1. Institutions get serious about developing nontraditional revenue sources

There’s no sugar-coating it: Institutions are dealing with several daunting realities. In 2013, Harvard Business School professors Clayton Christensen and Michael Horn made a striking prediction in the New York Times, forecasting that “a host of struggling colleges and universities — the bottom 25 percent of every tier, we predict — will disappear or merge in the next 10 to 15 years.” Today, the higher education market has reached a phase of maturity and decline, characterized by market saturation, decreasing demand and the looming “enrollment cliff,” signaling contraction and a potential oversupply of institutions and programs. This is prompting institutions to rethink their strategies with approaches that include:

Moving aggressively to develop micro-credentialing programs. A 2023 report from Capterra found that 41% of U.S. organizations have dropped degree requirements for some jobs and 48% believe alternative credentials can be a worthy substitute for a college degree for some jobs. Disruptive programs like Grow with Google offer students a fast track to high-demand jobs, with career certifications leading to roles in fields with a median salary of $93,000.
Monetizing assets through innovation hubs. Universities are increasingly leasing space to establish innovation hubs, generating revenue while creating valuable learning and research opportunities for students. The University of Pennsylvania’s Pennovation Center is an example of industry and academia collaborating to provide pathways to commercialization.

2. Mergers and acquisitions accelerate, making restructuring a major issue

We’ll see a substantial uptick in merger and acquisition (M&A) activity in the year ahead, along with closures that force students and faculty to migrate to different institutions. Some 16 nonprofit colleges and universities reportedly announced closures in 2024, an increase from 14 last year, with most being small, private, tuition-dependent institutions that lacked substantial endowments.

Acquiring institutions will face integration challenges, including aligning cultures, meshing educational programs, merging systems and consolidating data and assets. Based on my experience in higher education restructuring and as a technology partner, increased M&A activity will drive the need for unified business technology platforms. Institutions that successfully integrate systems and data onto a single platform will become more streamlined, agile, as the following examples illustrate:

Streamlining operations and reducing costs: The Georgia State System consolidated several colleges to enhance educational pathways and resource efficiency.
Shared values and corresponding missions: Villanova University and Cabrini College, both faith-based institutions with closely aligned values, are collaborating to determine the optimal way to integrate and utilize the Cabrini campus for expansion to benefit students, faculty, staff and alumni.

3. A continued rise in unionization

Unionization is reshaping higher education, expanding from faculty and graduate student employees (GSEs) to student athletes. A 2024 report from National Center for the Study of Collective Bargaining in Higher Education and the Professions revealed a 7.5% increase in unionized faculty and a 133% surge in unionized GSEs since 2012. Meanwhile, student athletes are advocating for rights like fair compensation, healthcare protections and revenue sharing, spurred by recent legal shifts recognizing them as employees under the National Labor Relations Act. Specifically:

Driven by pay and workload concerns, faculty at New Mexico State University are advocating for equitable treatment, citing pay that is 20% to 30% below peer institutions and excessive workloads as key concerns.
Unionization of college athletes is sparking debate: Dartmouth College’s basketball team’s vote to unionize has raised the question of whether college athletes should be considered employees. Concerns include financial risks to non-revenue sports and the potential impact on athletic programs, while others argue for athletes’ rights to bargain for health, safety and compensation as part of the evolving collegiate sports landscape.

4. The politics of higher education

Legislation and public perception are playing a pivotal role in shaping the future of higher education. As political discourse increasingly intersects with academic policies, institutions are finding themselves at the center of debates about their purpose, governance and societal contributions. With the newly elected administration prioritizing an overhaul of the higher education system, further changes are expected, including:

A legislative overhaul: State and federal policies are reshaping higher education. State-level initiatives—such as Florida’s legislation on academic freedom, free speech and diversity restrictions—are redefining governance and curricula. Federally, the Higher Education Opportunity Act (2008) improved access and affordability. More recently, the College Cost Reduction Act (2024) has progressed through the House Committee on Education and the Workforce and awaits further consideration, signaling ongoing efforts to address affordability and reform student loan processes.
Evolving public trust: The value of higher education remains under scrutiny, with growing calls for greater affordability and transparency. University leaders must address these challenges while emphasizing the critical role of higher education in society and working to mitigate the $1.77 trillion student loan debt burden.

5. AI, of course

No trends list would be complete without artificial intelligence. AI continues to revolutionize higher education, offering solutions to improve academic outcomes, operational efficiency and student experiences. While AI cannot directly solve affordability issues, it helps optimize operational efficiencies, potentially reducing costs over time.

Instant Insights /

Watch for these 5 high-impact trends shaping higher education business in 2025

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