In higher education, the promise of AI often gets tangled in dreams of transformation, while institutions quietly hemorrhage from inefficiencies. Too often, the focus is on revolutionizing pedagogy, when the immediate crisis is operational survival. Efficiency and transformation aren’t mutually exclusive; efficiency is the precondition that allows transformation.
Recently, I found myself in a heated debate with colleagues who are respected experts in higher education and acutely aware of the mounting pressures on our institutions. The crux of our discussion was the role of artificial intelligence (AI) in higher education. Several expressed frustration that AI’s impact seemed confined to operational efficiencies, yearning instead for transformative educational experiences.
While I share the aspiration for AI to revolutionize learning, I challenge the notion that enhancing institutional efficiency is a disappointment. In today’s volatile landscape, operational efficiency is no longer optional; it’s essential for survival and the most reliable way to fund and de-risk transformational bets.
In this dire context, AI’s immediate value lies in preserving educational missions under threat. Colleges and universities are not just facing temporary budget cuts but a fundamental shift in how they must operate to survive. When budgets tighten and enrollment falls, institutions must first steady the core, stabilize operations, reclaim resources, protect quality, and create the runway for bigger changes.
A Stark Reality: Higher Ed in Crisis
Consider the sobering data highlighted in BestColleges.com‘s article, “Tracking College Closures and Mergers“:
Since March 2020, at least 79 public or nonprofit colleges have closed, merged, or announced closures or mergers, affecting nearly 48,000 students.
A December 2024 report by the Federal Reserve Bank of Philadelphia identified fiscal challenges and an impending enrollment cliff as primary predictors of college closures.
The report’s worst-case scenario (triggered by a sudden, significant enrollment drop) estimates that as many as 80 colleges could close, affecting more than 100,000 students and 20,000 staff members.
SHEEO and the National Student Clearinghouse Research Center found that only 47% of students affected by a college closure between 2004–2020 re-enrolled elsewhere.
The ripple effects on students, families, and communities are profound, leaving behind a trail of defaulted student loans, widespread staff layoffs, and the closure of businesses whose very survival depended on the lifeblood of these institutions.
Even well-resourced institutions are not immune. Brown University is grappling with a $46 million structural deficit. According to the Office of the Provost, without operational changes, this deficit is projected to exceed $90 million next year, with continued increases in subsequent years (Brown University). Temple University has forecasted a $60 million structural deficit for 2026.
