April 7, 2026 · Episode 306
2026 Title IV Changes and How Higher Education Can Adapt to the OBBBA
37 Min · By Dr. Drumm McNaughton
2026 Title IV changes are reshaping higher education. Learn how institutions can adapt to federal reform, graduate funding pressure, and structural change.
The structural changes now reshaping higher education did not arrive by executive order. They arrived by an act of Congress. That distinction matters enormously, because it means institutions waiting for a policy reversal, a change in the White House, or a shift in chamber control are waiting for something that is not coming. The question is, will adapt in time.
That is the central message Dr. Andy Vaughn, President and CEO of Alliant University, and Dr. Drumm McNaughton deliver in part two of his conversation on the Changing Higher Ed® podcast. Having served on the negotiated rulemaking committee that shaped Title IV implementation under the One Big Beautiful Bill (OB3) Act, Vaughn speaks not as an outside observer but as an institutional leader with a front-row seat to what is coming and a concrete plan already in motion.
Higher Education’s Resistance to Change Is a Strategic Liability
Higher education is, by most accounts, the most change-resistant sector in the American economy. Vaughn does not soften that assessment. He attributes resistance less to malice and more to two structural realities: a culture shaped by academic research, which values slow, incremental inquiry over rapid execution, and a tendency to view change as something other departments need rather than a shared institutional imperative.
The consequences of that posture in the current environment are severe. Incremental improvement is not sufficient when the change required is transformational. Host Dr. Drumm McNaughton draws the analogy to COVID-19: some institutions had as little as two weeks to move instruction entirely online. Vaughn affirmed the parallel directly, noting he had not previously considered it but found it apt: the federal and market disruptions now converging on higher education demand the same urgency, with slightly more runway but no less pressure.
Jack Welch’s warning applies with particular force here: when the rate of change outside an institution exceeds the rate of change inside it, decline is the predictable result. The evidence of that dynamic is visible in accelerating institutional closures, mergers, and enrollment contraction.
Project Evolve: A Four-Pillar Response to Structural Disruption
Alliant’s response to this environment is Project Evolve, a strategic initiative formally launched in September 2025. Its origins trace to February of that year, when Vaughn began picking up early signals from congressional committee discussions on both the House and Senate sides about major structural changes to Title IV. He was on the first plane to Washington to speak with policy advisors and writers once that intelligence emerged. The initiative rests on four pillars.
Pillar One: Student Funding After July 2026
The elimination of Grad Plus loans and the imposition of new loan caps at the graduate level represent the most immediate financial disruption. Vaughn notes that undergraduate funding was largely preserved, with Stafford Direct Loans intact and Pell Grant access stable or expanding in some areas. The congressional focus was squarely on graduate programs. For nonprofit institutions specifically, reductions in federal grant funding add a second layer of fiscal pressure on top of the loan restructuring.
Vaughn emphasizes that the access gap data is national, not just Alliant-specific. Based on modeling across graduate student populations — who tend to be 30 or older — approximately 30 percent of graduate students will not qualify for private loans based on credit score. Of that group, roughly half will be unable or unwilling to secure a co-signer. An additional cohort of around five percent will decline private loans due to less favorable terms such as higher rates or shorter repayment windows. The aggregate impact ranges from ten to twenty percent of the graduate student population facing a genuine access gap.
Alliant is exploring several responses, including direct relationships with private lenders, institutional loan programs funded through bond sales on the private market, and potential risk-sharing arrangements. Federal legislation that could facilitate institutional bond programs for student lending is being tracked closely.
Pillar Two: Innovation, Access, and Accreditation Reform
Vaughn’s sharpest critique in this conversation is directed at the gap in stakeholder representation during the Neg Reg process. When a Department official suggested Alliant simply lower its tuition, Vaughn’s response was precise: institutions with specialty-accredited programs cannot unilaterally reduce the cost of delivery when margin structures are already razor thin and accreditor standards prescribe program requirements in granular detail.
The missing party, in his view, is accreditors. Lowering the cost of graduate education requires institutions, accreditors, and the Department to sit at the same table. Specific levers include reducing credit hour requirements where redundancy with prior learning exists, introducing competency-based pathways, and rethinking delivery models. None of these can be pulled by institutions acting alone.
Pillar Three: Differentiation and Unique Value Proposition
Drawing on ten years as a chief marketing officer in higher education, Vaughn identifies institutional messaging as a systemic failure point. Most institutions compete on the same undifferentiated claims: faculty quality, class size, student support, and outcome statements that are either vague or indistinguishable from competitor language.
Genuine differentiation requires identifying something an institution does distinctively well, packaging it with precision, and protecting it where possible through branding or trademark. Vaughn points to FlexPath as an example of a trademarked differentiator that created a durable competitive distinction. The test is whether the value proposition can be articulated in terms that are specific, verifiable, and not already claimed by every peer institution.
This is not a marketing problem in isolation. It connects directly to accreditation norms that historically have required new programs to demonstrate precedent at comparable institutions, creating structural pressure toward sameness. Accreditation reform, in Vaughn’s view, must address this constraint.
Pillar Four: Growth, Expansion, and Fiscal Positioning
Alliant has invested significantly in physical infrastructure, including a new Sacramento campus and a Phoenix campus launching the institution’s first pre-licensure nursing program. The institution enters this period of uncertainty with one significant structural advantage: zero debt.
