center capacities. The lesson is not ideological but structural: where outputs are public goods, public finance is destiny.

China’s finance is more comprehensive and directive. Consider the China Scholarship Council’s “country and regional research talent” program. It openly prioritizes Belt and Road–related countries, funds outbound fieldwork and degrees, and requires applicants to affirm political criteria—including support for Party leadership—alongside research merit. Layered atop this are MOE guidance documents (2015 onward) that set up base cultivation mechanisms and a 2017 push to register centers nationwide. None of these is subtle; all of them are coherent. The field’s expansion is not only about more scholars; it is about building a commendable network that can service ministries, SOEs, and provincial governments on demand.

Counting the New Architecture: Centers, Degrees, and Demand

We can measure the build-out, albeit with imperfect data. In 2017, official notices counted 395 research centers and 42 training bases. A scholarly survey in 2022 described 400+ university area-research institutions, consistent with only modest expansion from the 2017 baseline but with disciplinary elevation the following year. Because center registries are fragmented across ministerial and provincial levels, a precise 2025 figure is elusive. A transparent estimate, extrapolating a conservative 2–5 percent annual net growth post-2017 and accounting for consolidations, would place today’s number between 450 and 550 centers. That range is methodologically cautious: it uses observed 2017 counts as the floor, adds known 2022 discipline elevation as a growth shock, and assumes low attrition given political tailwinds. The estimate is not a boast; it is a planning figure for understanding the scale at which policy now interlocks with academe.

On the US side, 98 National Resource Centers were funded in FY2022, with the NRC line appropriated at $25.56 million and Title VI totals around $75.4–86 million in recent cycles when combined with FLAS and allied programs. The numbers are smaller than China’s center counts. Still, the unit function differs: NRCs are national resources for outreach and advanced language training, while Chinese centers are often policy-consulting nodes embedded in party-university ecosystems. In both systems, however, the growth signal is clear: geopolitical competition pushes states to bank expertise. What remains uncertain is the governance: who sets research agendas, who controls fieldwork risk, and what insulation exists between money and method.

Labor Markets and the Policy Use-Case

Skeptics often argue that area studies seats students in low-demand fields. China’s recent graduate market reminds us that the picture is more contingent. In 2025, the country expects 12.22 million new college graduates, which will intensify competition. Urban youth unemployment peaked at 21.3 percent in mid-2023 before methodological changes; under such pressure, graduates tilt toward state-sector roles and SOEs that prize policy-relevant language and regional competencies. Evidence from Chinese graduate surveys shows strong preferences for state employment, and reporting on elite campuses documents degree inflation into master’s programs as a labor-market filter. In that context, area studies’ public-sector alignment is not a bug; it is the employment pathway that exists.

The American labor channel is quieter but similar. FLAS fellowships and NRC ecosystems function as employment pipelines into government, nonprofit, and education sectors where public missions dominate and margins are thin. When federal funding dips, the market does not rush in; programs shrink, languages vanish from catalogs, and analytic depth erodes. That is the real opportunity cost of treating area studies as a luxury: in crises—from evacuations to sanctions design—the state rediscovers that it needs analysts who already know the files and speak the languages. The time to cultivate that bench is before the crisis, not after.

The Governance Problem: Funding Without Suffocation

The policy challenge is to recognize that instrumental value does not license ideological capture. China’s universities face intensified ideological oversight. Mandated ideology courses have expanded; researchers describe a turn toward insularity and new controls on international collaboration; student reporting suggests propaganda courses are widely disliked even as they proliferate. These dynamics will not stop the build-out of area studies, but they will think the knowledge if fieldwork is chilled and critical voices self-censor. The short-run effect is quietism; the long-run cost is shallower statecraft. A governance framework that protects fieldwork, allows plural methods, and separates budget authorization from research line-item control would buy China better knowledge even on its terms.

Democracies need guardrails, too. US Title VI centers are perennial targets in budget skirmishes; advocacy letters and rulemaking debates show how quickly politics can skew evaluation criteria or stigmatize regions. The fix is not to depoliticize the impossible but to proceduralize the inevitable: multi-agency cost sharing that prevents single-desk vetoes; rotation of peer-review panels to blunt ideological capture; transparent post-grant audits that track actual public value (graduates in public service, language proficiency outcomes, timely policy briefs). In both systems, the same principle applies: money may be public, but the method must remain scholarly.

Anticipating the Critics

One objection says that in the big-data era, translation engines and open-source feeds make area studies quaint. This misunderstands what the field does. It is not a dictionary service but a context engine—the habit of reading documents against institutions, incentives, and history. Data without context decays into pattern hallucination. The persistence of NRC/FLAS funding and the renewed regulatory attention in 2024 are tacit acknowledgments that governments cannot outsource situated judgment to APIs. What algorithms accelerate, area studies interpret.

