As federal funding uncertainty intensifies—and some institutions also face tighter state appropriations—college leaders are being forced to revisit a financial model that already leaves little margin for error. New revenue strategies can help, but the most durable moves tend to build on existing strengths, avoid large upfront costs, and offer a realistic path to return on investment.
At the same time, many campuses are confronting the uncomfortable reality that meaningful savings often require changes inside the academic enterprise itself, not just back-office trimming.
An analysis of IPEDS data by EAB, a global education consulting firm formerly known as the Education Advisory Board, underscores why targeted funding cuts can hit hard. Across public, private, and research-intensive institutions, tuition and government funding dominate revenue streams.
Public institutions rely heavily on government support, with EAB estimating that it accounts for 61% of funding at public institutions, compared with 10% at private institutions and 26% at research-intensive universities. Tuition and fees remain another essential pillar, representing 23% of revenue at public institutions, 52% at private institutions, and 25% at research-intensive universities. Auxiliary enterprises and private gifts are rarely sufficient to compensate for large losses, making up only about 10% of funding for public and research-intensive institutions.
That reliance helps explain why many institutions are moving quickly on cost controls. In a March 2025 overview of budget pressures, EAB cited measures such as Stanford University implementing a hiring freeze, Penn State University considering the closure of twelve commonwealth campuses due to enrollment challenges, and St. Francis College conducting layoffs and selling its Brooklyn campus. These moves reflect a sector increasingly treating budget stresses as structural rather than temporary.
At Harvard, the stakes of federal research disruptions were laid out in stark terms. In an interview accompanying the university’s fiscal year 2025 financial report, Chief Financial Officer Ritu Kalra said, “About $116 million in sponsored funds—which are reimbursements for costs the university has already incurred—disappeared almost overnight.” Kalra added that Harvard closed the year with a $113 million operating deficit on a $6.7 billion revenue base.
Harvard’s leaders described cost controls familiar to many campuses, including a hiring freeze across the university, pausing salary increases for exempt staff, and delaying nonessential capital projects.
For institutions seeking new revenue, EAB argues that some popular ideas routinely disappoint because they require years to mature or demand investments that outstrip likely returns.
One example is launching new online microcredentials, often pitched as a quick win. EAB’s critique is that building microcredentials from the ground up can carry significant upfront costs—including faculty course development and staffing—while revenue expectations may not justify the investment.
A more promising approach, the firm suggests, is repackaging existing curriculum into non-credit offerings designed for employers, particularly in high-demand areas such as artificial intelligence and data science, where institutions may secure upfront payments to cover customization. That shift reduces risk. Colleges refine and repurpose what they already teach instead of betting on an entirely new product line.
EAB also recommends exploring corporate sponsorships beyond traditional athletics support. Expanding sports programs can be financially risky in a disrupted athletics landscape, while sponsorships tied to career fairs, hackathons, incubators, or innovation hubs can be easier to scale and may strengthen talent pipelines for students. Examples include tiered career services sponsorship packages and event sponsorship menus housed within academic units.
Other common fee-based approaches can be politically fraught and financially modest. Parking fee increases, for example, are often incremental and may be absorbed by maintenance or specific projects rather than generating flexible surplus dollars. A more meaningful alternative is renting underutilized campus spaces—recreation facilities, fitness centers, and specialized venues—to community members through memberships or hourly fees.
For research-focused universities, another temptation is to increase research output in hopes of generating commercial revenue. EAB cautions that research costs can outpace returns and that major gains often depend on rare “hit products.” Instead, the firm points to monetizing research infrastructure—renting out lab space and equipment to outside organizations during off-hours—as a more reliable option for campuses with specialized facilities.
None of these revenue strategies eliminates the need to confront costs directly. EAB estimates that academic costs make up at least 61% of expenditures across institutional segments, with labor serving as the largest driver at an average of 56% of total expenses.
The implication is direct. If institutions want significant, sustainable savings, they must evaluate instructional models, staffing patterns, and academic operations—choices that are often contentious but increasingly difficult to avoid as federal policy becomes a less stable pillar of institutional finances.