On the contraction side, three small branch campuses representing approximately six percent of enrollment will be wound down over four to five years, allowing enrolled students to complete their programs without disruption. Vaughn frames this as a deliberate alignment of resource deployment with long-term institutional viability rather than a defensive retreat.
Why These Changes Are Permanent
The question Vaughn says he hears most frequently from other presidents is whether a change in congressional composition or White House occupancy could reverse the Title IV restructuring. His answer, based on direct participation in the rulemaking process, is unambiguous. These changes were enacted by Congress, not through executive rulemaking. The usual levers available to future administrations do not apply.
Institutions that are still treating this as a temporary disruption are making a strategic error with compounding consequences. The planning window is narrowing. July 1, 2026 is when new loan limits take effect. Institutions that have not begun structural adaptation by now are, in Vaughn’s assessment, approaching the limit of viable response time.
Execution Remains the Differentiating Variable
Project Evolve is not a static plan. It is reviewed continuously, updated as new federal guidance emerges, and designed with quantitative goals rather than aspirational statements. Vaughn applies a simple test to every stated goal: can you determine in under five seconds whether it was met? If not, it is a vision statement, not a goal.
Shared governance is incorporated through a faculty strategic planning committee appointed by the faculty senate and an elected staff council. Vaughn notes that Student Government Association members have been included in past strategic planning cycles but have not yet been brought in for Project Evolve specifically, though the intent is to do so. The distinction he draws on shared governance is important: it means stakeholders have a meaningful seat at the table and are thoughtfully heard — not that any group holds veto authority over institutional direction.
The broader lesson Vaughn offers for higher education leadership is familiar but frequently honored in the breach: execution is the constraint, not planning. Institutions that produce visually polished strategic documents without assigning individual accountability for each goal, and without reviewing progress against measurable outcomes at regular intervals, are not planning strategically. They are performing it.
Three Takeaways for University Presidents and Boards
- The federal changes are permanent. The HEROES Act restructuring of Title IV was an act of Congress, not executive rulemaking. No change in administration, chamber composition, or negotiated rule revision will reverse it. Institutions that have not begun substantive adaptation should treat July 1, 2026 as a hard planning deadline, not a distant milestone.
- It is late but not too late. Institutions that have not started are behind, but the window has not fully closed. The priority is to move from awareness to action, with specific accountabilities and measurable goals rather than exploratory committees and extended study timelines.
- Plans without execution are decoration. Assign individual ownership to every goal. Establish quantitative outcomes that can be assessed in seconds, not paragraphs. Review the plan regularly and revise it when market conditions change. The institutions that navigate this period successfully will not be those with the best-designed documents. They will be those that execute.
This analysis provides presidents, boards, and enrollment leaders with a practitioner’s account of what is coming, why it cannot be reversed, and what a concrete institutional response looks like. For leaders seeking a framework for strategic adaptation under genuine structural pressure, Vaughn’s account of Project Evolve is among the most instructive case studies currently available from a sitting university president.
Quick Overview
- Higher education faces structural, not cyclical, disruption from federal and market forces
- The OB3 Act changes to Title IV are permanent legislation, not reversible policy
- Graduate-level funding faces the most acute pressure, with Grad Plus elimination taking effect July 1, 2026
- Up to 20 percent of graduate students may face a genuine access gap as private loan qualification becomes the gatekeeping mechanism
- Institutional differentiation requires specificity and trademarkable distinction, not clichéd claims shared across all competitors
- Accreditation reform must include accreditors at the table, not just institutions and the Department
- Shared governance means a seat at the table, not final authority over institutional strategy
- Execution, not planning, is the differentiating variable for institutions navigating this period
- Strategic plans should be written in pencil, anchored in quantitative goals, and assigned to individual owners
- Project Evolve demonstrates that proactive structural adaptation is both possible and necessary before the disruption fully arrives
About Our Podcast Guest
Andy Vaughn serves as President and CEO of Alliant University. He began his career in higher education at National University in San Diego and has since served in various leadership roles at institutions nationwide, including Regional Dean, President and CEO, Chief Operating Officer, Vice President of Marketing and Admissions, and Associate Director of Student Services. Prior to joining Alliant in 2015, Vaughn served as President and CEO of Trident University, California, where he also held the role of Chief Operating Officer. He currently serves on two boards, including the Board of Directors for St. Luke and the Central Valley Education Consortium. Vaughn earned his undergraduate degree from the University of Nebraska–Lincoln, his graduate degree from National University in San Diego, and his doctoral degree from the University of Southern California.
Connect with Andy Vaughn on LinkedIn →
About the Host
Dr. Drumm McNaughton is the founder, CEO, and Principal Consultant at The Change Leader, Inc. A highly sought-after higher education consultant with 20+ years of experience, Dr. McNaughton works with leadership, management, and boards of U.S. and international institutions. His expertise spans key areas, including accreditation, governance, strategic planning, presidential onboarding, mergers, acquisitions, and strategic alliances. Dr. McNaughton’s approach combines a holistic methodology with a deep understanding of the contemporary and evolving challenges facing higher education institutions worldwide to ensure his clients succeed in their mission.