A different objection insists that state funding turns scholars into propagandists. Here, the China–US contrast is real but not dispositive. China’s CSC criteria and ideological guidance are explicit and compulsory; the US Title VI architecture, while strategic, is pluralistic by design, with peer review, diverse regional representation, and public reporting. The correct answer is not purity politics but institutional design: security system directors from line ministries; shelter fieldwork under non-security umbrellas; publish negative findings; and require mixed-methods literacy to prevent monocultures that flatter funders. The point is to accept the strategic rationale for area studies while refusing epistemic monocropping.

Policy To-Dos: Building Capacity, We Can Trust

First, treat area studies as a knowledge infrastructure and fund it accordingly. In China, formal discipline status should be matched with fieldwork protections—simple measures like indemnity pools, transparent IRB processes for politically sensitive topics, and ministerial guarantees against punitive retaliation for good-faith research. Without this, the discipline will remain performative rather than analytic. In the United States, double down on counter-cyclical appropriations: when crises are quiet, keep the pipeline full; when they spike, resist faddish reallocation. NRC/FLAS is small enough to insulate culture wars while still changing outcomes.

Second, link funding to public, auditable outputs—not slogans. Require that centers publish annual language proficiency distributions; catalog fieldwork days; and archive policy memos with declassification clocks. Third, incentivize joint cross-border labs where feasible. Even amid rivalry, research on non-sensitive domains—public health surveillance methods, energy market data standards, archival digitization—can be pursued in sandboxed collaborations that raise global capacity. Fourth, build career bridges that make graduates legible to employers: standardized micro-credentials in translation for diplomacy, regulatory impact analysis, and sanctions design would convert general area knowledge into specific competencies. Finally, anchor governance in independent peer communities—professional associations and journals with diverse editorial boards—so that research quality, not political favor, structures recognition.

Back to the Number, and the Choice

The figure that initiated this discussion—395 centers and 42 bases listed in China’s records in 2017, with official discipline enhancement occurring in 2022—wasn’t merely intriguing. It served as a guiding framework. It conveyed that governments support what the market fails to provide and that area studies expand as empires grow. The United States’ Title VI funding line, consistent yet modest, communicates a similar message in a subtler tone. The allure of the policy is to debate its purity. The policy's essential goal is to formulate agreements that seriously consider strategy while safeguarding independence, as expertise becomes stale without it. Establish the framework. Release the assessments. Safeguard the fieldwork. Allow methods, not administrative bodies, to shape conclusions. If we accomplish this, area studies will continue to be what the present situation necessitates: a public good in a perilous world, funded by the government but operated for the citizens—a discipline driven by understanding, not rhetoric, able to convey truths that those in power must hear, even if they are reluctant to accept them.

The original article was authored by Els van Dongen, an Associate Professor at Nanyang Technological University, Singapore. The English version of the article, titled "Area studies gain ground in China’s educational institutions," was published by East Asia Forum. For more information about SIAI’s Gordon School of Business and Artificial Intelligence, please visit https://gsb.siai.org.

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This article is based on ideas originally published by VoxEU – Centre for Economic Policy Research (CEPR) and has been independently rewritten and extended by The EduTimes editorial team, in collaboration with SIAI’s Global School of Business (GSB). While inspired by the original analysis, the content presented here reflects a broader interpretation and additional commentary. The views expressed do not necessarily represent those of VoxEU or CEPR.

The most revealing number is not a grade or a place in university rankings. That's 29.2 trillion Korean won (Roughly USD 21 billion) — the record spending of Korean households on private education in 2024 — at a time when the student population is shrinking. Combine this with a second figure: 47.6% of children under six already attend tutoring, with a quarter starting before two. These two facts say more about the policy field than any slogan about "meritocracy" or "opportunity." In systems where the family response to motivation is hyperelastic and begins at a very young age, even well-intentioned preferential admission arrangements can be arbitrated on a large scale. By contrast, in Chile, where an in-school scheme for top disadvantaged high school students increased access to selective universities without causing massive "manipulation," the benefits were measurable — albeit with margin limits. The position of this article is straightforward: privileged admissions can work where behavioral responses are restrained and tertiary education remains partial; fail, or boomerang, in environments like Japan, Korea or China, where families quickly readjust strategies around each new rule. The question is not whether to widen the opportunities, but how to design them so that they cannot be bypassed.

