Challenges in Higher Education

13th Avenue on the UO campus in Eugene
A Challenging Economic Forecast for Higher Education

Page last updated: May 13, 2026

A structural shift, not a passing storm

Across the country, higher education is in the middle of a generational change. It is likely not a cyclical downturn that will pass with the next economic recovery, and it is likely not unique to any one institution. Two long-running trends—a shrinking population of young people and decades of decline in state funding for public universities—are converging at the same moment, and together they are reshaping what it takes for a public research university to remain strong.

In a fall 2025 Chronicle of Higher Education survey of 275 administrators with direct budget authority, more than 75 percent said their institutions must make changes to continue fulfilling their mission.  

The University of Oregon is navigating these forces alongside our peers. Understanding what is happening, and why, is the starting point for the work ahead.

Fewer children, fewer students

The most important fact about higher education's future is one of the simplest: there are fewer young people. U.S. birth rates began falling in 2007 and have not yet recovered. That generation is now reaching college age. The Western Interstate Commission for Higher Education projects that the number of high school graduates in the United States peaked in 2025 and will decline through 2041, falling roughly 13 percent nationally. The decline will be steeper in the West, where projections show a drop of about 20 percent.

This is not an abstract forecast. It is already visible in Oregon's K-12 schools. A recent New York Times analysis found that public school enrollment in Oregon fell 9.4 percent between 2014 and 2024, the sixth-largest decline of any state. Portland Public Schools, the state's largest district, has lost 9 percent of its students and faces a $50 million budget shortfall, layoffs, and possible school closures.  Demographics give us a long runway to see what's coming. The high school seniors weighing college decisions this spring started kindergarten thirteen years ago. The freshman class of the late 2030s is in kindergarten today, and there are fewer of them.

State investment has not kept pace

At the same time the pool of students has been shrinking, investment in public universities by states has fallen. Oregon has long ranked near the bottom nationally in per-student state appropriations for higher education. To keep tuition affordable for Oregon students, particularly first-generation students and those from low-income backgrounds, public research universities have had to find other ways to balance their budgets.

Researchers studying public universities nationally have documented what has followed: as state support declines, institutions rely more heavily on non-resident tuition. The effect is strongest at research universities like the UO, which are best positioned to attract students from outside the state.

That model has traditionally worked. It has also made the UO more dependent on national recruitment in an increasingly competitive market—one where every public research university is reaching across state lines for the same shrinking pool of students.

 

Colleges and universities across the country are facing tough economic headwinds. The University of Oregon is no exception.

Like universities across the nation, the University of Oregon faces significant economic headwinds. These include declining high-school-aged population, competition from other leading colleges and universities, cost pressures from the federal government and state policy, and under-investment in higher education at the state level. Those challenges are particularly acute in Oregon, where the state’s budget stability has been shaken by the ripple effects of recent federal actions. According to the state’s March 2026 revenue forecast, the total impact in the current biennium will be an $888 million reduction to revenue. These losses threaten already limited higher education funding. 

Universities across the country also continue to assess the potential impact of federal actions and executive orders. This includes federally awarded research grants and the entire research infrastructure that supports those grant-awarding entities. Universities across the country stand to lose billions in funding, and the impacts are expected to affect both universities and the broader local economies that depend on them. Many of our AAU peers and other universities enacted financial austerity measures in anticipation of the loss of revenue. Financial pressures are already reshaping campus life, with many universities cutting academic programs, reducing staff, and limiting student services in order to remain financially sustainable in the face of increasing pressures on higher education.

 

Budget shortfalls are a national trend

A November 2025 analysis by the Pew Charitable Trusts found that state university systems in at least eight states are taking cost-cutting measures to address significant budget shortfalls, while proposed federal cuts to NIH and NSF funding threaten the research enterprise that sustains many institutions. 

All three major credit rating agencies have issued unfavorable outlooks for higher education in 2026. Fitch Ratings described a “deteriorating” credit environment, while Moody’s and S&P Global issued similarly negative assessments, citing enrollment declines, rising costs, and federal policy uncertainty. A January 2026 roundup by Higher Ed Dive noted that all three agencies predicted a grim year, with Moody’s estimating that revenue growth would trail expense growth across the sector. 

