Like universities across the nation, the University of Oregon faces significant economic headwinds. These include declining high-school aged population, competition from other colleges and universities, cost pressures from the federal government and state policy, and under-investment in higher education at the state level.
Universities across the country also continue to assess the potential impact of a number of federal actions and executive orders. This includes a potential cap on indirect funding from grants, reimbursements that cover a portion of universities’ facilities and administrative costs. If this or similar actions move forward, universities across the country stand to lose billions in funding, and the ripple effects are expected to affect both universities and the broader local economies that depend on them. Many of our AAU peers, as well as universities across the country, have already issued financial austerity measures in anticipation of the potential loss of revenue.
Budget shortfalls are a national trend
Global management firm McKinsey estimates that 57% of private and 77% of public institutions are facing budget shortfalls across the nation. In early February, Maryland’s governor, Wes Moore, announced a proposed reduction of $111 million to the University System of Maryland that would cut 400 jobs to its public universities. The California university systems are facing similar futures in Governor Gavin Newsom’s budget proposal. If passed, California State University and University of California would see hundreds of millions of dollars in reduced funds.
The ratings agency Fitch recently came out with a report describing a “deteriorating outlook” for higher education, driven by uneven enrollment, rising competitive pressures, and continued margin pressures. “Sector consolidation is likely to rise in 2025 … Even public institutions, which have long been more insulated from sector pressures, may be forced to consider drastic budgetary decisions to remain sustainable.”
There are fewer young Americans of college age
According to the Centers for Disease Control, the U.S. birth rate began dropping 17 years ago — falling almost 23% between 2007 and 2022. There are simply fewer 18-year-olds in the country looking to enroll in college. This will increase competition among institutions for enrollment and impact net tuition revenue. Axios
There is increased skepticism about the value of a four-year degree
According to a recent Pew Research poll, roughly half of Americans (49%) say it’s less important to have a four-year college degree today in order to get a well-paying job than it was 20 years ago. And 34% say it’s extremely or very likely that someone without a degree could still get a well-paying job today.