University business officials survey find risks, flexibility

up to date Internal Advanced ED/Hannover’s research survey of universities and university chief business officers released today reveals concerns about near-term uncertainty and financial sustainability, which are confidence in the long-term prospects.

One of the most important findings is that federal policy uncertainty creates difficulties in carrying out basic financial planning as the Trump administration introduces a series of changes that affect higher education, international students, how students pay for college, etc.

Experts point out that this uncertainty has had a clear impact on the industry.

“Chief business officials like certainty, whether it’s certainty about revenue streams or potential costs,” said Kara Freeman, president and CEO of the American Association of Colleges and University Business Officials. “Now they just don’t get it, and that causes anxiety.”

The annual survey of chief business officers of the college and university has now reached 15 years and it provides insights from financial leaders across 169 institutions in 2025, including public and private nonprofits. Responses to April and May collection.

Among the uncertainty, about one in five CBOs (58%) rate their institution’s financial status as good or excellent, and vary by type of institution.

Stress test

In last year’s survey, 56% of CBOs expect their institutions to be financially better after a year. In this year’s survey, that number dropped to 43%, raising the same question.

Thinking that its institution’s CBOs will be economically worse next year, citing concerns about the industry’s federal policy/funding environment (82%), potentially increasing non-labor operational costs (67%), rising labor costs (67%) and general economic problems (62%) (62%).

Larry Ladd, a subject matter expert at AGB Consulting, notes that universities are taking many measures to protect themselves, such as delaying construction projects, freezing recruitment and/or travel, and pulling other levers to protect themselves in the upcoming fall.

“You’re seeing colleges do their best to retain liquidity,” Rad said. “The biggest reason for this is of course they don’t know what their fall enrollment rate is.”

He noted that particular concern was that this attracted attention to spending given the massive layoffs by the Department of Education, which is the potential for disruption to the federal financial aid fund. Only 12% of CBOs support eliminating the sector.

Other possible signs of caution: At the time of delayed maintenance, 63% of respondents said their agency was expected to fund less than a quarter of certain demand during the fiscal year at that time. About 24% say their institution is freezing recruitment to control the cost of students. Another 62% said their institution would consider doing so.

Despite these challenges, respondents were more confident about the five to ten-year prospects of their institution, with 73% of whom believed their college or university would remain financially stable over the next five years, while 71% expressed the same confidence over the next decade. For reference, in 2024, 85% of CBOs are confident in the five-year outlook, compared with 73% of the 10-year outlook.

About 11% of CBOs said that in the last year, internal discussions about mergers with another university or university were the same as last year’s survey. Most of these CBOs show that this conversation is about actively ensuring the financial stability of the institution, rather than the risk of an imminent closure.

Another 16% of CBOs reported strict internal discussions about merging certain courses or operations with another university or university. Two out of one in five (42%) said their colleges would likely share administrative functions with another institution within five years. The CBO in the Northeast is particularly likely to be 63%.

Beyond the Fog

Ruth Johnston, vice president of Nacubo Consulting, said that while business personnel may be under direct pressure, they have confidence in what they will be like in the future.

“I think we’ll figure that out. Higher Eds, even if it’s slower, are resilient. So I hope we’ll see new creative solutions that will help strengthen higher education,” Johnston said.

That is to say, only 28% of CBOs believe they are very confident in the current business model of the organization. Another third indicates moderate confidence.

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The most important issues for those CBOs who are on the business model of the institution are: the lack of diversified revenue streams (64% of the group), ineffective cost containment and/or operational efficiency (54%), and insufficient cash reserves for “rainy days” or strategic investments (50%).

Tuition discounts are another important issue. Of all CBOs, more than half (54%) are concerned at least at least the financial sustainability of their institution’s tuition discount rate; two out of ten (21%) are highly concerned. Likewise, 50% of CBOs are at least concerned about the sustainability of rising prices for their institutions’ tuition labels. In both cases, private nonprofit CBOs are the most concerned sectors.

Respondents also believed that government efforts to influence institutional strategies and policies are an increasing risk to institutions, with 71% viewing it as a problem. That figure is slightly higher than last year’s 65%.

CBOs have paid much attention to efforts made by donors that impact institutional strategies in 2025, while 16% are concerned that this amounts to an increase in financial risk to their college or university.

At least internally, about 81% of CBOs agree that they have enough agency influence in their institutions to ensure their financial stability. Most also report strong working relationships with the president and understand the trustees’ understanding of the financial challenges facing the institutions.

Survey respondents were particularly concerned about federal student aid policies, with the vast majority viewing it as the highest risk associated with federal policy over the next four years, accounting for 68%. Some experts believe that concerns about other federal policy matters could be exacerbated if the investigation was conducted after a large Beauty Act passed earlier this month. It includes significant changes in higher education, as well as cuts in other public programs that may have a downstream impact on the industry.

“The bill has both direct and indirect implications, some of which have not been explored by universities and universities yet,” Rad said. “I thought of Medicaid cuts, even if those cuts will have an impact on universities.”

When asked about the general financial risks to their institutions over the next five years, many CBOs (especially the public) will also change changes in state and federal policies, as well as the reduction in state and federal funding. There are also declining enrollment rates, staff costs and infrastructure, and delayed maintenance costs.

As for what best improves the financial status and sustainability of an institution, the highest response from a list of choices by CBO is: increasing enrollment through targeted recruitment and improving retention programs; optimizing operational efficiency through improvements and strategic cost management; and in more distant options, strategic partnerships with employers, community organizations and/or other educational institutions. Cutting teachers and cutting staff are particularly unpopular.

When asked about value and affordability, CBOs largely agreed that their institution provides good value for the fees for undergraduate degrees (93%) and its net price is affordable (88%). Two-thirds (65%) said their institutions addressed institutional financial assistance/grants to address affordability last year.

The survey also found that CBOs are increasingly using artificial intelligence. Nearly half of respondents (46%) showed that AI could help them make smarter decisions. This figure is up from 33% in last year’s survey.

Despite some growth, most institutions’ respondents have not yet gone all out. Only 6% of people report that their universities have made comprehensive strategic investments in AI. But many are experimenting: 39% of CBOs point out that their institutions are in the early stages of AI exploration, while another 28% drive such tools in certain departments.

“AI stay here,” Johnston said.