During lunchtime at LeMoyne-Owen College, Memphis’ only historically Black college, President Christopher Davis finds South Memphians of all ages taking advantage of the $6 meals in the cafeteria, one of the few fast and affordable fresh food options in the neighborhood.
In the poorest ZIP code in the city, the college is a lifeline for students and their families. But that lifeline is fraying. Davis describes his biggest challenge as tolerating “uncertainty” amid unprecedented threats to federal higher education funding. “We’re operating in perpetual fear around what program will be impacted next.”
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That fear reflects a broader anxiety spreading across the country’s higher education landscape. For half a century, colleges and universities have been slowly bleeding funding. As support from state governments has shrunk, students have paid higher tuition and are increasingly reliant on federal aid programs and loans.
But the latest wave of federal proposals has alarmed college leaders who say they go beyond disinvestment toward dismantling the federal safety net that helped compensate for state cuts. In Memphis, where several colleges serve high proportions of low-income and first-generation students and operate on razor-thin financial margins, the effects are already being felt.
These funding uncertainties compound existing financial pressures across higher education. Colleges nationwide are already under pressure from the “enrollment cliff,” a sharp, long-term decline in the number of college-aged students due to a drop in the birth rate beginning in 2008, which is reducing student numbers and straining budgets across the country.
Paying the ‘chaos tax’
Project 2025 — a policy blueprint developed by the Heritage Foundation — originally outlined plans to eliminate the U.S. Department of Education, end all diversity, equity and inclusion funding, and curtail key aid programs like Pell grants that offer need-based grants for low-income students, TRIO programs providing academic support services for first-generation and disadvantaged students, and Title III federal grants that strengthen institutions serving large numbers of minority and low-income students. While President Donald Trump has publicly distanced himself from Project 2025, many of the recommendations mirror policies and priorities his administration is pursuing.
On his first day in office, Trump signed executive orders dismantling Title IX protections for transgender students, stripping DEI requirements from federal contracts and launching a plan to dismantle the Department of Education. The Trump administration has since cut nearly half the department’s workforce—more than 1,300 positions have been eliminated through layoffs, with another 600 employees accepting voluntary resignations or retiring.
Many of the government’s moves — including dismantling the DOE and the new Title IX rules — were reversed by federal courts, and others have been partially rolled back following outcry or litigation. However, on July 8, the Supreme Court reversed a lower court order that had blocked the Trump administration from enacting mass layoffs within government agencies, and on July 14, the Court decided that more than 1,300 Education Department employees that had been reinstated after the reversal can be fired again, which would leave the DOE with less than half the number of employees it had in January.Even the brief implementation of temporary policies meant campuses already operating on tight budgets had to overhaul student handbooks, halt compliance training and hire legal support. In addition to federal pressure, Tennessee recently passed laws curtailing DEI programming, leading to the closure of offices that support students of color, LGBTQ+ students, and first-generation college students.
Such erratic policy changes result in what Marjorie Hass, former president of Rhodes College and current head of the Council of Independent Colleges, has called a “chaos tax” that forces institutions to divert resources from teaching and research toward crisis management and contingency planning. This further exacerbates the effects of cuts on institutions, with secondary consequences on college finances and staff resources.
Limiting education access
More instability recently rattled higher education as the Trump administration’s budget bill passed the Senate through reconciliation and was signed by Trump on July 4.
Trump’s proposed “skinny budget,” released in May, recommended reducing the maximum Pell Grant by $1,685, from $7,395 to $5,710, which would have erased a decade of increases. The non-binding blueprint also proposed eliminating TRIO and the federal Supplemental Educational Opportunity Grant, as well as slashing $980 million from the Federal Work-Study program, in which all local institutions participate.
After backlash across the sector and intensive lobbying and advocating, the Senate removed those provisions but did legislate a — tax that ranges from 1.4% to 8% on endowments over $500,000 for institutions with enrollment over 3,000, sparing small colleges. Additionally, the revised legislation now allows Pell Grants to be used for certifications or other workforce education, a shift that could significantly benefit Memphis-area colleges focusing on vocational training and career-oriented education.
The final bill also enables the federal government to pull funding for colleges and university programs whose graduates do not exceed the median earnings of local high school graduates, caps Parent PLUS loans and eliminates Grad PLUS loans entirely. PLUS loans previously allowed for unlimited borrowing, but another provision caps loans for graduate and professional students at $100,000 and $200,000, respectively, and limits parents to borrowing $65,000 per student.
Besides limiting education access for students, these changes will have a dramatic effect on the financial stability of institutions that rely heavily on tuition revenue from graduate programs. Perhaps the biggest effect will be on the University of Tennessee Health Science Center, where nearly 88% of its students are enrolled in graduate or professional programs. The University of Memphis enrolls about 4,900 graduate students, or about one-fifth of its total enrollment. Christian Brothers University’s graduate enrollment makes up 41% of its total population, offering seven graduate degree programs, six graduate certificate programs, and two teaching licensure programs. Primarily an undergraduate college, Rhodes offers one master’s degree and one post-baccalaureate certificate, which enrolled 16 students during the 2024-2025 academic year.