Read the Podcast Transcript →
Transcript 306: Changing Higher Ed podcast – with host Dr. Drumm McNaughton and guest Dr. Andy Vaughn Part 2
Introduction to Changing Higher Ed®
Welcome to Changing Higher Ed®, a podcast dedicated to helping higher education leaders improve their institutions. With your host, Dr. Drumm McNaughton, CEO of The Change Leader, a consultancy that helps higher ed leaders holistically transform their institutions. Learn more at changinghighered.com. And now, here’s your host, Drumm McNaughton.
[00:00:31] Welcome Back Part Two
Drumm McNaughton: Today I welcome back for part two, Dr. Andy Vaughn, the President and Chief Executive Officer of Alliant University. We talked last time about the negotiated rulemaking and what’s going on at the Department of Higher Ed. Today we’re going to talk about how the OB3 Act has changed higher ed and what Alliant is doing to keep up with those changes.
Andy, welcome back for part two.
Andy Vaughn: Great to see you again and be with you again. Thank you.
Drumm McNaughton: I’m looking forward to a great conversation. We always have had good conversations, haven’t we?
Andy Vaughn: Going back 15 years, we have, and if I knew you longer, I’d even say longer, but it’s always a pleasure to talk to you.
Drumm McNaughton: Well, likewise my friend. I appreciate that. We’re going to talk about change in this one. You were recently on the Neg Reg committee that talked about student loans and there’s a lot of changes coming out of not only the Neg Reg, but changes that were implemented as far as the OB3.
[00:01:39] Guest Background Recap
Drumm McNaughton: Before we get into that stuff, your background again in case listeners weren’t there for the last time.
Andy Vaughn: Sure. I serve as President and CEO of Alliant University. Our headquarters and main campus is in San Diego, but we have seven campuses in two states, including Arizona and California. We specialize primarily in mental health licensure programs. About 99% of what we do is professional practice programs that lead the licensure. Clinical psychology is our largest. We also do marriage, family therapy, clinical counseling, social work. We’re one of the largest providers of licensed K 12 teachers in California. Very proud of that, very important job. And we recently branched out into health sciences with a new nursing campus in Phoenix. I’ve been in higher ed a little over 30 years, mostly in the operations side, that’s how we met originally, Drumm, and have served two institutions as President and CEO and just a pleasure to work in this fantastic sector.
[00:02:33] Higher Ed Vortex Stories
Drumm McNaughton: Yeah, it just is amazing. For most people that I speak with, it’s like once you’ve dabbled your toe in higher ed, the water just grabs you and pulls you in.
Andy Vaughn: It, I call it the vortex. It just sucks you in. My first job in higher ed was by accident. They told me, “Hey, if you work here, your tuition is free.” ‘Cause I wasn’t interested. I said, sign me up. No student loans. Yes.” And I thought, I’ll do this for two years and get out and then I fell in love with it and stayed ever since.
[00:02:58] Trident Innovation Days
Drumm McNaughton: Well, I’ve been able to bring both careers together between consulting and higher ed. And I got my higher ed roots really starting at Trident back when. And
Andy Vaughn: Where we met.
Drumm McNaughton: Yeah. But it was even before then, Joram Newman was the president, CEO at the time. His wife was the provost and I got hired on there and that was primary, my, full-time job in higher ed.
Andy Vaughn: That’s right. And Trident did some great things in online education, very innovative at the time and you were a part of that.
Drumm McNaughton: I, yeah, I was, it was, that was a fun time back at Trident.
Andy Vaughn: Yes, it was. And Trident did things that no one else was doing at that time.
Drumm McNaughton: Yes. And that’s hats off to Joram and Edith for what they did and Bernie Luskin who was, right there advising them along the way.
Andy Vaughn: Agreed, I was tracking that from a distance. I had not worked there yet at that time, but they had a great vision and more importantly, they knew how to execute and that’s the missing part sometimes in higher ed.
Drumm McNaughton: Absolutely.
[00:04:00] Execution Beats Planning
Drumm McNaughton: Oh gosh, who was, I’m forgetting a quote, but it was, he was a CEO of at AMD for many years, Rogers, and he said, “everybody can develop a great strategic plan. I put my best people on the execution, the implementation, and that’s what makes the difference.”
Andy Vaughn: It’s the most important part of it. I heard a quote once too that said, would you rather have a 100% perfect plan or 100% perfect execution with maybe an 80% good plan? I’ll take the 80% plan and 100% execution every time.
Drumm McNaughton: Yep. A good friend of mine who was a VC back in San Diego, that was his thing. I’ll fund a great leadership team and a mediocre plan. There’s no way a great plan and a mediocre implementation team.
Andy Vaughn: That is 100% true.
[00:04:47] Why Higher Ed Resists Change
Drumm McNaughton: So let’s get to it. Changes are coming in higher ed from O Triple B, the Neg Reg you were just on talking about student loans, professional loans, et cetera. Higher ed doesn’t like change.
Andy Vaughn: They do not..
Drumm McNaughton: And I, I’m not sure why. Like I mentioned in the last episode, the Navy, ” 250 years of tradition unhampered by progress.” Higher ed is right there in many respects too.
Andy Vaughn: Same amount of years, same slogan. Don’t know why either, but of any sector in the US, higher education is the most resistant to change. That is a factual statement.
Drumm McNaughton: And there are safeguards in there, and I don’t want to say higher ed doesn’t want change. I think in many respects they do, but they don’t do a good job of bringing people along with the change. There is the shared governance piece of it, but it doesn’t always work well.
