UM will never move up to FBS, as we know it now. And not to anything similar.
How has D-I football changed in the last 40 years? Has the NCAA caused and created any of the changes?
Conferences have changed and re-aligned. Very significant changes. Those were caused by the schools, conferences and tv money. Some FCS teams have moved up. The FCS playoffs have expanded. The FBS playoffs were created and are expanding. The Portal came and no-sit rule adopted (NCAA was involved in that). NIL was created. What else? Women's basketball has grown significantly.
The supposed third middle division has been discussed, but never even proposed by anyone of authority, to my knowledge. It has become harder to get into FBS. Top conferences have maximized and consolidated their tv money.
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As good of a program as UM is, and as successful of a team that it is, it's not set up, geographically, tv market wise, financially, or otherwise, to be FCS.
Changes are mostly being driven by money and tv contracts, not by competition. Sometimes not even by geography anymore. I can't imagine that the lower level FBS teams in the region would even want UM and MSU to join them, unless those FBS teams were left by themselves by the big boys of FCS and just needed to have a slightly larger conference.