A president’s guide to the six forces reshaping higher education

Higher ed is facing a reckoning with relevance. Politicians, op-ed writers, and even students’ families openly question the worth of a college education. On top of this, a volatile enrollment market, seemingly endless budget cuts, waves of program closures, votes of no confidence, and the AI revolution inundate presidents with threats (and opportunities) in timeframes at odds with traditional institutional capabilities.

To help presidents strategically focus, we’ve identified six key factors most important to consider in shaping the operational direction of colleges and universities in this year’s State of the Sector.

1. Public Perception of Higher Ed Value: The persistent debate over higher ed’s ROI, increasing costs, and association with long-term debt has led to widespread skepticism about the value of a college degree. While these narratives don’t always stand up to scrutiny, they have created a negative echo chamber that deters potential students and affects how boards, local stakeholders, and university personnel are thinking about higher education.
2. Enrollment and Demographics: The post-pandemic enrollment stabilization does not signal a return to normalcy. Instead, the approaching “demographic cliff” and an eventual peak in the global population foreshadow a significant, long-term decrease in the youth population, ultimately resulting in fewer students for higher education institutions nationwide.
3. Sustainable Business Models: Enrollment declines, inflation, and increasing wages are straining the budgets of higher education institutions, prompting even financially stable ones to seek cost-saving measures. Long term, rather than continuing to try to “do more with less,” many universities are pursuing a “less with less” strategy—reduced footprint, fewer offerings, fewer students—to become leaner and more resilient.
4. Student Readiness and Well-being: The mental health crisis and declining academic preparedness of incoming students demand a proactive and comprehensive response from universities. Unfortunately, this dual challenge will get worse before it gets better. The largest drops in test scores occurred with younger students who will arrive on campus across the next decade.
5. Hybrid Campus: Adapting to hybrid work and learning models is crucial, as it influences hiring, retention, and overall operational effectiveness. More fundamentally, almost regardless of exact hybrid policy, most universities now have too much space and the wrong mix of space, given changes in work and student preferences.
6. Artificial Intelligence: The advent of technologies like AI, epitomized by the rapid rise of tools like ChatGPT, requires a fundamental shift in pedagogical approaches and the integration of AI in various aspects of university operations.

The most astute and far-sighted presidents are proactively engaging their teams in interrogating these priorities and understanding institutional strategies to address, respond, and thrive, embracing the (sometimes) significant change that lies ahead. This effort requires strategic clarity and a market-responsive approach that is supported by our dynamic research agenda and other areas of inquiry. Our Strategic Advisory Services help create impactful, lasting initiatives while considering shifting landscapes.