Andy Vaughn: I think part of that is, “change is fine if it’s a different department than mine”. A different department has to change. I’m doing just fine. Thank you. But yes, they need to change that department over there, they’re not doing it right. They need to change, so the, that’s part of it too. Just not in my backyard is sometimes, not in every case, but sometimes that’s the case.
But I think also people in higher ed sometimes equate change to lowering quality. And that’s not true. If you embrace change and innovation, and by the way, innovation is not always technology or AI, many times it’s not, it’s about thinking differently. And I think what happens in higher ed, especially if you have a good track record of student learning outcomes, completion rates, in our case, licensure pass rates for licensure degree programs, then, oh God, if we change anything that might falter. I don’t think so. If you do it right and if you execute correctly, and that’s where the collaborative process has to come in.
[00:06:44] Committees Versus Speed
Andy Vaughn: If you really embrace change, here’s the other thing, high ed is fantastic at forming committees, exploratory groups, and we’re going to study this for two years. Part of this comes from our research tethered ties. Research, it takes a long time, and that’s great for certain things, but for the environment we’re living in today in higher ed, we don’t have two years, folks, we don’t have two years to plan these changes. We have about six months if we’re lucky, and so let’s get to it. Let’s not have committee after committee and pontificate about all the different things that might, let’s get to it.
Here’s the thing. You don’t have to be perfect, you have to aim for excellence, not perfection. And I think we all wait for that perfect plan. Do we know everything? You’re never going to know everything. You’re never going to get there. So let’s move and just know that you can re-aim, move this ending point when you need to. Don’t write your strategic plan in stone, write it in pencil. Erase it when you need to, when the market changes. And I think that’s the key to this change and speeding it up.
Drumm McNaughton: And I think you’re spot on with that. We in higher ed, and I think you hit the nail on the head or whatever the saying is. Okay.
[00:07:59] Transformational Not Incremental
Drumm McNaughton: But when you stop and think about research and educators really are about research, it’s not so much about business. You came from the business side of the house, you have a love for higher education. You think budgets, you think strategies. Educators primarily think about research, they think about teaching. And with that, how many times have we ever seen breakthrough research that completely blows something out of the water? It’s usually incremental change. That’s the mentality that we have, and that’s not what these times are calling. It’s calling for transformation or even revolutionary change.
Andy Vaughn: That’s right. I think that’s dead on Drumm is these are not incremental. If you go incremental right now, you’re not going to make it through what’s about to happen over the next few years in higher education. So you really do have to think innovatively for transformational change. That’s the key word you used, because small increments are not going to get you there.
[00:09:01] COVID As Change Template
Drumm McNaughton: When I look at revolutionary change, I look at the iPhone, I look at AI, the internet. These are all revolutionary changes that’s beyond transformational. We’re not at that point, although there’s the adaptation for online education. COVID forced institutions to bring out online education. Some of them had to do it in two weeks because they didn’t have any basis for it. We’re at that point where we’ve got to do the transformational change.
Andy Vaughn: I think it’s a great analogy. We’re not in a pandemic, but we’re in a place where an external force is requiring us to change and change quickly. I think it’s great, what you just said. I’ve not thought about that before, but during COVID, we had about a week to get everybody online and think about delivery of education in a very different way.
We’re at that point now with the federal changes, but not, I think we focus a lot on the structural changes of higher ed policy that were influenced by O Triple B legislation, but it goes well beyond that. The consumer demand is changing, preferences are changing, there’s public angst about loan debt, which was what Congress was all about in writing O triple B. There are changes beyond the regulations that we have to pay attention to as well.
[00:10:20] Gen Z And New Demands
Andy Vaughn: The next generation of students is no longer millennials, in the next couple of years it’s going to be majority of the next generation down. Gen Z is about to become the majority. They grew up with smartphones that you mentioned earlier. They have a different expectation of us and how we deliver education. And they want it, by the way, at a lot lower cost, but they want the quality to be high. That’s no easy task, is it? These are a lot of changes that we have to creatively solve, and that’s going to be key in the coming months.
Drumm McNaughton: Absolutely.
[00:10:46] External Change Cliff
Drumm McNaughton: And with those changes you’ve got to bring everybody on board. We may not like what’s being done through O Triple B. But guess what? It’s here, and Jack Welsh had a saying years ago, for those of you who remember who Jack Welsh was
Andy Vaughn: I do, I
Drumm McNaughton: Of course. When the change outside, external to the institution, exceeds that that’s internal to the institution you’re heading to the cliff.”
Andy Vaughn: That’s right. Very true statement. And that’s where we are.
Drumm McNaughton: Yes, and we’re seeing that reflected in the number of institutions going out of business. The number of mergers are accelerating. We’ve got the demographic cliff, which we’re in at this point, we’re going to have a solid decline of the quote, traditional age students, for the next 15 years. We have to be thinking about these things differently.
Now, that’s based on those type of things and what you learned back in DC and you’re not a rookie when it comes to working back in dc. You’ve done a lot of that.
[00:11:55] Project Evolve Origins
Drumm McNaughton: You came up with Project Evolve to help transform Alliant.
Andy Vaughn: That’s right. So it was clear to our team at Alliant in early ’25. The analogy I use is the changes the Department demanded in DEI that hit early ’25 are quite important for institutions and there’s no doubt about that. So I’m not trying to reduce the impact of that change, but that was a thunderstorm coming through at the same time a category five hurricane was forming about 500 miles away.
