Unsteady state investment

While flagships are “politically strong,” they are still susceptible to state budget cycles, said Jeff Doyle, a longtime university administrator who serves as Executive Director for Student Support at the University of Texas at Austin. UT Austin is one of two flagship institutions in the Lone Star State. The other is Texas A&M’s campus at College Station, Texas.

Higher education is often “easier for states to cut” than K-12 education because its funding has a robust set of formulas around it, Doyle said. For instance, Title I funding provides supplemental financial assistance to school districts with high percentages of children living in poverty.

“The danger is not always a visible cut,” Doyle said of cuts to higher education. “It can be a ‘flat’ appropriation that fails to cover salary increases, health insurance, deferred maintenance, utilities, IT security, debt service and compliance costs.”

While there has been some recovery in recent years, according to Stephen Burd, Senior Writer and Editor with the education policy programme at New America, a left-leaning think tank based in Washington, D.C., many states have seen “substantial decreases in per-student higher education funding, forcing those universities to charge more”.

“States have a limited pot of money, and when they have shortfalls, they tend to shortchange their public colleges and universities because they know these institutions can raise their tuition and leave students and families carrying more of the load,” Burd said.

An April 2026 report from the State Higher Education Executive Officers Association (SHEEO) found that while full-time college enrolment increased by 3.6 percent in 2025, funding on a per-student basis dropped 1 percent, representing the first drop in per-student funding since 2012. That reduction in per-student spending – from $12,205 in fiscal 2024 to $12,082 in fiscal 2025 – took place despite a record high of $130.7 billion in state and local appropriations for higher education.

But the one-year drop must be viewed within a broader context. The SHEEO report notes that inflation-adjusted education appropriations per full-time enrolment were actually 9.2 percent greater than before the Great Recession of 2008, and 16.4 percent greater than before the pandemic in 2019.

“Per-student state funding is near a 25-year high nationally, but state funding is unlikely to keep up with inflation going forward as state budgets tighten substantially,” Kelchen said.

Burd said since Congress slashed federal spending on Medicaid by about $911 billion over the next decade, with the most significant cuts starting in January 2028, states will be “under tremendous pressure to make up for these cuts”.

“And that will likely mean more severe state disinvestment from public higher education as a result,” Burd said.

A drop in international student enrolment

According to The Global Enrolment Benchmark Survey – published by several organisations, including NASFA – foreign student enrolment at US universities fell 20 percent among undergraduates between spring of 2025 and spring of 2026. Among graduate students, international enrolment fell even more – by 24 percent. There were about 1.17 million international students studying in the US in the 2024-2025 academic year.

“Many flagships use international enrolment, especially graduate and STEM enrolment, to support tuition revenue, research, assistantships, and programme viability,” said Doyle, the UT Austin student support administrator.

“International enrolment is a factor affecting the budgets of flagship public universities, with wealthier institutions generally being affected more than others,” said Robert Kelchen, Professor and Head of the Department of Educational Leadership and Policy Studies at the University of Tennessee, Knoxville.

Two-thirds of the global survey respondents indicated that concerns about visas and government policy were the biggest drivers of the drop in international enrolment.

“Many describe how policy volatility directly suppressed realised enrolments, converting offer-holders into deferrals, late arrivals or losses to alternative destinations,” the survey states. “Universities frequently connect affordability and policy risk, suggesting that concerns about return on investment for students, magnify the impact of uncertainty.”