Higher education’s cost pressures deepened in 2025 as the Higher Education Price Index topped expectations, registering 3.6% inflation that outpaced prior-decade norms. Colleges told Commonfund and rating agencies that utilities, wage inflation, and volatile vendor costs are pushing operating expenses higher even as enrollment and federal research funding face headwinds. Fitch and other analysts flagged elevated operating expenses as a key reason for a more negative sector outlook in 2026. Institutions with concentrated exposure to research funding or declining enrollments reported acute stress; small colleges and community colleges face particular vulnerability to single events that can upend budgets. Institutional leaders are being urged to sharpen multi-year financial modeling, preserve cash reserves and consider strategic restructuring of services. The cost-side squeeze complicates long-standing conversations about tuition, aid and enrollment-driven revenue strategies.