Drumm McNaughton: Mm-hmm.
Andy Vaughn: And so when you pay attention to the thunderstorm warning, which is pretty significant by the way, maybe even a tornado watch or a tornado warning, okay, that’s important. And I agree we should not ignore that. But at the same time, our eyes were out in the Pacific Ocean and a hurricane category five forming, that’s about to hit us in about a year. That’s where we spent the majority of our attention because there is no mission to achieve if you have no funding to do it. That’s period, end of story. And so we learned early on back in February of ’25 about chatter happening in the Congressional committees on the House and Senate side, on the Republican side about major structural changes to Title IV and new loan limit caps. That got my attention. I was on the first plane of DC in February ’25, talking to policy advisors and writers once we learn that.
So Project Evolve has been evolving since that time and it really is shaped on several different reasons.
[00:13:19] Federal And Market Drivers
Andy Vaughn: One is the federal changes, especially for institutions that have graduate level programs, the elimination of grad plus, lower loan limits for most programs. Institutions have to navigate through that. And for the nonprofit world, there’s the reductions in federal grant funding that’s significant. What’s coming up this summer is accreditation reform, but that’s not just about accreditors. Institutions are involved in this too. Accreditation reform may be good news for institutions in many ways. And one of those is allowing them to be a little bit more innovative. And I don’t think it’s so much about institutional accreditors more than it is program specialty creditors in my opinion. And I’m not on that Neg Reg committee, so I don’t know all the nuances, but I think that’s where they’re going with that.
Market demand is changing. I think you’re seeing students choose master’s programs over doctoral now. That’ll only probably get heightened after the new loan limits go into affect this July 1st of ’26. Modality, preference of students, they want more online and hybrid. And then there’s just a change in demand and a demand for innovation and the way we deliver education. It’s not just for students, employers are telling us in surveys, we’re not meeting their needs either with what students know when they get out. Again, we’re tethered to as the Under Secretary of State, we’re tethered to bygone policies and traditions that may not make sense anymore in all cases. So let’s think differently, and I think that’s the biggest purpose about the “why” behind Project Evolve at Alliant.
[00:14:49] Student Funding After 2026
Drumm McNaughton: So what are you doing? What does Project Evolve look like.
Andy Vaughn: Yeah, so the first part is taking care of students. One is looking at the new realities of federal student loan funding, specifically at the graduate level. Let’s face it, undergrad funding wasn’t changed all that much. There’s some trimming of parent plus loans, nothing that’s going to cause angst. The Stafford Direct Loans are really untouched. The grants seem to be fine and in place and actually expanding in some program areas. The focus really of Congress and therefore the Department was more on the graduate level institutions and programs.
[00:15:23] Private Loans And Credit Gaps
Andy Vaughn: So what we’re doing is really increasing our access to private loan funding and looking at creative ways. Our biggest concern about students after July 1st of ’26 are those that may not have credit to qualify for private loans. The federal loans are pretty much signature loan. Yeah. There’s a kind of a credit check, but not really. Private loans are a lot more choosy in who gets them, and we’ve gone through model after model and iterations of this. What we’ve figured out is this isn’t just for a Alliant, it’s really a national numbers. ’cause graduate students tell me about 30 plus years old, and what we figured out is 30% of graduate students will not qualify for private loans based on their credit score. Half that group will not qualify or will not be able to secure a co-signer or not want to get one. Maybe another 5% are not going to go to higher ed in this program just ’cause they don’t want private loan loan terms, higher rates, longer or shorter payment return, terms of payment. And so, take your number, is it 10%, 15%, 20% impact? The answer is, yeah, there’s going to be some impact there. So our job right now is to figure out how do we really solve to that population without getting them into heavy private loan debt. And we’ve got some really creative ideas that are brewing on that.
[00:16:39] Employer Tuition Support
Drumm McNaughton: Yeah, let me interrupt you real quick if I may. Do you see, with these limits on the student loans, especially at the graduate level, do you see more corporations stepping in and funding their employees education?
Andy Vaughn: Yes, I do. We’ve talked to almost every private lender that’s currently in the market for higher ed. Not all of them, but almost all. And they’ve all assured us that there’s enough funding with the current tranche of lenders to be okay for the elimination of Grad Plus. And that’s really where the programs are going to come in.
[00:17:14] Grad Plus And Living Costs
Andy Vaughn: Remember, grad Plus is largely used in programs where you cannot work full-time and students take loans out on that side of it to often fund living expenses. That’s Medical Doctor, DDS, osteopathy, clinical Psych, and other programs where for four or five years you really can’t earn money by even working part-time.
That’s a lot of use in Grad plus. There are certain programs that also use it for tuition fees, but in our experience it’s mostly on the living expense type for programs where you can’t work. And that’s the biggest challenge, I think, to solve for. So I, I think in the short term, we’re okay on private lenders, but yeah, I mean, think about it, I don’t know the exact number, I don’t have it in my fingertips right now, but the elimination of Grad Plus is billions. And so somebody’s going to step up, many will step up. I’ve talked to private equity firms about that. They’re already formulating ideas about new corporations being funded, funding coming in for graduate loans.