Framing the question: from access to incentives

The public debate on preferential admissions usually asks whether disadvantaged students' access to academic criteria without undue harm is increased. This framework ignores the deeper variable that judges success: the elasticity of pre-university behavior towards the admission rule itself. In low-flexibility environments — where few pursue tertiary education, where private tutoring support is limited, and where school placement is difficult to manipulate — schemes that reward top performers in understaffed schools can produce 'absolute mobility', which means a significant increase in the number of students from disadvantaged backgrounds who successfully enter tertiary education, with 'tolerable side effects', meaning the negative consequences of the policy are manageable. In high-flexibility environments — where almost everyone is aiming for university, where households mobilize money and time years in advance, and where school placement or housing is strategically remodeled — the same rules trigger 'gaming,' poor distribution, and late dropouts. The Chilean scheme of 'top x% within disadvantaged schools' has increased access and subsequent earnings on average. The Korean culture of early, intensive, and adaptive preparation would turn the same rule into a strategic transfer match. Political debate, therefore, is not 'yes/no', but 'planning under behavioral constraints'.

Why the Chilean model moves the index — and its potential

Chile offers unambiguous documentation. A national program that guaranteed a place in selective institutions for the top 15% of disadvantaged high school graduates increased first-year enrollment and, for the average beneficiary, improved future earnings, mainly because students were admitted to more selective programs. However, the same data illuminates hard limits. Marginally eligible students showed higher dropout risks and weaker returns later on, consistent with academic readiness "mismatch" when the program is demanding. A key finding is that beliefs and motivation count. Some students reduced effort in high school by predicting the preferential pathway, while simple, targeted information improved choices without the side effects of generalized relaxation. The conclusion is not that preferences "work" or "don't work", but that in contexts like Chile's — medium-range tutoring, limited ability to "buy" school, part-time tertiary education — targeted preferences plus information can increase mobility, as long as there are railings that maintain motivation and academic matchmaking. This mixture is complex to reproduce when home adaptation is faster and stronger.

The reality of East Asia: when families move faster than politics

East Asian systems change the equation. The tertiary participation rate in Korea is essentially universal by international standards, and the preparation culture is both early and intensive. The statistical office records new records of expenditure on private education in 2023 and 2024; International reports confirm that almost half of pre-kindergarten children attend tutoring centers, especially in the privileged neighborhoods of Seoul. The participation of school-age children in private aid is approaching saturation, while analyses by the government and the OECD link the 'arms race' with broader social costs. In China, the combination of provincial quotas and differences in exams has historically produced 'gaokao migration,' with families changing hukou or school to optimize the odds — an archetype of high political responsiveness. In this landscape, a rule that 'locks' into a 'disadvantaged school', which refers to a school with a high proportion of students from low-income or underprivileged backgrounds, is tantamount to an invitation to strategic transfers, changes of direction, or regular school re-matching. We are not talking about hypothetical risks; They stem from the observed willingness of families to spend, move, and plan years in advance to extract even marginal advantages.

What the Korean withdrawal signals: the "lowering of the bar" does not level the field

An enlightening counterweight is the Korean postgraduate experiment that opened the door wide to candidates from across the spectrum of institutions, including those whose internal indicators predicted they would struggle. The short-term gain in equality was undeniable — doors that had hitherto been closed were opened — but the medium-term outcome was harsh: over 60 percent left before completing half of the courses, and less than one in five finished with a thesis. The evaluation of the program itself attributed the failure to a discrepancy between training optimized for the reproduction of test standards and the requirements of an open-type, problem-centered study, with a few notable exceptions from "non-branded" institutions distinguished by strong innate ability. Other Korean data shows increased dropout rates in STEM master's degrees for international students compared to domestic students. None of this "proves" that graduates of disadvantaged schools cannot succeed; It shows that the introduction of itself, in a system optimized for testing and early specialization, can widen the discrepancy if it is not accompanied by serious preparation and support. In short, horizontal preferences without scaffolding build failure.

Designing for Asia: the imperative of equality without loopholes

If the problem is flexibility, the solution is to reduce the policy surface that households can exploit and transfer resources from "positioning" to preparation. First principle: transition from school labels to place-bound local disadvantage indicators, difficult to falsify, combining long-term residence, neighborhood deprivation, and cross-income with consistency checks over time. Second: the privileged admission must be conditional on pre-registration and bound to acquired proficiency – offer of a place conditional on the successful completion of standardized bridging modules that close the fundamental gaps of the targeted school. Third: breaking the single high limit in tiers by randomizing bonds within tiers; Randomization on the sidelines cancels out surgical "gaming" targeting without sacrificing value signals. Fourth: active audit and feedback; Import services publish "anomaly flags" (sudden bursts of transfers in eligibility zones, unlikely changes of residence) and dynamically regulate the boundaries. Each element channels the family effort towards the accumulation of human capital instead of strategic repositioning. In East Asia, this reorientation is the main prize.

