Recap: Demand-side vs Supply-side
Two Approaches, One Debate, and a Sector Under Pressure
I’ve been thinking a lot lately about the pressures facing higher education—cost, outcomes, access, and the sustainability of the institutions themselves. But this week, the big picture finally clicked into place. The real question isn’t whether the sector should evolve. It’s how different policy frameworks are trying to shape that evolution. Understanding the contrast between demand-side and supply-side dynamics is essential in order to make meaningful progress on the reforms that many policymakers on both sides of the political aisle say the sector needs.
The big picture
Higher education isn’t under sudden attack—it’s experiencing a new phase in a long-standing debate. For more than a decade, policymakers across the political spectrum have focused on reforming the sector’s cost structure, outcomes, and return on investment.
While the Biden administration emphasized demand-side tools—expanding access, improving affordability, and tracking student outcomes—the current approach reflects a shift toward supply-side thinking, focused on structural realignment through constrained resources.
What’s happening
Recent federal proposals offer a clearer picture of what supply-side reform looks like in practice:
Caps on indirect cost reimbursements for research
Reductions in federal research grant funding
A proposed increase in the endowment tax
New limits on federal student loans
Elimination of PLUS loans for graduate and professional students
These policies aim to change institutional behavior by reshaping the financial environment in which colleges and universities operate.
Why it matters
Higher education faces the same challenge: expanding access, controlling costs, and improving ROI. Reform is now driven by upstream inputs, shifting focus from student-centered metrics to funding structures, tax treatment, and loan availability. This approach alters financial conditions rather than mandating specific outcomes.
Reform isn’t optional. The priorities are clear. Achieving meaningful progress on those fronts remains our most important work. The incentives may have shifted, but the opportunity endures.