It’s a pretty good value proposition for most programs, not all, but most. I mean, think about it, if you are lending to a future medical doctor or clinical psychologist, If you look at the federal default rates on those programs, they’re less than one half of 1% in most cases. Now, that doesn’t always equate to private loan defaults because private loan defaults are measured differently than federal loan defaults, but still, it’s a pretty good value prop. ’cause these are students that come out making six figures within a couple of years of their graduation. And so it’s a pretty good business model for private lenders to consider. But not every private loan is going to cover that because of the cosigner issue. If the credit scores are too low.
So we’re also looking at creative ideas like selling bonds on the private market at a certain interest rate to fund institutional loans, possibly, that fund some of those higher risk students that maybe we have some risk share involved with that. Institutions are going to need to be very creative. There’s some federal legislation that’s running through Congress right now that may help that aspect of the bond sale for institutional loan programs, and we’re tracking that very closely. But I think that’s where the creative time is being spent right now.
Drumm McNaughton: Okay. Thank you. that’s a good explanation.
[00:19:12] Innovation Access And Accreditors
Drumm McNaughton: Pillar two.
Andy Vaughn: Is innovation and access. And I think, look, when the Department, I, as you mentioned, I served on negotiated rulemaking committee in late ’25 on the Title IV regulations, which were dictated by Congress or O Triple B. Great experience, by the way. Probably the most valuable experience I’ve ever had in higher ed and after 30 years, that says a lot, just an amazing experience. So the people I met, people I work with, fantastic.
I think what we’re seeing though is we’re missing a party at the table to effect change, and the Department looked at me during a Neg Reg session on the record and said, “well, you’re a CEO, just lower your tuition”. I said, “well, Jeff, I’d love to, I’d love to. We can’t do this in a vacuum. You see, at our institution, our programs are all specially accredited and we have really prescriptive standards, which I agree with, they do deliver high quality, but I think it’s time to think about them a little differently. Because we can’t just lower the cost when a program margin is low, single digits, and some of the most expensive programs in the country, especially at doctoral level, are very low single digit margins for universities. They’re still very expensive to the student, I get that. But to lower those, we’re going to need the accreditors to be at the table with us”. And I told Jeff that day, “we’re missing the most important party at this table for that discussion. It’s got to be not the universities and the Department, but universities, accreditors, and Departments sitting down together to figure out how we can lower the cost of delivery of education and then effectively lower tuition rates once we do that. There’s different levers you can pull on that. Are programs too long? I think they are. I think lowering credit and without lowering quality or outcomes, I think in some cases at the graduate level, there’s a repetitive nature of things you already know from your undergrad or maybe even on the job experience. Could that be competency based? Could it be just lower credits? That’s the biggest lever to pull to lower the tuition cost. One is looking at technology to enhance maybe lower cost of delivery on salaries. Do we need as many training staff? Maybe. Depends on the program. Maybe not, but we have to look at this together. There’s different ways you can lower the cost of delivery without impacting quality. And to this date, we’ve really not done that all together, and it’s time we do. So that’s number two.
[00:21:29] Differentiation And USP
Andy Vaughn: Three, and I think this is where institutions need to spend the most of their time is, and I spent 10 years as a Chief marketing officer in higher ed, and differentiation is really not seen. Everybody says we have smaller class sizes, we got great faculty, we have… And that’s true. We have title, we, student loans for those who qualify, blah blah, blah. Okay? Everyone, that’s like saying, “Hey, buy this car. It has windshield wipers and a gas tank.
Drumm McNaughton: So before we dive into that deeply. What do you mean by differentiation? Because you come from a marketing background. I do as well. That’s second nature to us.
Andy Vaughn: Sure. It’s creating a value proposition that is different than your competitor. So if somebody says, “why should I go to your school?” You can articulate things that are not cliches. By cliches, those are the ones I mentioned earlier. You could say something like, “we have been around for over 100 years and have a track record of X, Y, and Z on graduation rates, licensure pass rates”, and whatever your programs are.
Or maybe you have some sort of differentiating factor that very few people have, at least in your market or your sector. It’s coming up with a unique selling proposition, and no one likes the word selling in higher ed, I get that, but it’s, but you kind of have to go that direction. Now, a USP, Unique Selling Proposition or Unique Value Proposition. It doesn’t mean that you’re the only one that does it, but maybe you’re only one of a few. But there are certain things you could trademark. I mean, there are certain institutions that have done a nice job of coming up with a trademark term that no one else has. FlexPath is one of those brilliant move, on that university’s part. And so are there things you can package that you do really well, that you’re better than most? It doesn’t mean you have to be number one in the category, it just means you have to be in the top five, ten in the category. Brand it, come up with a term, put it into a trademark even, and say, “we have this and nobody else does”. That’s differentiation.
Drumm McNaughton: Okay, so continue on with that because that’s a great explanation and I think a lot of listeners may not know the details behind differentiation.
Andy Vaughn: Higher ed not only is resistant to change, but embraces a sea of sameness in our messaging. And everyone says, no, we really have the best faculty. Well, that school over there just said that too. So who’s right here? No, but we do, we have, we, our faculty are the, okay, well, everyone’s saying that.
Drumm McNaughton: Yeah. And even when you roll a new program out, which you and I have both done in higher ed, the accreditors want to say, show us five other institutions who have a program similar to yours. It’s like, come on, where’s the innovation there?
Andy Vaughn: Right. That’s it exactly. That’s what I get to the accreditation reform. Higher ed does need to become a little bit more like private sector in certain ways, for that same reason. Yeah, that, that’s it too.
