The report, released this year, frames the challenge in stark terms.
"This moment in higher ed's history is defined not by a single shock, but by the cumulative weight of many," the authors write. "Political volatility, financial strain, demographic headwinds, and rapid advances in AI now reinforce one another, accelerating pressures that have been building for more than a decade."
What EAB describes as "upheaval on four fronts" — external accountability, financial sustainability, market relevance, and institutional agility — amounts to something more fundamental than a difficult stretch of budget cycles or enrollment fluctuations. The report argues that higher education's social contract with the public is being rewritten in real time, driven in large part by the Trump administration's aggressive scrutiny of campuses nationwide.
On the political front, the federal government has deployed policy, funding, and media pressure to push colleges toward compliance on issues ranging from DEI restrictions to new return-on-investment metrics. State legislatures have followed suit, restricting academic freedom and expanding oversight of faculty and governance. The net effect, EAB argues, is a wholesale renegotiation of what institutions owe the public in exchange for federal and state support. The report describes this as "less about any single executive order or funding cut and more about a fundamental rewriting of higher ed's social contract — one that increasingly links federal support to ideological alignment and measurable economic return."
The financial picture is equally daunting. EAB introduces the phrase "synchronized compression" to describe a scenario where every major revenue stream and expense category face simultaneous pressure — a condition the traditional higher ed business model was simply never designed to withstand. Labor constitutes 56 percent of all institutional expenditures, with half dedicated to instruction alone, leaving leaders with little room to maneuver. Meanwhile, enrollment growth over the past decade has become highly concentrated among just 175 institutions — online giants, Ivy Plus universities, large urban publics, and state flagships — while more than 2,100 four-year institutions compete in a stagnant or shrinking market.
Affordability constraints are deepening the enrollment crisis. The report notes that only 1 in 100 high school graduates with SAT scores above 1200 can afford a private college without financial aid — a stunning figure that underscores the widening gap between college costs and household capacity. College-going rates among young men continue to fall, adding another demographic dimension to an already precarious situation.
The third front involves market relevance in an AI-transformed economy. The report describes three converging forces: a generation of students arriving on campus less prepared academically and socially, a tightening labor market where more than half of new bachelor's degree recipients start out underemployed, and the rapid advance of artificial intelligence rewriting the nature of work itself. Since the launch of ChatGPT, junior-level positions have already begun declining relative to mid- and senior-level roles across 285,000 U.S. firms — evidence of what EAB calls the emergence of a "career diamond" structure that is squeezing out entry-level workers.
Yet the report resists pure pessimism. It argues that crisis and opportunity are moving together, and that institutions willing to act boldly can use this moment to reset priorities and rebuild public trust. For the authors, the path forward runs through transparency, accountability, and a willingness to make genuinely hard decisions — even unpopular ones.
To that end, EAB invokes a timeless piece of leadership wisdom from the late Rev. Theodore Hesburgh, the legendary Notre Dame president who led the university for 35 years: "Just ask what is the right decision … People, your people, will respect you … for doing what you thought right, even though they do not agree."
In an era when institutional leaders face votes of no confidence, faculty protests, and donor skepticism, that counsel may be easier cited than followed.
But as EAB makes plain, higher education has entered a period where delay itself carries a cost — and the luxury of incrementalism no longer exists.