Preparation as a binding constraint: bridges that endure

Preferential admissions fail when they "admit" students to demanding programs without time to acquire the knowledge infrastructure that was not rewarded in school. Data on university bridges — though not homogeneous — show substantial gains in scoring and retention when the intervention teaches absolute prerequisites over a horizon of weeks and months, not days. At the same time, studies on very short pre-PhD "starts" warn against making excessive promises; Lasting benefits require duration, credits, and alignment with the final evaluation. The practical conclusion for Asia: preferential offers to be "linked" with credit, semester-long master's paths, co-taught by the same host schools, which end up in portals-evaluations that become a condition of full enrollment. This protects the criteria, concentrates investment in skills, and enables a dignified exit with a recognisable certificate – not a stigma – when the match does not prove to be correct. The U.S. debate over the reintroduction of standardized testing also points to a hybrid: where schools are "unknown," calibrated tests can protect high-achievers from disadvantaged environments, provided they are a signal among more.

What do teachers, administrations, and policymakers do now?

Teachers should redesign the first year of study to recognize heterogeneous readiness and "load" early diagnostic teaching, reducing the reliance on the "sink or swim" that punishes exactly the students that equality policies bring in. Administrations should massively pilot conditional offers, treating bridging programs as an integral phase of the degree, and publish transparent indicators: acquisition rates, credit accumulation, and two-year stay per admission route. Policymakers shift resources from blunt redeployments to targeted, early capacity building – particularly in mathematical thinking, writing, and evidence-based argumentation – starting in the last years of secondary school. They should also introduce disincentives to manipulation, tied to location markers and long-term residency certification, avoiding public signals that create abrupt "cliffs" of incentives. Finally, all actors should treat students' beliefs as policy levers: information campaigns that accurately capture the effort required per sector and the yields of the "master" can shift the study to the substance at a much lower cost than constantly cutting and sewing admission lines.

Dealing with objections — with evidence

One objection says that preferential imports necessarily "lower" the level and therefore harm those who are supposed to help. The Chilean archive shows the opposite on average when preferences are targeted and accompanied by reliable information; Failures accumulate in marginally eligible ones where the readiness gap is greater — a design problem, not a necessity. A second objection argues that Asia's intensive prep culture makes strong preferences imperative to "compensate" for tuition inequality. But if the policy surface is manipulable, we subsidize "gaming", not learning; The Korean private spending struggle and the "gaokao migration" to China show how quickly families are reacting—third objection: "test-optional" or "holistic" assessments already solve the problem. Newer U.S. figures are mixed: some institutions report gains in diversity and inclusion, others find that optionality may inadvertently reduce visibility for high-achievers from low incomes, prompting top universities to reinstate exams as part — not everything — of a holistic crisis. The right lesson is not the worship of the test, but the plurality of signals and the scaffolding of "master".

We plan for motivation, not intentions

Let's go back to those two figures: 29.2 trillion. Won and 47.6% of those under the age of six in tutoring schools. They describe an ecosystem in which families will reorganize budgets, housing, and time in response to every admission rule that offers an advantage, no matter how small. In such systems, the mechanical transfer of the Chilean rule based on ranking within "disadvantaged" schools is not progress realism; It is political naivety. The way forward is to narrow the arbitrage surface and widen the preparation pipeline: multi-year site markers that cost to falsify; coupling each offer with substantive, credit gain; randomization on the sidelines to "break" surgical targeting; and publishing evidence that beliefs can shift toward effort rather than loopholes. Where behavior is less elastic, preferences can continue to elevate mobility. Where it's hyperelastic, the choice is sharper: we design for motivation, not intentions — otherwise we'll see the promise of equality again turn into an arms race that parents win and students lose.

The original article was authored by Michela Tincani, an Associate Professor at University College London (UCL), along with two co-authors. The English version of the article, titled "When beliefs shape policy outcomes: Lessons from preferential college admissions in Chile," was published by CEPR on VoxEU. For more information about SIAI’s Gordon School of Business and Artificial Intelligence, please visit https://gsb.siai.org.

References

Bloomberg. (March 13, 2024). Spending on private education hits another record in South Korea. Reference to Statistics Korea data.

British Council. (24 June 2025). Slight dip in Gaokao candidates after 2024's record high.

Carlana, M., Miglino, E., & Tincani, M. (2024). How far can inclusion go? The long-term impacts of preferential college admissions (CEPR Discussion Paper DP19128). Centre for Economic Policy Research.

Carlana, M., Miglino, E., & Tincani, M. (2024). How far can inclusion go? The long-term impacts of preferential college admissions (conference version). World Bank.

College Board. (June 2025). New evidence on the effect of changes in testing policies (ARC Research Brief).

Financial Times. (17 March2025). South Korea's academic race pushes half of under-6s into "cram" schools.

Grossman, J., Tomkins, S., Page, L., & Goel, S. (2024). The disparate impacts of college admissions policies on Asian American applicants. Scientific Reports, 14(1), 4449.

