Analysis of U.S. Higher Education Policy Changes and Their Investment Implications

Based on acquired market data and market environment analysis, I will provide you with a systematic analysis report on U.S. higher education policy changes and their investment implications.

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According to public market information, after the new U.S. administration took office, it adopted a relatively tough stance on the higher education sector. Policy focus is concentrated on the following areas:

There is significant uncertainty regarding the federal government’s funding policy for higher education. Federal research funding, Pell Grants, and student loan programs may all face review and adjustment. This directly impacts public universities and private non-profit institutions that rely on federal funding.

The government has questioned the tax-exempt status of universities and strengthened supervision over university operations. In particular, stricter compliance requirements may be introduced regarding endowment fund management, admission policies, and campus governance of top private universities.

Potential adjustments to international student visa policies and H-1B visas will directly impact colleges and universities that rely on tuition income from international students, especially research universities with a high proportion of international students.

As a representative of top U.S. private universities, Harvard University’s interactions with the federal government are a bellwether. If an agreement is reached, it may involve:

• Conditional disbursement of federal research funding
• Compliance requirements for campus policies
• Transparency supervision of endowment funds
• Fairness review of admission policies

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As of January 20, 2026, major U.S. indices generally declined:

• S&P 500
  : 6,796.83 (-1.00%)
• NASDAQ
  : 22,938.49 (-0.88%)
• Dow Jones
  : 48,498.94 (-1.03%)
• Russell 2000
  : 2,644.51 (+0.45%)

fell 0.07% on the day, showing relative resilience. Among all sectors, the Healthcare sector performed the best (+0.85%), while the Utilities sector performed the worst (-1.47%).

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Ticker Symbol	Company Name	Current Price	Daily Change	Market Cap (Billion USD)	Rating
EDU	New Oriental	$54.10	-1.97%	$8.59	Buy (62.5%)
TAL	TAL Education	$10.73	-2.90%	$6.53	Hold (57.1%)

Indicator	New Oriental (EDU)	TAL Education (TAL)
Price-to-Earnings Ratio (P/E)	23.38x	11.90x
Price-to-Book Ratio (P/B)	2.17x	0.59x
Return on Equity (ROE)	9.80%	4.71%
Net Profit Margin	7.37%	6.45%
Current Ratio	1.65x	2.28x

:

• New Oriental has a higher valuation but stronger profitability, with ROE leading by approximately 5 percentage points
• TAL Education has a more attractive valuation (P/E of only 11.9x), but its earnings are more volatile
• Both companies face short-term pressure, falling 6.44% and 6.61% year-to-date respectively

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Risk Category	Risk Level	Risk Description
Uncertainty in Federal Funding	7/10	High Risk: Federal research funding and student aid funds may face cuts or conditionalization
Tax-Exempt Status Risk	6/10	Medium Risk: The tax-exempt status of colleges and universities is under scrutiny, which may affect endowment fund returns
Regulatory Pressure	8/10	High Risk: Admission policies, campus governance, and compensation structures face stricter scrutiny
Changes to Admission Policies	5/10	Medium Risk: Admission policies continue to adjust after affirmative action
International Student Policy	7/10	High Risk: Visa policy uncertainty affects international student enrollment

Investment Sector	Attractiveness Score	Investment Rationale
Vocational Education Platforms	8/10	High Attractiveness: Policies encourage vocational skill training, and market demand is growing
Educational Technology Companies	7/10	High Attractiveness: Technology-driven educational innovation with low policy sensitivity
Public University Assets	6/10	Medium Attractiveness: Relatively stable but faces state budget pressure
International Education Services	6/10	Medium Attractiveness: Demand is rigid, but affected by visa policies
Private University Endowment Funds	5/10	Medium Attractiveness: Long-term allocation value with significant short-term volatility

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• Cautious Wait-and-See
  : Wait for policy clarification before making major allocation adjustments
• Focus
  : Negotiation progress between the Trump administration and top universities such as Harvard
• Risk Hedging
  : Reduce investments related to policy-sensitive private universities

• Accumulate on Dips
  : Valuations of educational technology and vocational education sectors have fully reflected pessimistic expectations
• Diversified Allocation
  : Diversify risks between higher education and K-12 education, online and offline education
• Focus on Fundamentals
  : Prioritize targets with abundant cash flow and stable profitability

• Core Allocation
  :
  • New Oriental (EDU)
    : High degree of business diversification, stable profitability, analyst consensus target price of $60.00[0]
  • TAL Education (TAL)
    : Attractive valuation with a P/B of only 0.59x, long-term growth potential remains[0]
• Satellite Allocation
  : Vocational education platforms, education SaaS service providers

• Monitor the performance of U.S. higher education ETFs (such as XHE) as a sector-wide exposure
• Consider allocating to defensive assets with low correlation to education policies
• Maintain an appropriate cash position to cope with fluctuations caused by policy uncertainty

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1. Terms of the Agreement Between Harvard University and the Federal Government
   : Will be a bellwether for industry policies
2. Federal Budget
   : Specific arrangements for education funding will directly impact university revenues
3. Tax-Exempt Status Review Results
   : IRS reclassification of universities’ tax-exempt status
4. International Student Visa Policy
   : Changes to H-1B visa quotas and approval processes
5. Earnings Season Performance
   : New Oriental (January 28) and TAL Education (January 29) will soon release their financial reports[0]

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Changes in U.S. higher education policy create significant uncertainty for the education sector, but also create investment opportunities for some sub-sectors:

:

• In a
  highly uncertain environment
  , the
  vocational education
  and
  educational technology
  sectors are relatively resilient and have growth potential
• Chinese concept education stocks
  are under short-term pressure, but their long-term growth logic remains unchanged, and their valuations are already attractive
• Defensive allocation
  is a prudent choice in the current environment, with a focus on cash flow and profitability

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[0] Jinling AI Financial Database - Corporate financial data, market data, technical analysis

Note: This report is based on public market data and analysis, for reference only, and does not constitute investment advice. Investment involves risks; please proceed with caution.