Graduate enrollments have been increasing over the last decade as many colleges and universities have sought to increase and diversify their revenue streams and, in particular, attract international graduate students who typically pay full tuition. According to EAB, graduate revenue represented about 50% of total net tuition revenue across the sector in 2021.
In addition to the impacts of executive orders and the final FY 2026 federal budget, recent funding freezes and delays across agencies like the National Institutes of Health, National Science Foundation and the Department of Health and Human Services have caused significant disruption to the research pipeline nationwide. A broader rollback of federal investment could threaten faculty positions, stall scientific progress and shrink universities’ economic footprint in their communities.
The University of Memphis relies heavily on federal research funding. Though the university administration declined to comment for this story, it reported that it received more than $52 million in sponsored research awards in fiscal year 2022, including significant grants from the NSF and DOE.
Uneven impact on local colleges
“No administration has ever come in and said we’re cutting everything,” said Daniel Collier, assistant professor of higher and adult education at the University of Memphis. “They’ve decided they’re just going to do whatever they want and cut whatever they want, however they want — and they’re calling that cost-saving when it’s not.”Collier noted that higher education spending brings substantial returns on federal and state investment and has impacts extending far beyond campus boundaries, with research dollars fueling local economies while colleges generate jobs and revenue. According to a 2023 report from the Tennessee Independent Colleges and Universities Association, private colleges contribute more than $2.1 billion annually to the state’s economy. The University of Memphis, the city’s largest public university, reports it generates nearly $1.1 billion in annual economic activity, supports about 10,000 local jobs, and pays $500 million in wages.
“LeMoyne-Owen College is not just a college, it’s an anchor institution in this city,” said Davis.” We are one of the largest producers of Black educators, entrepreneurs, and community leaders in this city. So … federal disinvestment is not just an educational issue, it’s an economic issue that threatens the development of a Black middle class in Memphis.
Davis notes that, as a result of long-term historic underfunding, “HBCUs have suffered disproportionately because of fewer revenue streams and smaller endowments.” For LeMoyne-Owen specifically, he said, “This could potentially affect everything from scholarship and academic programs to student support services and faculty retention.”
The financial outlook is similarly shaky for Christian Brothers University, which declared financial exigency in late 2023 amid a projected $5-7 million shortfall. It implemented layoffs, salary reductions, and program cuts. Though CBU has since reported a small surplus and exited probation, its recovery remains delicate.
CBU declined requests for interviews but responded to MLK50 via email before the final passage of the budget bill that it “has relatively few federally funded programs, and so recent changes at the federal level have had minimal impact” on its existing financial strain. But with a 41% graduate enrollment, a student population that is 23% Black, 16.3% Hispanic or Latino and 6.6% non-resident immigrants and a publicly-stated commitment to diversity and inclusion, CBU remains vulnerable to recent policy changes.
Rhodes College, which, like CBU, enrolls about 2,000 students, is in better financial health, reporting a $22 million surplus in 2024. But even at Memphis’ best-resourced private institution, federal aid is critical to maintaining economic and racial diversity, enabling the college to enroll students who couldn’t otherwise afford it. The college’s approximately $400 million endowment provides stability, but like many private colleges, Rhodes relies heavily on federal aid to maintain accessibility. In 2023, Rhodes received nearly $2.3 million in Pell Grant disbursements. Federal programs like Pell Grants provide direct aid that doesn’t drain institutional resources, allowing colleges to reserve their scholarship funds for students who may not qualify for Pell or other significant federal assistance but still need help affording tuition. While Pell Grants were not cut in the final budget, Rhodes faculty have received grants from NIH, NSF, and HHS — the agencies subjected to funding freezes by the Trump administration.
As for the effect of anti-DEI executive orders, Rhodes committed to a 2020-2024 framework for inclusion, diversity, equity and accessibility, but more recently, the chief diversity officer left the college and has not been replaced. Rhodes President Jennifer Collins declined to be interviewed, and a spokesperson declined to comment when asked about the effects of anti-DEI policies and the loss of funding for programs that help their most vulnerable populations.
An uncertain future
Even before recent attempts to dismantle the DOE, FAFSA problems plagued the 2024-25 cycle during the Biden administration. The rollout of federal funding application forms was delayed until December 2023, and colleges did not receive student data until March 2024, exacerbating Collier’s concerns about disbursement for the upcoming academic year, given the onslaught of policy changes.
Even if the federal financial aid is disbursed on time, which Collier doubts, he worries that the administration will attach new conditions to the funding. The administration has already targeted Columbia and Harvard, threatening to cut funding over their handling of pro-Palestine campus protests, questioning whether the universities violated civil rights laws under Title VI by failing to address antisemitic or discriminatory speech.
“Some institutions won’t be able to operate,” Collier said. “We’re already seeing layoffs at other colleges. In Memphis, I would expect institutions to contract. You’re going to have a brain drain out of Memphis.”
J. Dylan Sandifer (they/she) is an essayist and journalist who writes about the impact of federal politics and policy on Memphis for MLK50. Dylan authors Nothing is Inevitable on Substack and contributes regularly to The New Republic.
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