Gordon Institute of Artificial Intelligence. (March 19, 2025, updated June 9). Why SIAI failed 80% of Asian students: A cultural, not genetic, explanation. giai.org.
Korea JoongAng Daily. (7 October 2024). High dropout rates persist for many international graduate students.

Korea Labor Institute. (31 March 2025). Panel Brief: Private education participation trends.

OECD. (2023). PISA 2022 results (Volume I): The state of learning and equity in education. OECD Publishing. https://doi.org/10.1787/53f23881-en

OECD. (July 3, 2024). OECD economic surveys: Korea 2024. OECD Publishing.

Reuters. (February 22, 2024). Yale reinstates standardized test requirement, citing benefits for diverse high-achievers.

Statistics Korea. (13 March 2025). Private Education Expenditures Survey of Elementary, Middle, and High School Students in 2024.

Tincani, M. M., Kosse, F., & Miglino, E. (2025). Beliefs and the incentive effects of preferential college admissions: Evidence from an experiment and a structural model (working paper). University College London.

UNESCO Institute for Statistics. (2025). Gross enrolment ratio in tertiary education (dataset, 1970–2025). Our World in Data (adapted).

University of California, Davis (reported by Davis Vanguard). (August 2025). Study finds test-optional policies can boost diversity, with caveats.

Washington Post. (10 June 2025). Cram schools for kindergartners are the latest in South Korean college prep.

World Bank. (2025). School enrollment, tertiary (% gross): Chile; Korea, Rep. (UIS series).

The web tightens across classrooms.
Academic freedom slips
Institutions caught in political nets.

Universities once stood as pillars of independent thought. Today, they find themselves straining under the weight of state control, political pressure, and federal overreach. From educational gag orders to frozen grant funding, these shifts signal a transformation in how higher education operates and what academic freedom truly means in America’s current political climate.

State Laws Weaving a Snare Around Universities

In 2025 alone, legislators in 26 states introduced more than 70 bills aimed at restricting higher education. Of these, 22 became law in 16 states, bringing policies that interfere with faculty governance, classroom content, and institutional autonomy. Known as “educational gag orders,” these laws prescribe what can and cannot be taught, sometimes even mandating state-prescribed civics courses. More than one in three Americans now reside in states where these restrictions are in force, signaling a dramatic shift in the relationship between government and academia.

The reach of these laws extends beyond direct censorship. Some bills weaponize accreditation by threatening institutional independence. Others dismantle faculty power by requiring governing boards to oversee tenure decisions. The cumulative effect is a chilling atmosphere for academic inquiry. As one critic remarked, this “precipitous climate” brings free expression on campus to a near standstill.

Harvard vs. Trump: A Battle for Academic Autonomy

Meanwhile, Harvard University is the focus of a high-stakes showdown with the Trump administration. After refusing to comply with sweeping demands ranging from governance restructuring to changes in student disciplinary policies, Harvard faced a USD 2.6 billion research funding freeze and a threat to its tax-exempt status. The administration also sought to block international students from enrolling.

Campaigning for federal settlements, reportedly as high as USD 500 million, has been denied by the university’s president. Harvard insists that academic freedom is non-negotiable. In contrast, Columbia University has settled for USD 221 million, accepting increased oversight and behavioral mandates. This divergence makes clear the stakes: universities must choose between survival under watchful political eyes or a costly legal stand that could inspire peer institutions across the nation.

The Broader Eclipse of Academic Freedom

These dual pressures from state legislatures and the executive branch converge to impose a framework of control over higher education. Republican-governed states, such as Texas, are pushing sweeping reforms that give political appointees the final say over curriculum, faculty hiring, and accreditation. The resulting legal constraints mirror federal tactics that freeze funding or manipulate program criteria, leaving both public and private institutions vulnerable to these strategies.

Across campuses, administrators, faculty members, and students are grappling with a new reality. Autonomy is no longer intrinsic. The threat now comes from all levels of government, justified under ideals such as neutrality, civic engagement, or reform. However, as these pressures intensify, the essence of higher education, learning without reprisal, may erode irreversibly.

Ultimately, the question is not whether institutions can adapt; rather, it is whether they can adapt effectively. It is whether any university can survive intact, unchanged by a web of control that constricts both governance and thought.

Degrees are being handed out like receipts.
Rigor erodes as GPAs climb.
AI looms over every exam.

It may come as little surprise that academic standards are slipping across universities. With students viewed as consumers rather than scholars, admissions have become more lenient, grades have inflated, and the pressure to satisfy rather than challenge has taken center stage. The looming presence of AI tools like ChatGPT only accelerates the erosion, making it more challenging than ever to uphold meaningful evaluation.

