3 hidden retention challenges facing higher ed in 2025

As higher education enters the midpoint of the 2020s, institutions face a wide range of challenges threatening retention and student success. Some, like cost and affordability, are longstanding, while others—such as the growing demand for mental health and wellness services—have rapidly increased in significance.

Hidden among these macro challenges are three risks that are newly emerging and thus easy to overlook. They are likely to affect different segments of higher education in different ways: some institutions may feel their impact profoundly, while others might not be affected at all.

As the new year begins, we encourage you to reflect on which of these under-the-radar challenges might influence your campus and to what extent. Here are three hidden retention challenges that could demand your attention in 2025.

Challenge 1: Addressing the “Murky Middle”

The “murky middle” refers to students midway through their academic careers (30–90 credits) with GPAs between 2.0 and 3.0. These students often persist at lower rates but are frequently overlooked by student success teams that focus primarily on first-to-second-year retention. Recent data suggests that attrition issues might be even more of a concern with this current cohort of sophomores and juniors.

Why It Matters

ACT results reveal a notable decline in academic preparedness among recent high school graduating classes, measured by their likelihood of passing college-level courses in the four critical subject areas tested by ACT (English, reading, science, and math). This decline is especially clear as students who were high school freshmen and sophomores during the pandemic-related learning disruptions of 2020–2021 are now starting college.

These cohorts missed critical instruction during a foundational period for subjects like algebra, which is essential for future STEM success. Four years later, these students are in their first and second years of college and are significantly less prepared academically than the college seniors who are just two years ahead of them.

Challenge 2: FAFSA Delays Increase Transfers

The rollout of the revamped FAFSA form in 2024 caused significant delays in financial aid decisions, leading to an unexpected drop in incoming student enrollment, although this drop has not been felt evenly across the sector. Data from the National Student Clearinghouse indicates that two-year colleges experienced a much smaller dip than four-year colleges. This suggests that a meaningful number of students who would have otherwise chosen more expensive four-year schools may have opted to stay closer to home.

Why It Matters

For many students, starting postsecondary education at a less expensive community college offered a practical solution amid financial uncertainty. However, these decisions could ultimately lead to an uptick in transfer activity as students reconsider their long-term goals once the financial aid landscape stabilizes.

What happens next depends on the perspective of your institution. Four-year institutions that missed out on these students as first-years will be looking to attract them as sophomores in Fall 2025. On the flip side, the local open-access colleges that currently enroll these first-year students will want to fight hard to keep them.

Challenge 3: Resource Strains at Highly Selective Institutions

The middle of the decade brings new student success challenges for some of the most selective colleges in the country—those with large endowments, top rankings, and retention rates exceeding 90%. These institutions have seen enrollment booms enabled by test-optional policies. As a result, they’ve been growing enrollment and increasing diversity on campus even as the rest of the sector declines.

Why It Matters

This growth is straining campus resources. While higher enrollment numbers demonstrate a broader commitment to accessibility, they also put pressure on infrastructure, especially in areas critical to student success. Compounding the challenge, elite colleges are also experiencing the changes in student readiness described above, meaning that they are not only trying to serve more students, but these students may also have more needs than before.

So far, much of the focus has been on expanding financial aid and mental health services, while advising and academic support have received comparatively less attention. As more students enter these highly competitive academic environments, the need for additional advising and tutoring capacity is growing.

Beyond 2025: Preparing for Long-Term Retention Challenges

These challenges will likely persist beyond 2025. Trends in academic preparedness, enrollment shifts, and resource constraints suggest that institutions must adopt long-term strategies. Investing in robust student success infrastructure—including people, processes, and technology—is key to sustaining retention rates and fostering student achievement.