Recap: A Week of Conversations across Higher Education
Research Cuts, Debt Risks, and Workforce Rigidity—Some of Higher Ed’s Challenges
Why it matters:
Sometimes, the best insights don’t come from formal reports or industry briefings but from conversations with colleagues across institutions. This past week, discussions about federal research funding, institutional debt, and workforce challenges highlighted just how much uncertainty higher education is navigating right now.
Here are a few key takeaways from those conversations:
NIH Indirect Cost Cuts Could Reshape Research Universities
There’s growing concern over potential federal cuts to NIH indirect costs, which—if they stand—could have an outsized impact on private R1 universities. Many have over-leveraged to finance large research facilities and other infrastructure projects, assuming indirects would always be there to service the debt.
State flagships that borrow independently to finance research facilities and infrastructure may face similar challenges, though many state institutions (which don’t have the same borrowing authority on their own) are less exposed. If substantial reductions in reimbursable indirect costs move forward, expect significant financial and operational disruptions across institutions that are over-leveraged.
A Shift in Federal Research Priorities?
A preeminent researcher I spoke with pointed out that NIH funding has been on an exponential growth curve for 20 years, making it a natural target for budget reductions. So far, colleagues haven’t seen similar proposed reductions at NSF or DOD, but there’s a growing sense that a redistribution of federal research dollars across priorities and the public and private sectors is coming.
Rather than permanent, draconian cuts to overall research investment, my conversations suggested:
Shifting priorities for research: More rebalancing of funding across agencies (NIH, NSF, DOD, DOE) with overall net reductions in the near term.
Rebalancing between public and private research investment: A shift in research dollars between higher ed and the private sector, particularly when it comes to the development side of “research and development.”
Too much “panic theater”: At best, lower federal research budgets for the next few years, but the “panic theater” around “existential threats” to the federal research enterprise is overblown.
For research-intensive institutions, this may mean a new era of diversification—not just in funding sources, but in how institutions align their research priorities with shifting federal interests.
Collective Bargaining & Workforce Rigidity
A colleague whose IT division operates under collective bargaining agreements shared how difficult it is to adapt staffing models to shifting institutional needs, particularly as budgets are reduced and new initiatives like AI take root. Unlike at my institution, where there is no collective bargaining, his ability to realign staff to different services and priorities is heavily constrained.
This made me wonder:
How much are perceived workforce inflexibilities contributing to some of the recent reorganization and layoffs in federal agencies?
How are institutions balancing workforce stability with the agility required to meet evolving technology and service demands?
As higher ed and government agencies adjust to budget cuts, workforce models that lack flexibility may face increasing stress.
Final Thoughts
It’s been an interesting week—lots of conversations that point to major financial and structural shifts coming for higher education. How institutions prepare for these changes—whether through financial restructuring, revenue diversification, or workforce adaptability—will determine who weathers the storm more easily.