School Costs Rise, Budgets Squeeze
The Ecosystem Weekly: Faculty salaries spike, federal oversight tightens, AI enters core workflows, and research units pull back as funding contracts.
The Ecosystem: Weekly Strategic Signals for Decision-Makers Serving Colleges, Universities, and Systems.
Enrollment & Revenue: Cost growth outpacing revenue is forcing institutions to slow upgrades, consolidate vendors, and demand clearer ROI before renewing contracts.
Policy & Regulation: The Harvard appeal shows federal agencies are willing to weaponize funding and compliance, pushing institutions toward more risk-averse procurement.
Tech & Infrastructure: The Genesis Mission shifts AI-enabled research toward federal platforms, raising the bar for data standards, interoperability, and defensibility in vendor products.
Research & Partnerships: Shrinking grant success rates and delayed hiring are consolidating tech purchasing at the college or enterprise level, tightening competition for research-centric vendors.
As always, write back and let us know if you’d like to see more details on any of those.
Please note that our next issue will arrive on January 5. Happy New Year to you and your teams!
Every week, presidents, provosts, CIOs, and senior administrators rely on our sister newsletter Higher Ed Leadership Intelligence for clarity on enrollment, funding, and technology decisions shaping their campuses.
If your organization supports higher ed institutions navigate those same challenges, let’s discuss how we can connect you with this leadership audience through partnerships and visibility opportunities.
Click on the button below to schedule a meeting or email us at: director@intelligencecouncil.com
1. Enrollment & Revenue
Institutional operating costs climb as HEPI rises 3.6 percent and faculty salaries hit record growth
What Happened
The Higher Education Price Index shows institutional costs rising in FY2025, with instructional compensation among the fastest-growing categories. Rising compensation outpaced most other cost categories and widened the gap between operating expenses and revenue growth at many institutions.
Why It Matters
Salary inflation is absorbing a larger share of institutional budgets, tightening discretionary spending, and increasing scrutiny of every external contract. Leaders under pressure to contain costs may postpone technology upgrades, consolidate vendors, or shift toward platforms that can automate work currently performed by staff. Enrollment-dependent institutions facing flat or declining net tuition revenue will be more resistant to price increases and more aggressive in negotiating renewals.
Vendors whose value proposition leans on productivity, workflow consolidation, or measurable cost savings have a clearer opening in this environment than those framed primarily as “enhancements.”
Implications for You
GTM teams should prepare for intensified ROI scrutiny, with CFOs and provosts asking for hard evidence of cost avoidance or efficiency gains tied to specific features.
Product teams may benefit from reprioritizing capabilities that replace or streamline labor-intensive tasks, especially in student services, instructional support, and compliance.
Pricing strategy may need adjustment for cost-sensitive segments; tiered models, modular offerings, and usage-based pricing become more attractive in FY2026.
Enterprise sellers should segment accounts by financial resilience, as small tuition-dependent institutions will display very different purchasing behavior from large research universities.
Messaging should shift toward fiscal resilience, predictable total cost of ownership, and integration that reduces support burden for internal IT teams.
Other Signals on our Radar:
S&P issues negative 2026 outlook for U.S. nonprofit colleges
S&P Global Ratings released a negative outlook for 2026, noting that nonprofit colleges face rising costs, policy shifts, enrollment competition, and new financial pressures from revenue-sharing arrangements with college athletes.
Expect intensified scrutiny on contract value, slower deal cycles, and increased demand for solutions tied to efficiency, automation, and cost containment. Vendors serving financially fragile institutions may face renewal risk and should segment pipelines accordingly.
2. Policy & Regulation
Federal appeal in Harvard funding case signals more aggressive oversight of institutional governance
What Happened
The Trump administration has appealed the federal court ruling that struck down its freeze of roughly $2.2 billion in Harvard’s research funding. The district court found the government’s actions unlawful, concluding the freeze and its accompanying demands violated the First Amendment and were arbitrary and capricious. The case now moves to the 1st U.S. Circuit Court of Appeals.
Why It Matters
