Approximately 7,800 students currently attend college on tuition exchange scholarships — a benefit available to employees of participating universities whose children can study at other member institutions for free or heavily reduced cost. As universities cut thousands of jobs in 2025 and early 2026, some of those scholarships are becoming uncertain or being revoked mid-enrollment. On March 11, 2026, Tuition Exchange issued new guidance to member institutions, giving schools discretion over whether laid-off employees' children remain eligible.

Joe Behen spent years building a career in higher education. When the School of the Art Institute of Chicago laid off 20 employees in November 2025, citing financial strain, Behen — then serving as dean of student wellness — was among them. His daughter was enrolled at the University of Southern California under a tuition exchange scholarship that covered about $60,000 of her tuition, or roughly 80 percent of the total cost.1

With Behen's employment gone, the scholarship's future became uncertain.

His situation is not unique. Across American higher education, universities laid off at least 9,000 employees in 2025 — a number that includes administrators, faculty, and support staff at institutions ranging from small private colleges to large research universities. For each employee with a dependent using a tuition exchange scholarship, a layoff creates an immediate financial question: does the scholarship survive?

How Tuition Exchange Works

The tuition exchange program is a network of roughly 700 participating colleges and universities. Employees at member institutions — whether they work at a small liberal arts college or a major research university — can apply to have their children attend other member schools at reduced or no tuition cost.

The specifics vary. Some institutions offer full tuition waivers; others offer partial ones. The arrangement is reciprocal: schools that export more students than they import are flagged as "exporters" and may face limits on how many students they can send to partner schools. There is no federal money involved — these are institutional benefit programs managed through a private consortium.

For families who work in higher education, it is often one of the most significant benefits they receive. At schools where tuition runs $60,000 to $80,000 per year, a tuition exchange scholarship effectively adds tens of thousands of dollars in annual compensation.

The Layoff Problem

The crisis is straightforward: tuition exchange eligibility has historically been tied to active employment. If a parent loses their job, the question of whether their child keeps the scholarship is left to each institution's individual policy — and those policies vary.

Until recently, there was no uniform guidance. Some schools automatically revoked scholarships when an employee was laid off. Others allowed students to finish their current semester. A few honored the scholarship through graduation.

On March 11, 2026, Tuition Exchange issued new guidance to member institutions.1 The protocol clarifies that institutions which have laid off employees currently using tuition exchange benefits can decide, at their own discretion, whether those employees' children remain eligible — and that maintaining eligibility comes at no additional cost to the institution, since the receiving school, not the exporting institution, provides the benefit.

In other words: schools now have explicit guidance that they can keep laid-off employees' children enrolled without incurring extra cost. But they are not required to.

If a parent who works at a university is at risk of layoff, and their child is on a tuition exchange scholarship, they should contact both the employer and the receiving institution immediately to ask about scholarship continuation policies. Do not wait for a formal layoff notice to start this conversation.

How Many Students Are Affected

There is no precise count of how many of the 7,800 tuition exchange students have been affected. Given that 9,000 university jobs were cut in 2025 and the program counts 7,800 participants, estimates from Inside Higher Ed suggest that at least dozens and possibly hundreds of students have had their educational plans disrupted.1

The problem is likely to continue. University budget pressures are not easing in 2026. Our post on college budget cuts and enrollment decline covers the scope of what's happening at Portland State, USC, and other institutions currently restructuring.

What Affected Families Should Do

If your family is in this situation — or concerned it could be — there are concrete steps to take now.

1. Ask for a written policy statement. Contact both the institution that employs the parent and the institution the student attends. Ask specifically: "If employment ends, does the scholarship continue?" Get the answer in writing.

2. File for institutional aid immediately. If a scholarship is revoked or reduced, contact the financial aid office at the student's school and explain the change in circumstances. A formal financial aid appeal based on a significant income change has a reasonable chance of generating emergency aid or a revised award.

3. Look at all available scholarship sources. Our guide to scholarships for college includes private scholarships that don't require a specific employment relationship — options worth identifying before a crisis, not after. The merit scholarship guide is a useful parallel resource.

4. Understand what you're comparing to. If a tuition exchange scholarship disappears at a high-cost private university, it may be worth comparing the revised cost to what the student would pay at a school where they qualify for strong institutional aid. Our guide to colleges with the best financial aid covers which schools meet the full demonstrated need for students and have generous merit programs.

A Structural Problem Without a Simple Fix

The tuition exchange program was designed for a relatively stable labor environment in higher education — one where employees spent decades at the same institution. The current environment doesn't look like that.

The March 11 guidance from Tuition Exchange is a step toward protecting students already in the system. But it stops short of a mandate. Whether a student keeps their scholarship after a parent is laid off still depends on which institution makes the call, and whether that institution decides to treat a former employee's child as a continuing obligation.

For families building a college financing plan that depends on tuition exchange, the lesson from the 2025-2026 academic year is clear: have a backup. Know what you would pay if the scholarship ended mid-degree. And read the financial aid award letter carefully at any school you're considering, so you understand what aid is guaranteed versus discretionary.

Footnotes

  1. Douglas, E. (2026, April 2). When Employees Lose Jobs, Their Kids Lose Scholarships. Inside Higher Ed. https://www.insidehighered.com/news/students/financial-aid/2026/04/02/when-employees-lose-jobs-their-kids-lose-scholarships ↩ ↩2 ↩3