[00:24:25] Growth Expansion And Sustainability
Andy Vaughn: Our fourth pillar is then really about growth and expansion and investment. So we’ve opened a couple of new campuses in the last couple of years. We have all new facilities now. Our Sacramento campus just had their grand opening last month with new students. We opened our Phoenix campus, which is our debut into physical health sciences, with the nursing program there, pre-licensure. We’ve spent millions on renovating, coming up with new programs, new program deliveries. And I think for us, our next look is expansion on the physical aspects on some new campuses in new states in the next couple of years. So I think the important thing is expansion is the headline of Project Evolve.
The other thing, we’re very proud,our debt is now zero. We paid off our debt, much like anyone in individual life, when you’re going up into a time of unknowns, which 2026 and ’27 is for higher ed. It is really nice to come into that with no debt. And that’s, that’s something we really paid attention to, is like, okay, hey, we need some money to invest in innovation and expansion and wouldn’t it be great to have no debt to do that? That really helps a lot. And that was another thing we’re very proud of.
[00:25:37] Branch Campus Wind Down
Andy Vaughn: And then finally, on the downside, we have three very small branch campuses that represent about 6% of our student population. And as you’ve probably seen the headlines, small branch campuses are just not typically anymore a viable model. When’s the last time you heard university? Hey, I got a great idea. Let’s open a small branch campus somewhere and launch that. No, it’s just not something people really do anymore. A lot of that’s because of the move to online and hybrid and some of it’s just the changes in higher ed. Some of that’s real estate cost. It really becomes unsustainable. Penn State just announced about a half a dozen of their branch campuses are closing too. It’s done in a lot of, subsidized universities as well. And so for us, it’s three of our smallest locations that represent about 6% of our student body. We’re not closing ’em overnight, we’re actually going to keep ’em up for another four, maybe five years until all students finish. And that’s the downside of Project Evolve, it’s not a fun side of it, but when you look at the greater good for what makes the institution healthy in the long term, our goal with Project Evolve is to make sure we’re around for yet another 100 years.
We had our 100 year anniversary just a couple of years ago. Project Evolve’s byline is, “to ensure the sustainability for another 100 years”. And that’s, unfortunately, that’s the downside of it. But again, these aren’t instant, they’re rolling down, winding down over a period of about five years on that aspect.
So Project Evolve looks at the big picture and again. I was so fortunate to have a front row seat in DC. I think I learned more in private conversations and meals shared with fellow negotiators than I did in the formal sessions. And you really have this time, in late ’25, when we could see the change in front of us. And I’m still, Drumm, shocked today how many presidents will call me, they want input about the changes in Title IV, and I’m happy to share that with anybody that asks, and they’re just learning about some of the nuances of it. Okay. It’s not too late, but it’s almost getting there and having this front row seat really put us on the forefront of what needs to be done long term for structural changes in higher ed.
[00:27:40] Why Changes Are Permanent
Drumm McNaughton: And the thing that you’ve impressed upon me, and I’ve known this, is because this is not done by executive order, it’s not done by negotiated rulemaking, it’s done by legislation. So this is, in essence, a reaffirmation, a reauthorization, of the Higher Education Act, something that hadn’t been done for a decade or more. We can’t unwind these things. These are permanent.
Andy Vaughn: That’s right. It’s technically separate from the HAA, but however, it’s just as impactful. And the most asked question I got as a federal negotiator is, “Hey, if the midterms change and one of the chambers goes, D will that?, No, that’s, oh, and it’s not going to, that’s not going to change this”. And then someone else asked me, “Hey, if a Democrat wins the White House, well that cha.., No, No. The way this was done is very differently than in the past. This was an act of Congress. That’s not typically how Neg Reg is dictated. As a negotiators,we had a lot of bumpers that, Neg Reg teams don’t typically have. When Congress speaks you can’t go against the will of Congress and most Neg Reg is a blank slate, a blank canvas, where you can play with almost anything.
We didn’t have that luxury here. The Congress spoke and we had very strict parameters. And to your other point, these changes are at least a decade, but I think they’re actually semi-permanent, if not permanent. So, word to institutions, if you think you’re going to get a last minute reprieve, that’s not coming. It’s not coming. Embrace the change That’s the choice you have.
Drumm McNaughton: A
[00:29:15] Evolve Timeline And Master Calendar
Drumm McNaughton: nd so when did you roll out Project Evolve?
Andy Vaughn: Last September is when it started. But we didn’t know we didn’t know. And it gets back to the master calendar. Typically, Neg Reg happens in the winter and spring months, and then you get the final draft published sometime in late summer. And then the final rule is published November the 1st in the federal register.
This time around, because it was an act of Congress, the master calendar was bypassed. So these came out a little bit later. So we really couldn’t finalize project evolve’s design until the final draft came out in late January. So what I say to our faculty and staff is Project Evolve is evolving, it itself is evolving and we learn something every week about what’s coming next. And it’s not all federally driven, it’s also market driven. Prospective students are speaking loudly about what they want, and largely higher ed is not delivering that. Employers are speaking what they want. Largely, we’re not there. We have to quickly get there, and the Department is demanding that too.
Drumm McNaughton: So with that, you rolled it out last year, it’s still evolving, that’s the point that I was wanting to make, is it’s not suffering the SPOTS Syndrome. You know, the strategic plan on the top shelf gathering dust. It’s a living breathing document and you’re going back and reviewing it, sometimes on a weekly basis, but at a minimum every six months. Am I correct?
