How Will AI Impact Higher Ed?

James G. Martin Center for Academic Renewal ^ | August 27, 2025 | Richard K. Vedder

[karpov]

Virtually every observer of American higher education agrees that it is in trouble, and most think the short to midterm future for universities is pretty bleak. Most emphasize growing disenchantment with the academy on the part of governmental funders, most conspicuously the Trump-era federal government. Still others point to both the enrollment decline of the past 15 years along with the shrinking supply of college-age Americans in coming years because of declining fertility rates.

Another factor arising that could be both a threat and an opportunity for colleges is artificial intelligence (AI). Will it magnify higher education’s troubles or help foster a period of expansion and prosperity?

Warning: I am an economist, and my profession’s record at forecasting future events is pretty dismal. An early economist, T.R. Malthus, in 1798 predicted a coming era of extreme poverty and near starvation, whereupon Britain then had the longest sustained period of rapid economic growth the world had ever seen. In the early 1940s, many prominent Keynesian economists predicted a resumption of the Great Depression at World War II’s end: It never came.

So let me hedge my bets by offering both a pessimistic and an optimist take on the possible impact of AI on higher education’s future.

During the first great Industrial Revolution, beginning in Great Britain around 1750, new technological advances increased incomes and jobs for most people, but there were some losers, too. Most famously, in the cotton textile industry the invention of machine-based technology to spin and weave cloth (i.e., the spinning jenny and power loom) meant some home-based spinners and weavers lost their jobs to new factory-based workers operating much more productive machines. The losers were often illiterate or marginally educated, while the more educated classes generally participated in the growing income arising out of increased production.

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TOPICS: Education
KEYWORDS: ai; college

[HIDEK6]

Aren’t you special.

[clearcarbon]

"How Will AI Impact Higher Ed?"

The machines get smarter. The people get dumber.