Colleges Are Cutting Majors and Jobs

The financial pressure on American universities is not new. But the pace and scope of what's happening in early 2026 is different. Schools that delayed difficult decisions during and after the pandemic are now being forced to act — and the consequences are playing out in real time for students and families.

Portland State: A Case Study in What "Financial Crisis" Actually Looks Like

On March 9, 2026, Portland State University President Ann Cudd announced that PSU would formally enter retrenchment — a structured process for institutional downsizing that allows for faculty layoffs under specific conditions of financial distress.¹

The target: close a projected $35 million deficit by the end of the 2026–27 school year.

In a letter to the PSU chapter of the American Association of University Professors, Cudd identified 19 academic departments facing reductions. Three face outright closure: University Studies (the university's interdisciplinary general education bachelor's program), Conflict Resolution, and the Portland Center study abroad program. Departments facing significant reductions include History, Philosophy, Economics, Criminology and Criminal Justice, Public Administration, Politics and Global Affairs, and World Languages and Literatures.¹

The root causes tell a story that applies far beyond Portland:

• Enrollment declined 23% from 2019 to 2026. PSU administrators attribute this to pandemic-era community college declines and safety concerns in downtown Portland.
• State funding has not kept pace with rising operating costs.
• Federal research funding cuts added pressure to a budget that was already strained.

A finalized layoffs announcement is expected at least two months from the March announcement. Students currently enrolled in affected programs are in limbo while the process plays out.

If you are considering Portland State — or any school that has announced retrenchment or program cuts — ask specifically whether your intended major is under review. "We're restructuring" does not mean your department is safe. Demand a straight answer from admissions before committing.

USC: 974 Employees, $230 Million in Deficits

On the other side of the country and the prestige spectrum, the University of Southern California has been in the middle of a significant workforce reduction since mid-2025.

According to state layoff data and reporting by the Daily Trojan and Higher Ed Dive, USC laid off at least 974 employees between July 2025 and early 2026 — cuts made to address $230 million in accumulated operating deficits from previous fiscal years.² The layoffs touched research, administration, communications, and academic support roles across USC's University Park and Health Sciences campuses.

USC says it expects to eliminate its long-term budget deficit by the end of the fiscal year in June 2026. The university is working to place approximately 200 affected employees in reorganized positions.

For USC students, the immediate impact has been visible: fewer support staff, longer waits for administrative services, and faculty uncertainty in some research-heavy departments.

The Broader Picture: 9,000+ Jobs Gone in 2025

Portland State and USC are not isolated cases. According to Inside Higher Ed's tracking data, the higher education sector shed more than 9,000 positions across 2025 — in layoffs, buyouts, and position eliminations.³

In just the weeks around the PSU announcement, a fresh wave of cuts spread across the country:

• Idaho State University eliminated 45 positions, including 12 faculty roles
• Union College (New York) laid off roughly 40 employees after missing enrollment goals
• Hiram College (Ohio) laid off 22 staff members due to enrollment declines
• Napa Valley College (California) laid off 16 workers

The causes are consistent: declining enrollment, flat state appropriations, rising costs, and — for research universities — significant reductions in federal funding for science and academic research. As we covered in Federal Research Cuts Are Hitting Universities Hard, proposed federal budgets call for sharp reductions at NIH and NSF, and some terminations are already underway.

9,000+

What This Means If You're Choosing a School

Budget distress at a university doesn't automatically mean it's a bad choice. But it does mean you need to ask different questions.

Before you enroll:

1. Is your major at risk? Google "[school name] budget cuts 2026" and look for any retrenchment or program review announcements. If your intended major is listed, ask admissions directly what that means for students who enroll this fall.

2. What is the school's enrollment trend? A school that's lost 15–20% of its enrollment over five years is under structural pressure regardless of what the brochure says. The Net Price Calculator gives you cost data, but enrollment trend data is at NCES (nces.ed.gov).

3. What does financial aid look like? Schools under budget pressure sometimes reduce merit aid to close gaps. If you received a merit offer, ask whether it's guaranteed for four years or subject to renewal. See our guide on decoding your financial aid award letter.

4. Community college as a starting point. For students uncertain about their school's stability, community college as a transfer path has never been a stronger option. Two years at a stable, lower-cost institution can reduce both your financial and academic risk.

Retrenchment does not mean a school is closing. But it is a legal process with real consequences for faculty and programs. If your school announces retrenchment, find out specifically which departments are under review, what the timeline looks like, and what protections exist for currently enrolled students in affected programs.

If you're already enrolled at a school facing cuts:

• Meet with your academic advisor now to confirm your program's status and your path to graduation.
• Ask about course substitutions in case required classes are reduced or eliminated.
• Review your financial aid situation — budget cuts at the institutional level can affect institutional grants in future years even if your federal aid is stable.
• If your program is cut, ask about teach-out plans, which schools are required to have for enrolled students.

What's Driving This and Why It's Not Stopping

The enrollment trends driving these cuts are structural, not cyclical. The U.S. is entering a decade-long decline in the number of 18-year-olds due to the low birth rates of the mid-2000s. Demographers call this the "enrollment cliff," and it will pressure university budgets throughout the late 2020s.

Combined with federal research funding uncertainty and rising operating costs, the institutions most at risk are mid-size public universities and smaller private colleges that have relied on enrollment growth that is no longer available.

If you're planning for college now, see our college planning timeline and our guide on how to build a college list — both of which can help you evaluate institutional health alongside academics and affordability.

Footnotes

1. Oregon Public Broadcasting. (2026, March 9). Portland State declares financial crisis, reveals plan to cut or reduce 19 departments. OPB. https://www.opb.org/article/2026/03/09/portland-state-university-cuts-layoffs-retrenchment/ ↩ ↩²

2. Higher Ed Dive. (2026). USC 'on track' to eliminate deficit after 900-plus layoff notices. Higher Ed Dive. https://www.highereddive.com/news/university-southern-california-900-layoffs-deficit/804575/ ↩

3. University Herald. (2026, March 16). Another wave of faculty and program cuts is hitting American universities. University Herald. https://www.universityherald.com/articles/80226/20260316/another-wave-faculty-program-cuts-hitting-american-universities-heres-whos-cutting-what.htm ↩