Although full-time college enrollment increased by 3.6% in 2025, funding on a per-student basis dropped 1%, marking the first decrease in per-student funding since 2012, according to a new higher education finance report. The reduction in per-student spending – from $12,205 in fiscal 2024 to $12,082 in fiscal 2025 – comes despite a record high of $130.7 billion in state and local appropriations for higher education, according to a new report from the State Higher Education Executive Officers Association (SHEEO).
Net revenue from tuition and fees, adjusted for inflation, also dropped by 3.5% to $7,459 per full-time student in 2025. However, those decreases are largely due to increases in state financial aid and minimal growth in tuition rates, the report states.
The two downward trends mean greater financial pressure is on the horizon for public institutions, and officials at the State Higher Education Executive Officers Association, or SHEEO, which released the report, say the reduction in per-student spending that took place in 2025 signals a new era of uncertainty in funding for higher ed. “While we are encouraged that public funding remained strong in 2025 and enrollment has continued to recover from pandemic lows, the first reduction in per student funding in more than a decade suggests we are moving into a period of increased volatility,” said Rob Anderson, president of SHEEO.
The bigger picture:
Although enrollment has been slowly recovering since COVID, a looming “demographic cliff” remains due to low birth rates in the U.S. The Western Interstate Commission for Higher Education projects that the nation’s total number of high school graduates is expected to begin a gradual decline through 2041 – to about 3.4 million after having reached a peak of between 3.8 and 3.9 million students in 2025. These trends will undoubtedly impact revenue for colleges and universities.
Community colleges could be hit particularly hard. Spending per full-time student decreased 1.8% at two-year institutions compared to 0.6% at four-year institutions, the SHEEO report states.
One bright spot is that state public financial aid per full-time student reached an all-time high in 2025 at $1,271 per student – a 5.1% increase from the previous year. “These funds made up 9.3% of all education appropriations,” the report states. It notes that increases in financial aid took place in 26 states and Washington, D.C., within the last year.
