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The global mergers and acquisitions boom has hit a surprising sector — the American university system. Higher education is the country’s sixth-largest export, but the number of institutions is shrinking. If the Trump administration has its way, it will get much smaller still.
Last month, the administration announced new rules designed to speed up the consolidation of the sector. As education under-secretary Nicholas Kent put it in June, “there are 6,000 institutions of higher education in this country, and not all of them are going to make it out of the next decade. The ones that do are going to be nimble.” By the end of July, several colleges in New York, New Jersey and California had announced new M&A deals.
But even before the administration, which is sceptical of higher education in general, began making it easier for colleges to merge, consolidation was well under way. The trend is driven by a number of factors: demographic shifts; prohibitive cost; financial over-reach; declining trust in institutions; the falling value of a college degree; a need to find new efficiencies in an age of online education and coming AI disruption.
Between 2000 and 2025, the number of higher education mergers and takeovers tripled, driven largely by consolidation in for-profit schools (some of which had come under fire in recent years for poor results and exploitative practices — think Trump University). Many of these had been underperforming and overpromising for years, exploiting a generous federal loan system but failing to graduate large numbers of poor students who would end up defaulting on loans and leaving university with debt but no degree.
More recently, private non-profit universities — where a year of tuition and housing costs can run into the high five or even six figures — have come under pressure to consolidate. While large public “land grant” universities still offer value for money (particularly for in-state students), high-cost, middle-market private colleges that don’t have elite brands or a specialised offering (like some sort of vocational programme or professional track degree) are under pressure. Over the past couple of decades, many of these schools took on debt to hire more administrators and build fancy facilities to lure in full-fee-paying students (often from overseas).
Now, the environment has shifted. Operational costs and interest rates have risen, even as debt loads remain the same or higher. Foreign students are reconsidering the US as it has become more hostile to immigration. Meanwhile, overall college enrolment numbers fell 11 per cent between 2010 and 2021. Numbers have rebounded a bit in recent years, but a demographic cliff looms. America turns out 3.9mn high school graduates per year, but that number has probably peaked. One recent study has projected that it will fall to about 3.4mn by 2041, a 13 per cent loss.
Many colleges are decreasing prices to try to maintain enrolment (private non-profit colleges discounted tuition by 57 per cent on average in the 2025-26 school year). That can, in turn, create budget shortages. Meanwhile, as a recent survey of state higher education officers put it, as “education at large continues to face lower state funding and an increased need to maximise operational efficiencies, the number of consolidations” will become “more prominent” in the US.
Nearly a fifth of college and university presidents had serious merger discussions in 2025, according to one study; 34 per cent of those were at private non-profit universities versus 7 per cent at public institutions. Many of those are exactly the type of expensive, elite, liberal arts schools that have been battling with the administration over funding cuts and civil rights probes in recent years.
But the higher education M&A story isn’t just a reaction to political and economic forces. It’s also about institutions getting ahead of trends. There are a host of up-and-coming schools that seek consolidation to build global presence and visibility in what is increasingly becoming a winner-takes-all environment. One prominent example is Northeastern, a Boston-based institution once known as a commuter college that has in recent years become one of the most selective universities in the country, in large part because of a successful “co-op” programme in which students often work — in well-paid jobs arranged by the school — for at least six months to graduate.
As Northeastern president Joseph Aoun (not to be confused with the president of Lebanon) put it to me last week: “The universities that have brand differentiation are doing well in the current environment, and those that aren’t, aren’t.” In the past 10 years, Northeastern has acquired three other institutions (in London, Oakland, California, and in July, New York City) as part of an effort not only to build a global brand but also to prepare for the disruptive effects of AI, towards which many US universities have adopted a hostile stance.
As Aoun sees it, AI will increase the possibilities for learning remotely, but it won’t necessarily replace human contact in the real world. That’s why having a greater number of physical campuses will be crucial. “We think experiential education will become more important in a world of AI,” he says. Given the trend towards more higher education consolidation, scale will be, too.
