The NATIONAL ASSOCIATION OF COLLEGE AND UNIVERSITY BUSINESS OFFICERS, NACUBO, surveys more than 600 college business officers every year. This past fall, the number one challenge on their list: "Managing Unreliable Funding Sources."

That's a polite way of saying the financial foundation of American higher education has shifted beneath their feet.

I've spent the last 18 years in and around higher education - primarily in college athletics through Game Plan (Acquired by BridgeAthletic) and more recently in strategy work with Deloitte, and what I believe we’re seeing right now is a perfect storm.

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Higher Ed Has Always Figured It Out.

American higher education has an extraordinary track record. The GI Bill sent 8 million veterans to college after World War II and built the largest middle class the world had ever seen. Research coming out of our universities gave us the internet, GPS, and the science behind modern medicine. The list of accomplishments goes on and on.

For over a century, when the country needed something: educated workers, breakthrough research, innovation - higher education delivered.

For most of that time, the business model just worked. Enrollment grew. Tuition revenue followed. State and federal support was stable. The system sustained itself. Everything in the pitch deck chart kept moving 'up and to the right.'

Until now. Now, the traditional higher education economic model is being tested in a big way.

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The Perfect Storm

The tuition cliff is here. This wasn't a surprise. It's simple demographics. Falling birth rates meant fewer 18-year-olds, which meant fewer students, which meant less tuition. That's here now.

In the first nine months of 2024 alone, 28 degree-granting colleges closed. Sixteen more followed in 2025. The Federal Reserve Bank of Philadelphia is now modeling a worst-case scenario where an abrupt enrollment decline could trigger as many as 80 closures in a single year.

Grants have stalled or declined. Research universities built their operating models around federal grant dollars, not just for the research outcomes, but for the cost recovery that funds staff, infrastructure, and operations. Overnight, grants have become unreliable. NACUBO survey respondents used words like "chaos" to describe what they're navigating. One business officer put it simply: "Change is coming faster than anyone is ready for."

Athletics spend has exploded. For a long time, college athletics was the brand engine: national TV, alumni giving, recruiting. It is the front porch to the institution. That's more true than ever at many schools. But the economics have flipped. The House v. NCAA settlement now allows schools to directly share revenue with athletes: up to $20.5 million annually this academic year. It ramps up from here. Although deficits in college athletics are not new, the sheer magnitude is. Power 5 through FCS, no one is immune. It’s not just small programs struggling - there are flagship institutions facing massive deficits.

The storm is that all three of these hit at the same time - tuition, grants and athletics.

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The Answer Is Complicated

Institutions have responded. Hiring freezes. Deferred construction. Programs reduced or eliminated. Reduced staff.

In athletics, the moves have gone further.

For example: Kentucky spun its revenue-generating operations into a private commercial entity. The University of Utah partnered with New York private equity firm Otro Capital in a first-of-its-kind deal expected to generate over $500 million for its athletics operation. There are more to come.

Schools are doing things that would have been unthinkable five years ago.

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As they say, you cannot cut your way to growth.

At some point, every institution facing this storm has to ask a harder question: What are we actually sitting on?

The answers are already there. Brand equity built over decades. Alumni networks. Real estate. Research capacity. Deep community relationships. These assets have been under leveraged for a long time - not out of negligence, but because the old model worked fine and no one had to push harder.

That era is over. Institutions are now being forced into a new kind of innovation they've never had to pursue, and the ones that move fast and think differently will survive - even thrive. Unfortunately, those that don't will become a statistic.

I'll be tracking which is which. Follow along if this is something you're watching too.

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