Colleges are confronting a cost shock as the Higher Education Price Index hit 3.6 percent in 2025, above prior expectations and outpacing recent decade averages. Institutions face volatile utility bills, higher living‑cost pass‑throughs and a rising price base even as enrollments and tuition revenue remain under pressure. Ratings agencies cited elevated operating expenses as a key reason for a negative sector outlook, and auditors warned of numerous hidden costs that can surprise campus budgets. The squeeze varies by institution, but officials say the combination of revenue headwinds and elevated costs demands tighter planning, modeling and contingency strategies. At the same time, a wave of closures and reconfigurations in 2025 underscores the sector’s sensitivity to such shocks: several institutions cited enrollment declines and budget shortfalls as primary drivers of program cuts and campus restructurings.