Students as Customers, Standards as Casualties

Higher education has increasingly positioned its students as customers, individuals whose satisfaction must be secured. Administrators are driven to create smooth service experiences that minimize complaints and maximize retention. This customer-centric approach, while aimed at improving the student experience, often comes at the expense of academic rigor. Professors report watering down assignments, extending deadlines, and lowering expectations to avoid displeasing students or triggering bad feedback that could endanger their careers.

Surveys show that over three in five students see themselves as customers, expecting institutions to meet their needs in return for tuition. When education becomes transactional, the burden shifts away from learning to accommodation. Students thrive when they are expected to work hard and challenge their intellectual abilities. When colleges trade that ethic for consumer comforts, they do harm not only to students but to the credibility of degrees themselves.

Grade Inflation and Credential Erosion

As universities compete for students, grade inflation becomes a convenient tool for achieving this goal. High GPAs are more valuable in marketing collateral than faculty candor, and they help preserve graduation rates. But the result is a credential that lacks differentiation and meaning. According to academic research, grade inflation undermines the value of academic credentials and distorts the educational economy. When every student earns high marks, merit loses its significance.

Credential inflation also occurs when advanced degrees proliferate without a corresponding increase in academic achievement. Many graduates find the market saturated, with recruiters dismissing diplomas as meaningless markers of skill. This dynamic creates a vicious cycle, degrees lose power, so institutions inflate grades or dilute curricula to maintain demand. Meanwhile, employers downgrade their expectations by asking for college credentials even when unnecessary.

AI: The Final Nail

The rise of AI tools raises the stakes even further. Technologies like large language models can now perform much of the creative and analytical work that students once had to do themselves. A well-written essay, once a test of critical thought and synthesis, can now be generated in seconds. The presence of AI exposes a harsh reality: if institutions continue to prioritize satisfaction over challenge, there may be little left that students must do for themselves.

This is not just an academic matter. It is about shaping human capacities, curiosity, analysis, and expression that define citizenship and innovation. When algorithms and stress-free grade models replace these attributes, society loses more than test scores. It loses capacity for deep thinking and informed judgment, qualities essential to democracy and progress.

But there is still a path forward. Educators and institutions can choose to reaffirm the values of challenge, trust, and hard-earned achievement. Community colleges, under less consumer pressure and closer to local needs, offer a promising alternative. They are better positioned to emphasize deep reading, handwritten exams, and meaningful dialogue, an antidote to the performance economy.

The decline in academic quality is not an accident; it is a choice rooted in cultural priorities. Restoring the substance of education will not be easy, but it begins with remembering that schools exist to teach, not to serve.

STEM major choices driven by wage levels and employment risk rather than gender
Finland favors interest-based choices, while Spain gravitates toward high-return majors
Subsidies, income-linked repayment schemes, and disclosure of major-specific data proposed as solutions

This article is a reconstruction tailored to the Korean market based on a contribution to the SIAI Business Review series published by the Swiss Artificial Intelligence Institute (SIAI). The series aims to present researchers’ perspectives on the latest issues in technology, economics, and policy in a manner accessible to general readers. The views expressed herein are those of the author and do not necessarily reflect the official position of SIAI or its affiliated institutions.

Wage disparities by field of study across Europe directly reflect national economic structures and labor market conditions. As of October 2024, the median monthly starting salary for newly hired engineers in Finland stood at approximately $4,300, about 12% higher than the roughly $3,850 earned by humanities graduates. By contrast, in Spain, newly graduated industrial engineering majors earned an annual salary of about $42,000, 57% above the national median income for higher-education graduates and nearly double the most common salary level nationwide.

Such return differentials shape students’ choices of academic majors. In environments where wage gaps are narrow and welfare systems absorb early-career risks, students place less weight on economic considerations. Where rewards are large and unemployment risk is high, enrollment concentrates in high-return fields. This pattern is not driven by gender, but by differences in the structural incentives that guide major selection.

Structural Drivers of Major Choice

Current debates in advanced economies often attribute gender-based segregation across majors to cultural norms, confidence gaps, or school environments. Viewed through a labor economics lens, however, the same data allow for a different interpretation.

Finland’s wage system, anchored in strong unions, progressive taxation, and income-linked welfare, keeps inter-major wage gaps narrow. In such an environment, the economic incentive to pursue demanding majors in mathematics or engineering remains limited. Spain, by contrast, combines a weaker social safety net with one of the highest youth unemployment rates in Europe, producing a clear preference for majors associated with stable employment and high pay. When risk is socially pooled and rewards are similar, interest guides choice; when risk is individualized and rewards diverge sharply, economic calculation takes precedence.

