Financial pressures continue to rise at an unprecedented rate in higher education. Declining enrollment, driven by the 2025 demographic cliff, reductions in research and government funding, and inflation, has further exacerbated these challenges. As a result, financial pressures consistently rank among the top risks identified by risk management professionals across both public and private institutions.
One of the most significant contributors to financial risk is the growing backlog of deferred maintenance. This issue has consistently appeared in United Educators’ Annual Top Risk Report, ranking sixth in both 2023 and 2024 and eighth in 2022. The cost of deferred maintenance can be staggering, and it grows each year as projects are delayed and additional needs emerge. Institutions are now at a crossroads, and they must determine how to address this escalating risk amid competing priorities.
Bringing Visibility to the Risks
From an enterprise risk management (ERM) standpoint, deferred maintenance touches every major risk category: financial, operational, strategic, compliance, and reputational. Recognizing its institution-wide impact can help risk leaders elevate the importance of this issue in conversations with executive leadership and governing boards.
For institutions with mature ERM programs, one of the most effective strategies is to highlight the broad implications of deferred maintenance across all areas of the university. The risks of inaction tend to be underestimated outside of facilities and finance, making cross-functional awareness and communication essential.
For tuition-dependent institutions, deferred maintenance is inextricably linked to enrollment. The condition of facilities, including residence halls, classrooms, dining areas, and recreation spaces, can directly influence prospective students and their families. Benchmarking campus facilities against peer institutions and connecting these comparisons to enrollm