The 2025 Outlook for Higher Ed Business Officers

The higher education landscape is undergoing transformative change, presenting both challenges and opportunities for institutions nationwide. Financial pressures, fueled by inflation and changing enrollment patterns, are forcing colleges to reevaluate how they operate, while student melt remains a pressing issue, impacting persistence from first-year students to degree completion.

Advancements in technology, such as artificial intelligence and integrated systems, are empowering institutions to streamline processes and better engage with students, though these innovations bring with them critical concerns around data usage, cybersecurity and compliance. By addressing these trends proactively, colleges and universities can position themselves for long-term success and continue to fulfill their mission of student and community support.

The Realities of Higher Ed’s Financial Situation

Higher education is navigating a period of significant financial distress. On any given day, new articles are published about universities and colleges making cuts to programs or even closing their doors. Even private institutions are experiencing mounting pressures. Additionally, inflation has increased expenses for everything from salaries to campus maintenance, further straining tight budgets, while state funding for public colleges and universities remains stagnant or continues to decline in many regions.

Compounding these challenges are shifting enrollment trends. Recent growth in undergraduate enrollment has still not rebounded to pre-pandemic levels. Additionally, the demographic cliff is upon us. The number of high school graduates will peak in 2025 and then decline for the next several years.

For many colleges and universities, rising operational costs combined with declining enrollment trends underscore the urgent need to adapt, innovate, and find sustainable paths forward. Institutions are approaching these issues in a variety of ways.

1. Right-Sizing: Many colleges and universities are reevaluating the breadth of their academic programs, campus facilities and more. After decades of expansion, it may be prudent to reduce the scope of an institution so that resources can be better aligned to serve the long-term sustainability and needs of the community at large.
2. Revenue Diversification: In an effort to reduce reliance on tuition and governmental funding, many institutions are also developing alternative revenue streams such as auxiliary services, research grants, philanthropy, and continuing education programs. By supporting revenue opportunities for departments and student organizations, institutions can alleviate financial pressures for added services.

Addressing Student Melt

Expanding on the enrollment concerns outlined above, decreasing student melt and bolstering retention rates is a critical focus for higher education institutions. While "summer melt" often describes incoming students who commit to attending and then fail to enroll, broader issues of student melt impact students at every stage of their academic path.

According to the National Center for Education Statistics, the overall six-year completion rate is only 64 percent for first-time undergraduate students and nearly 25 percent of first year students don’t return the following year. In a recent survey conducted with Higher Ed Dive, higher ed leaders responded that the top two factors that sway students' decision to stop out of classes are ‘emotional/mental stress’ and ‘financial hardship’.

To combat these challenges, colleges and universities are employing innovative strategies. In a recent University Business Ed Talk, California College of the Arts shared their approach to addressing summer melt by leveraging data analytics to create predictive models that identify students at risk of not enrolling, making it possible to engage with those students earlier to offer support.

Institutions are also reevaluating policies around past-due balances amid concerns surrounding transcript holds. New federal and state regulations place limits on when an institution can use transcript holds, and the CFPB has highlighted the practice as potentially unfair, deceptive or an abusive act. Instead, institutions are exploring flexible payment plans and debt forgiveness initiatives to help retain students who might otherwise leave the institution.

AI, Cybersecurity, and Other Technology Trends

Technology offers unprecedented opportunities for institutions to improve administrative efficiencies and enhance student services. Artificial intelligence (AI) is at the forefront of this evolution, streamlining routine tasks such as application processing, financial aid assessments, and course scheduling.

On the student services side, AI-powered chatbots and virtual advisors can provide 24/7 support, answer common questions, and even deliver personalized academic guidance. These innovations not only improve the student experience, but also allow staff to focus on more complex, value-added tasks. However, without proper human oversight, concerns about privacy, bias, and accuracy in AI tools remain significant, requiring institutions to adopt responsible AI practices and transparent data governance policies.

Because they have so much sensitive personal data, higher education institutions face growing cybersecurity risks. Ransomware attacks, phishing schemes, and data breaches continue to rise, putting sensitive student and institutional data at heightened risk. As bad actors continue to find new ways to thwart cybersecurity measures, implementing fraud prevention tools and best practices can help mitigate risks.

Integrated technology systems are another critical factor in improving operational efficiency across campuses. By connecting complementary platforms such as student information systems, student financial services, and campus card systems, institutions can streamline workflows, reduce redundancies, and gain real-time insights into student behaviors and institutional performance. This holistic approach helps institutions identify and address potential issues early, leading to improved outcomes for both students and staff.

Growing Areas of Compliance

Compliance in higher education is an ever-growing area of focus as colleges and universities navigate a complex regulatory environment aimed at protecting students and ensuring institutional accountability.

Some recent compliance priorities have been focused on accessibility and cost transparency.

1. Accessibility laws, particularly around digital accessibility, require institutions to ensure that websites, learning management systems, and other digital tools are usable for all students, including those with disabilities. Recent updates to the Americans with Disabilities Act include more specific technical standards for web content that institutions need to meet. New standards take effect in April 2026 (or April 2027 depending on size of institution) that will require colleges and universities to review their current efforts and may require significant content updates or upgrades to systems.
2. Cost transparency has also become a major priority, especially concerning tuition payment plans and other financial options offered to students. The Consumer Financial Protection Bureau (CFPB) has taken the position that colleges and universities that offer tuition payment plans should be considered lenders and therefore subject to regulations such as the Truth in Lending Act (TILA) that include standards for annual percentage rate (APR) disclosures. Higher ed leaders should be mindful of adopting any practice that the CFBP might consider to be an unfair, deceptive or abusive act or practice (UDAAP), such as withholding transcripts.

Despite the burden compliance requirements entail, regulations and standards surrounding payments and privacy continue to evolve and must remain a priority for institutions of higher education. These regulations, combined with increasing pressure from lawmakers and advocacy groups, make compliance a central focus of operational strategies in higher education, requiring institutions to stay ahead of evolving requirements to mitigate risks and maintain trust. Institutions should always consult legal counsel to fully understand the breadth of laws and regulations that apply to them, as well as how those laws and regulations should be operationalized.