A March 2026 report from Deloitte identified six converging trends shaping higher education in 2026, including the elimination of Grad PLUS loans, continued enrollment pressures from the demographic cliff, and intensifying competition for a shrinking student pool 

Partial list of Budget Reductions in Higher Education

Below is a partial list of budget reductions in higher education as reported by various news sources. This information was gathered from publicly available sources for comparative purposes and is not comprehensive. This list was last updated April 1, 2026. 

Boston University

Brown University 

University of California, Los Angeles 

University of California, Santa Barbara 

  • ~10-12.95% unit and department budget reductions; hiring freeze 
  • Coverage: Daily Nexus 

University of Chicago 

  • $160 million budget shortfall; staff reductions; 200 employees accepted voluntary retirement incentive; pauses and reductions in PhD admissions; program reorganization 
  • Coverage: Higher Ed Dive, The Chicago Maroon 

Cornell University 

  • Workforce reductions planned through multi-phase cost containment strategy; employee layoffs; hiring freeze in place with limited exceptions; administrative restructuring and centralization underway; shift from $23 million operating surplus (FY2023) to $176 million operating deficit (FY2024) 
  • Coverage: Higher Ed Dive, Cornell Review (1), Cornell Review (2), Forbes 

Duke University 

  • $364 million cost-cutting program in 2025; hiring freeze, reduction of non-personnel expenses, and staff and faculty reductions through voluntary separation incentives and layoffs, affecting nearly 700 positions 
  • Coverage: The Duke Chronicle, Higher Ed Dive 

George Washington University 

  • Undergoing position management review process following hiring freeze; additional workforce reductions under review; admissions paused to five PhD programs  
  • Coverage: GW Hatchet, Inside Higher Ed 

Indiana University, Bloomington 

  • Voluntary retirement program; merging and cutting of degree programs; elimination of unfilled positions; reduction of about $100 million in expenses for FY2026 
  • Coverage: Inside Higher Ed, Indiana Public Media, IU Today 

University of Kansas 

  • $32 million in budget cuts for the Lawrence and Edwards campuses; $39 million cut for KU Medical center; 20% reduction in university travel budgets; another 5% in budget cuts through targeted expense reductions in various departments; hiring freeze 
  • Coverage: Lawrence Journal-World, The University Daily Kansan 

University of Maine 

Michigan State University 

  • 9% general fund reduction over two years, including 6% in FY2025–2026; 182 positions eliminated between March 1 and October 14, 2025 
  • Coverage: Yahoo News, Inside Higher Ed 

University of Nebraska-Lincoln 

  • $27.5 million in budget reductions, including $6.5 million in proactive cuts through elimination of several academic programs; $40 million in cuts across NU system 
  • Coverage: Nebraska Examiner, Nebraska Public Media 

University of North Texas 

Northwestern University 

  • 425 staff positions eliminated (roughly half vacant); ~5% budget reduction 
  • Coverage: Inside Higher Ed 

University of Pennsylvania 

  • 4% cut to non-compensation expenses at all schools and centers in FY2027, in addition to a 5% reduction in FY2026; staff hiring freeze; freezes on midyear adjustments in staff salaries 
  • Coverage: The Philadelphia Inquirer, The Daily Pennsylvanian 

Penn State University

  • Preliminary recommendation to close 49 of 403 baccalaureate and associate degree programs as part of the Academic Program and Portfolio Review (APPR); 906 undergraduate students (~1.3%) currently enrolled in affected programs; 26 of the 49 programs would continue to be offered through another college; final decisions expected fall 2026 following community feedback period through mid-May
  • Coverage: Penn State News

Portland State University 

  • $35M structural deficit; 17 non-tenure-track faculty layoffs in Dec. 2024; entered formal retrenchment with 19 departments identified for cuts (3 for elimination, 16 for reduction/change); additional layoffs expected 
  • Coverage: PSU President's message, OPB, OregonLive, Higher Ed Dive 

University of Southern California 

Southern Oregon University 

Stanford University 

Temple University

  • $85 million projected deficit for FY2027 operating budget; Voluntary Retirement Incentive Program (more than 70 faculty); transition to centralized "One Temple" budget model effective July 1; school/college budget reduction targets with anticipated reductions in force; review of severely underenrolled academic programs
  • Coverage: Temple Now, The Philadelphia Inquirer

University of Wisconsin-Madison 

  • 5% cuts to all schools and colleges in FY 2026; 7% cuts to all administrative and other departments 
  • Coverage: Wisconsin Public Radio