Challenges Facing Higher Education Institutions

Challenges Facing Higher Education Institutions

There has been no greater impact on higher education than COVID-19.

It’s transformed how colleges and universities provide education overnight, creating significant financial distress and uncertainty across the sector.

Enrollment Projections for the fall semester are constantly changing.

Students are deciding to take a gap year. International students may not be able to return to campus. And there is a threat of continued virtual learning.

Schools are also facing an uphill battle financially.

Many schools had to refund room & board from Spring 2020. Others need to make up for lost revenue from cancelled athletic programs.

COVID-19 isn’t the only challenge that schools face.

There has been extensive pressure due to declining enrollment. Lower high school graduation rates, attractive alternatives to higher education, and sky rocketing education costs have all driven down enrollment.

In addition to COVID-19 and declining enrollment, higher education faces numerous other challenges.

Underutilized, fixed assets are reducing EBITDA and cash flow, resulting in debt and covenant defaults. Traditional lenders are looking to exit the sector while non-traditional lenders are slowly entering, bringing a higher cost of capital with them.

Other challenges include…
  • Virtual courses are changing education delivery and stealing market share from campus-based schools.
  • Schools with high-discount rates and smaller endowments can’t compete with larger, more well-funded schools when it comes to an overall student experience.
  • There is also increased regulatory scrutiny throughout the sector.

What can higher education institutions do?

  • Managing, preserving and improving liquidity is critical.
  • Address near-term and long-term financial and operational challenges right now.
  • Develop a sustainable, bottoms-up financial plan.
  • Create a process to engage all stakeholders (administration, faculty, students, parents, alumni/donors) in structuring a plan towards success and profitability.
  • Financial planning and cost mitigation plans are a necessity since budget shortfalls are already happening.
Carl Marks Advisors is ready to step in to support an overstretched and understaffed administration, and work with the President and Board of Trustees, to ensure the best outcome for the continued success of the school.
  • We have extensive experience helping higher education institutions improve their financial stability and operations.
  • Our comprehensive perspective is the product of years of hands-on experience, providing guidance to lenders, investors, administrators and trustees.
  • We understand that the decisions made today will have an amplifying profound impact on a school’s long-term viability.

For more information on the challenges facing higher education or to learn how Carl Marks Advisors can help, contact us or email

Sign Up for Our Newsletter

This field is for validation purposes and should be left unchanged.