Wage Gaps by Major

An analysis of 4,100 observations from the 2024 labor market survey conducted by the Finnish Association of Graduate Engineers (TEK), divided into deciles, shows that the gap between the top and bottom deciles for engineering graduates was approximately $8,600, with a risk-adjusted return index of 0.24. For humanities graduates, the corresponding figures were about $7,600 and 0.21, indicating minimal differences.

Applying the same methodology to Spain’s 2025 major-specific wage data yields a gap of roughly $24,600 for engineering majors and about $10,300 for humanities graduates. The risk-adjusted return indices stood at 1.08 and 0.46, respectively, indicating that inter-major return differentials were far wider in Spain than in Finland. In other words, choosing humanities in Finland entails little penalty, whereas in Spain the income premium associated with engineering remains substantial.

Teenagers’ Major Choices

Some argue that teenagers fail to recognize structural differences in labor markets. Survey evidence suggests otherwise. In March 2025, a Conference Board survey of 11,000 final-year high school students across nine EU countries found that adjusting expected wages by 20% prompted 82% of respondents to say they would change their intended major.

Supplementary surveys conducted in urban high schools in Tampere, Finland, and Valencia, Spain, produced similar results. When expected income was incorporated into the analysis, gender had no statistically significant effect on STEM preferences, while wage outlook emerged as the decisive factor.

Notably, when the perceived probability of post-graduation unemployment increased, Finnish female students’ likelihood of choosing information and communications technology majors declined by 11%, while in Spain it rose by 8%. Researchers attribute this divergence to the interaction between “major-specific wage gaps” and “welfare levels.” In Finland, limited wage differentials mean that riskier majors offer little additional reward, and stable welfare systems reduce incentives to assume risk. In Spain, wide wage gaps and weaker social safety nets encourage students to offset higher employment risk by pursuing majors with larger income premiums.

Post-Pandemic Labor Shortages in Europe

Europe’s post-pandemic labor shortages have heightened the need to reassess the structural factors influencing major choice. Between 2014 and 2024, low-skilled jobs in Europe declined by 2.3 million, while positions requiring a university degree increased by more than 20 million. Hiring times in STEM fields were more than three times longer than in law or journalism.

According to Randstad Research, Spain will require an additional 75,000 engineers by 2030 to meet its recovery fund targets, while Finland faces a shortage of data scientists amid rapid population aging. Experts warn that policies framing gender gaps solely as “confidence issues,” while ignoring the risk–reward signals embedded in wage structures, risk devolving into fiscally costly but ineffective public relations initiatives.

Policy Tasks for Risk Mitigation

Finland could consider introducing a tax-exempt subsidy of about $6,600 for low-income STEM freshmen, benchmarked to union-recommended wages. Such a measure would raise net entry-level pay by roughly 15%, expanding choice for risk-averse students. Analysts suggest the funding could be secured through a 0.1 percentage point adjustment to corporate R&D tax credit rates.

Spain is weighing an expansion of Income Share Agreements (ISA) currently operated by some universities. Under the proposal, repayment would begin only when annual income exceeds approximately $18,700, with payments capped at 13.2% of disposable income. An analysis of Eurostat data indicates that such schemes halve income volatility among female physics graduates and reduce lifetime gender income gaps by 8 percentage points.

Counterarguments and Responses

Some contend that Nordic women favor people-oriented professions. However, the 2025 Global Gender Gap Report shows that Iceland, Norway, and Finland rank at the top in gender equality while female STEM enrollment remains below 28%. If gender equality were the primary determinant, outcomes would be reversed.

Others argue that social stereotypes portraying women as unsuited for STEM undermine girls’ performance and confidence. Yet a 2024 analysis of the Programme for International Student Assessment (PISA) data found that once expected post-graduation income was accounted for, gender differences in self-efficacy disappeared. This suggests that lower confidence among female students reflects rational responses to unfavorable wage prospects rather than purely psychological factors.

OECD workforce projections also counter concerns that subsidies would overcrowd certain majors. European engineering programs could absorb an additional 17% increase in students before returning to pre-pandemic faculty-to-student ratios, indicating that policies targeting risk structures remain feasible.

Completing Reform Through Measurement

To enhance policy effectiveness, authorities should publish, on a quarterly basis, four bundled indicators: median income three and five years after graduation by major, income volatility, student loan delinquency rates, and hiring lead times for core STEM occupations. Finland already collects some of these metrics, and Spain’s statistical office plans to release detailed data from the second quarter of 2025.

Integrating these indicators into high school career counseling programs would allow students to adjust wage and risk parameters directly when planning their educational paths. In Andalusia, Spain, the introduction of an integrated dashboard reduced gender bias in physics course selection by one-third within a single semester.

Once indicators are public, fiscal authorities must also be accountable for outcomes. If subsidies or ISAs successfully mitigate risk dispersion, the data will confirm it; if not, budgets can be reallocated elsewhere. Transparent metrics transform budget execution into a verifiable experiment and, over time, provide a public data foundation for research and policy design.

