The conversation around higher education’s future often centers on financial challenges. From dwindling enrollments to rising operational costs, it is no secret that colleges and universities are feeling the pressure. But framing this dialogue solely around fiscal distress risks missing a more significant opportunity—transforming how institutions serve students and their broader communities.

Understanding the Landscape

Recent research from the Federal Reserve Bank of Philadelphia paints a complex picture of the challenges facing higher education[1]:

• College enrollment has plummeted by 15% between 2010 and 2021.
• The previously forecasted “demographic cliff” is here—many regions contain fewer available traditional college-age students.
• Overall immediate college enrollment post-high school has slipped from 70% to 62%.
• Adult learner enrollment (ages 25+) has nearly halved since the Great Recession.
• Rising operational costs, especially in healthcare and employee benefits, strain budgets.
• State funding remains volatile, often slashed during economic downturns, and key federal funding streams like NIH grants face great uncertainty.

The data underscores a hard truth: the traditional higher education model is under immense strain. But instead of solely focusing on tightening budgets and cutting costs, what if institutions saw this moment as a call for reinvention?

Moving Beyond the Selectivity Arms Race

One critical misstep in higher education has been the relentless pursuit of prestige through exclusivity. The obsession with rankings and acceptance rates has created a culture where turning students away is seen as a mark of success. But in today’s landscape—where affordability and social mobility are at the forefront—this model feels increasingly outdated.

Not every institution needs to play the selectivity game. In fact, there is growing value in colleges that lean into accessibility. Success should not be measured by rejection rates but by how effectively an institution supports the students it enrolls. Expanding pathways for first-generation students and adult learners can drive both social impact and institutional resilience. Additionally, designating scarce staff resources to the rankings game gains no positive results for students.

The Critical Role of Board Governance

While presidents and provosts handle the day-to-day strategy and operations, ultimate responsibility for an institution’s financial health lies with its Board of Trustees. Traditionally, boards have followed the “noses in, fingers out” philosophy—offering oversight without meddling in operations. But in today’s climate, passive governance may no longer cut it.

Effective board governance demands:

• Active Oversight: Regular reviews of financial health, a deep understanding of market dynamics, and rigorous monitoring of institutional performance.
• Strategic Decision-Making: Boards must be willing to make tough calls—whether that is discontinuing underperforming programs, consolidating campuses, or embracing strategic partnerships.
• Accountability: Transparency is non-negotiable. Boards should set clear expectations, hold leadership accountable, and be prepared to defend difficult decisions.

Boards that lean into these responsibilities can help steer institutions through turbulent waters, guiding transformative change rather than reacting to crises.

The Importance of Proactive Leadership

Denial is perhaps the most dangerous response an institution can have when faced with existential challenges. This has played out in state systems, where delays in making hard decisions around campus consolidations only deepened the eventual impact.

Proactive leadership involves:

• Honest Assessment: Regularly evaluate program viability and market relevance. Communicate challenges openly and foster dialogue with stakeholders.
• Strategic Planning: Focus on core strengths and data-driven decision-making, making data governance and analysis a priority. Develop realistic transformation plans that balance mission with market demand.
• Inclusive Processes: Engage faculty, staff, students, alumni, business and community partners. Consider the regional impact of decisions, especially in areas where the local economy is deeply tied to the institution.

Leaders who confront challenges head-on, rather than deferring them, create a foundation for sustainable change.

Innovative Revenue Strategies

Traditional tuition-driven models are not cutting it anymore. Institutions need diversified revenue streams and flexible program offerings that meet evolving workforce needs. Every higher education institution should consider:

1. Micro-Credentials:

• Offer stackable certificates and industry-aligned badges
• Design skills-based credentials at competitive, market-based rates (rather than based upon 4-year degree credit prices)
• Build flexible pathways that allow students to upskill without committing to a full degree

1. Industry Partnerships:

• Create corporate training programs and customized workforce solutions
• Develop internship and co-op opportunities that blend classroom learning with real-world experience
• Establish research collaborations that drive innovation and funding from various sources
• Encourage faculty to work with industry partners, incentivizing creative curriculum development using insights from industry

1. Alternative Delivery Models:

• Expand hybrid and accelerated programs
• Integrate work-based learning into curricula
• Explore asynchronous education models and flexible scheduling options

These strategies not only attract non-traditional learners but also strengthen ties between higher education and industry—aligning academic outcomes with workforce demands.

Beyond Budget Balancing

Financial stability is crucial, but real transformation should focus on broader institutional goals:

• Student Success: Prioritize accessibility, enhance support services, and strengthen career preparation; focus on graduates being prepared for the workforce and securing their first professional jobs above everything else
• Community Impact: Align programs with regional economic needs, invest in local partnerships, and contribute to economic development
• Educational Innovation: Embrace flexible learning models, integrate new technologies like AI (rather than pushing against these new technologies), and develop interdisciplinary approaches to solve complex problems

When colleges see themselves not just as academic institutions but as economic and social anchors within their communities, the conversation shifts from survival to long-term relevance and impact.

The Path Forward

What does meaningful transformation look like?

1. Clear Vision:

• Understand the institution’s mission and unique strengths
• Set realistic goals grounded in data and market insights, focusing on strategic planning efforts for the near-term (5 years)
• Build buy-in from stakeholders, recognizing that not everyone will agree with the transformation efforts; build in time to listen to the various viewpoints

1. Decisive Action:

• Make tough decisions quickly but thoughtfully, avoiding the voices of the few to influence decisions that are not for the greater institutional good
• Monitor progress and remain agile, adjusting strategies as needed

1. Sustainable Solutions:

• Focus on long-term financial resilience, not just short-term fixes
• Diversify revenue streams while maintaining academic quality
• Develop flexible structures that can evolve with changing market demands
• Focus on fundraising and bring alumni and industry donors into the conversation

The Future of Higher Education

The coming decade will be pivotal. Some institutions will consolidate or close, unable or unwilling to adapt. Others will emerge stronger, not because they preserved the status quo, but because they embraced change with intention and vision.

The keys to success? Strong board leadership, innovative programming, strategic partnerships, and a relentless focus on student and community impact.

Higher education is not just facing a fiscal challenge—it is facing a moment of redefinition. Institutions that seize this opportunity for transformation will not just survive; they will thrive, better serving students, communities, and the broader economy for generations to come.

[1] Kelchen, Robert, et al. “Predicting College Closures and Financial Distress.” Working Paper, Federal Reserve Bank of Philadelphia, December 2024.

Cassandra Brown, Director | Cbrown@econsultsolutions.com

Cassandra Brown is a director at Econsult Solutions. She has a deep background in higher education, working in various roles with alumni, faculty, and the external business and governance community for 15 years at Drexel University. Ms. Brown received her M.B.A. at Drexel University.