Andy Vaughn: That’s right.
[00:30:43] Living Plan Measurable Goals
Andy Vaughn: I think the challenge with many institutions is that they have these fantastic brochures on a PDF file on their website. Boy, they look great. For my taste. Most institutions are a little too abstract in their goals, though. We try to write ours with very specific quantitative outcomes that you can. If you can’t answer, “did you meet this goal,” in less than five seconds, it’s probably not a goal. It’s probably more of an abstract idea or vision, and that’s fine in a vision statement. But for a goal, you want to anchor that in a quantitative outcome. And so for us, it’s also important we don’t write strategic plans in stone. They’re written in pencil. Why? Well, ask Blockbuster, Woolworths, and a few other corporations and Kodak, how that worked out when they wrote their start plan in stone. Didn’t work out ’cause they didn’t adapt to changes that were right in front of their face. And higher ed has a habit of doing that. So for us it’s important you stress to faculty and staff, “Hey, this plan may change in a year. It may change next week. that’s because we have to be adaptable to the changes the market is screaming about”.
Drumm McNaughton: That is a critical point for people to understand.
[00:31:51] Shared Governance Buy In
Drumm McNaughton: Now, it wasn’t developed in a silo. You had multiple stakeholder groups working together to develop the plan. Correct?
Andy Vaughn: Yeah, the strategic plan process at Alliant focuses on two different groups before it gets to the board. Administration certainly drives it, but we have a faculty committee on strategic planning, which is appointed by our faculty senate. And then we have a staff council that are elected by their peers to serve as representatives of all staff.
And we have not done this for Evolve yet, but we will, in the past strategic planning process, we have elected Student Government Association members too. Shared governance has different meanings, depends on who you ask. I think some people think shared governance means we get the final say, and that’s not true. Shared governance means you have a seat at the table and you’re thoughtfully listened and all ideas are welcome. And so for us, we’re not perfect at it, but we really try to maintain that shared governance as we develop these plans as well.
Drumm McNaughton: And that’s so important. As we say at our firms, people support what they help create.
Andy Vaughn: That’s right. That’s right.
Drumm McNaughton: So Andy, thank you so much. This has been, again, a fascinating conversation. I always learn things from you when you’re on the show, and I greatly appreciate that in you and your being on.
Andy Vaughn: Likewise, I’ve learned a lot from you over the last 15 plus years in our relationship together too, and it’s always a pleasure to talk to you.
Drumm McNaughton: Thank you. I appreciate that.
[00:33:14] Three Takeaways for Higher Education Leaders
Drumm McNaughton: Three takeaways?
Andy Vaughn: Well takeaway one is these changes are permanent folks. If you think that last minute Hail Mary is coming, it’s not. I’m talking about the structural federal changes that Congress spoke, the Department responded to, and being on that frontline team, I can tell you these changes are here to stay. Don’t underestimate, your planning process.
Number two, it’s late, but it’s not too late. If you’ve not started changing your institution, getting ready for it, not just federal changes, but for demand and what the consumer wants, that next generation of student is demanding more flexible learning pathways. It’s late, but it’s not too late. You can still get started now, and know you can affect change in a very good way for what’s coming next.
Number three. Plans are great, so you have to have a plan, but what’s more important is execution. Higher education has a historical habit of having the best looking shiny strategic plans that sit on the top of a shelf on your website at the front door. Wow do they look great in that PDF file in that full color brochure, they do look great, don’t they? Two things about those. One. Have measurable goals. Don’t confuse a vision statement for a goal they’re very different. And unfortunately, I see, “our goals are, ‘we’re going to become the best, abstract, abstract, abstract, abstract'”. And then, and you go, well, “okay, well how do we measure that though”? I have to measure that somehow.
And number two, have an execution team. Have someone own it and not a group of people. ‘Because if everybody owns it, nobody does. One person. It doesn’t mean they have to do it by themselves to meet the goal, but one person needs to be the accountable party to meet that goal. Assign it to one person that you can go to saying, are we meeting this goal and have regular updates?
And those are my three takeaways.
Drumm McNaughton: Thank you. Those are great. And I feel like you’re preaching to the choir here because that’s exactly how we do planning work is, the RACI model, vision statement, how do you measure it, you’ve got to have the, your key success indicators, goals, all of these kind of things. So thank you.
Andy Vaughn: Always a pleasure and it’s like writing a dissertation. There’s not one right framework. There’s a lot out there. Just pick one and stick to it and execute the heck out of it.
Drumm McNaughton: Exactly. The best dissertation is the one that’s finished.
Andy Vaughn: That is right. Execute.
[00:35:37] Final Thoughts and Sign Off
Drumm McNaughton: Very good, sir. Well, Andy, thank you so much for being on the show. any last-minute thoughts for us?
Andy Vaughn: Embrace the change, everyone. There’s no stopping it. Innovation, creativity and execution are key. And good luck to everyone.
Drumm McNaughton: Thank you, sir. Always a pleasure, Andy.
Andy Vaughn: Same here, drumm. Thank you.
Drumm McNaughton: Thanks for listening today and a special thank you to my guest, Dr. Andy Vaughan. Andy, always a pleasure having you on the podcast. Thank you so much for all you’re doing, especially with the Neg Reg. I look forward to the next time our paths cross.
To my listeners. Thanks for tuning in. See you next week.
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