From Insight to Incentives

Europe’s STEM gender divide stems from differences in economic incentives. Where wage gaps are narrow, as in Finland, interest guides choice; where gaps are wide, as in Spain, returns dominate. Practical measures—such as subsidies lowering entry barriers, income-linked tuition schemes, and disclosure of major-specific income and employment data—remain essential. When risk and reward are balanced, students choose majors aligned with their skills and interests regardless of gender. Adjusting incentives today sets the conditions for the next generation to pursue a wider range of pathways.

For the original version of this research article, please refer to Choice, Risk, and the STEM Gender Divide—Why Pay Matters More Than Policy. Copyright of this article belongs to the Swiss Artificial Intelligence Institute (SIAI).

The money is on the table.
The mission is under scrutiny.
The message, still uncertain

Harvard University is once again in the national spotlight, not for a groundbreaking discovery or a stellar academic ranking, but for what appears to be a quiet negotiation with one of its most vocal critics. As reports circulate about a potential USD 500 million deal with the Trump administration, concerns about academic independence, political compromise, and the long-term integrity of higher education are growing both on and off campus.

A Truce or a Trade?

For years, Donald Trump has pointed to elite academic institutions as bastions of what he calls cultural elitism and ideological bias. Harvard has long topped his list, not just for its influence but also for its symbolic role in shaping American thought and leadership. According to several news reports, informal talks between Trump-aligned officials and Harvard administrators are evolving into something more concrete. A potential USD 500 million partnership could signal a dramatic shift in the relationship between the former president and America’s oldest university.

Inside Harvard, the atmosphere is changing. Faculty and students alike have begun to notice the softening of specific policies and the removal of prominent “DEI” (Diversity, Equity, and Inclusion) labels. Though officials claim the change is a strategic update in terminology, many observers view it as an early concession to political pressure. If these signals indicate a larger agreement is in progress, the implications could significantly reshape Harvard’s role in the national conversation on education, equity, and freedom of thought.

Harvard’s reputation as an academic powerhouse has long been built on its autonomy. Accepting a politically driven financial deal would not just invite criticism from across the ideological spectrum but could also erode trust within its community. The balance between upholding values and preserving financial viability is now more precarious than ever.

Redefining the Narrative

The Trump administration has shown a clear strategy in its campaign against what it labels as academic overreach. Lawsuits, funding threats, and public denunciations have created an environment where many universities are walking a tightrope. For Harvard, the political attack has been especially pointed, targeting both its internal programs and its broader public image.

This backdrop adds weight to reports of quiet diplomacy between Harvard and Trump’s camp. For the former president, cooperation from Harvard would represent a significant symbolic victory. For Harvard, engagement with a political adversary might offer breathing room at a time when universities face growing operational and financial pressures. But at what cost?

A deal with Trump might protect Harvard from immediate federal scrutiny should political winds shift further in his favor. Others warn that even tacit cooperation sends a message that institutional principles are negotiable. With many faculty already voicing opposition to the idea of a deal, internal tensions are building. Students, too, have expressed skepticism, worried that any alignment with political figures could dilute the university’s mission and compromise the educational environment they were promised.

These concerns are not hypothetical. The slow retreat from DEI branding has already caused unease among those who supported the programs as a reflection of institutional progress. Though framed as a cosmetic change, many fear it signals a larger retreat from equity-focused policies. If that retreat is linked to political pressure, then Harvard may be redefining not just language, but its entire narrative.

Academic Freedom at a Cost

At the center of this debate is the question of what academic freedom truly means in today’s polarized environment. Harvard’s leadership is facing a dilemma familiar to many modern institutions. Should it double down on principle and risk political retaliation, or engage pragmatically with adversaries to protect its longer-term stability?

The stakes are exceptionally high for a university as visible and influential as Harvard. A financial agreement, even one that does not explicitly compromise academic control, could open the door to future encroachments. Once a precedent is set, it may be challenging to reverse the influence of outside interests on educational governance.

This moment also reflects broader tensions within the higher education sector. Universities across the United States are facing funding challenges, growing student populations, and increased political scrutiny. Harvard, despite its massive endowment, is not immune to financial difficulties. Yet its choices will likely shape the decisions of other institutions watching closely.

Suppose Harvard chooses to move forward with a deal perceived as politically motivated. In that case, it will not only redefine its legacy but also influence the public’s understanding of what academic leadership entails. Can a university accept large-scale funding without inviting ideological influence? Can it engage with power and still critique it?

These are the questions Harvard must now answer, not through press releases or branding, but through the consistency of its actions. As the nation’s academic and political communities watch closely, what happens next in Cambridge will ripple far beyond the confines of the university itself.