Some are calling this week’s Wall Street Journal article about Syracuse University’s financial woes the proverbial canary in the coal mine for higher education.

In case you missed it, the article cited concerns such as Syracuse’s 1.5% operating deficit and declining enrollment in spite of its heavy use of financial aid to discount the almost $100k annual tuition costs.

To be sure, an institution with a reported $2.2 billion dollar endowment isn’t going anywhere soon. But Syracuse is amongst a growing number of colleges and universities that have either recently reported negative financial results or have closed their doors. The big three credit rating agencies all issued negative outlooks for the sector at the end of 2025 as well.

Syracuse’s Chancellor, J. Michael Haynie, dismissed the severity of the outlook saying, “a 1.5% budget deficit is far from a crisis”. I’m not so sure.

Of course, he wouldn’t state so publicly. However, I do feel many in Chancellor Haynie’s position don’t fully appreciate the business their in or that the environment they’ve operated in for almost four decades is fundamentally changing.

Haynie himself has attributed the struggles to everything from the Trump administration’s crack down on international student enrollment (for which schools like Syracuse depend on) to the lack of national exposure from poorly performing athletic programs. For sure, these contribute to their woes but I fear he’s missing the bigger picture.

Similarly, Haynie sites plans to improve the University’s prospects which include capitalizing on a new semiconductor plant being constructed in the region as well as creating new academic programs aimed at students who want to become influencers . We truly live in a new world.

What Haynie is missing, or not admitting, is that universities have enjoyed decades of rising prices fueled by the Federal Student Loan Program. I’m not debating the program’s merits one way or the other, but pointing out its economic consequences.

Imagine your customers were able to take out loans, regardless of credit-worthiness, to purchase your goods or services. Is it any wonder college tuition and fees jumped 700% in the past forty years, over three times the rate of inflation?

During that time what did universities do with that kind of pricing power? They built buildings, added programs, and hired faculty to support it. Translation—they added billions in fixed costs.

That’s the concern with an apparent minuscule 1.5% operating deficit. When your business is loaded with fixed costs, you don’t have much room to adjust when demand declines. To further their problems, much of their recent expansion was debt funded.

Syracuse reportedly had 460 different degree programs compared to a peer average of 200. Of the 93 programs Syracuse decided to sunset, 55 had zero students enrolled. That’s like a manufacturer having 460 SKUs and only reducing 93 with 55 of those having zero sales.

The $100,000 annual tuition was not a misprint. Only 21% of students pay the full price and many of those are likely international. But students and their parents nationwide have begun questioning the value of college degrees even as institutions like Syracuse discount heavily through financial aid. And this is the key point. The debt that fueled university’s growth over the past decade has stopped providing demand even at discounted prices.

So what do higher education’s woes have to do with our businesses? Quite a lot.

The lesson is really simple. The environment has shifted for universities and they don’t structurally appear to be able to adjust in time. It got me wondering about our current environment with AI and whether or not we’re all behaving like Chancellor Haynie.

Many conversations around AI have been binary. Will AI replace me or my industry or am I safe? But what if AI doesn’t replace you or your business? What if it eliminates 5% of your pricing power? Can your business survive? Or, like Syracuse, do you have costs or other structural factors that hamper your response?

AI is set to unleash potentially huge productivity gains, but who captures the value of that productivity? You? Your customer? Your competitors? The new startup that doesn’t have your fixed costs?

I think this supports the often cited quote of, “AI won’t replace you, but someone using AI might.”

Therein lies the risk of not adopting or at least not planning a response.

None of us can predict how all of this will play out or what it will do to your industry or whether your business is vulnerable. You can stress test it though.

Imagine, tomorrow, the market price for what you sell falls by 20%. What happens to profit?

Then ask yourself how quickly the business could actually adapt if that became reality. Could you reduce costs fast enough to preserve margins? What would stop an AI-enabled competitor from profitably charging 20% less than you? And which parts of your current economics depend on environmental conditions that may not last?

The answers may be reassuring. Maybe your brand gives you real pricing power. Maybe location, customer relationships, proprietary data, or switching costs make you difficult to replace. Maybe your business depends on physical infrastructure that AI can't reproduce. Or perhaps AI allows you to reduce costs even faster than prices fall.

Good or bad, It’s worth finding answers to those questions sooner than later. The other uncertainty is how fast these changes could arrive. Universities have been a train-wreck decades in the making and failed to adjust. We may not have a fraction of that time.

The predicament universities find themselves have less to do with academic programs or success in athletics. The problems are structural and their coming home to roost. Universities are notoriously slow responding to any sort of change and I would predict disruption and consolidation over the coming decade. College as we all knew it won’t be the same for the coming generations.

In truth, we’re all at risk to a business environment that is changing faster than we’ve ever experienced.

Warren Buffett famously stated, “There’s nobody’s predictions that we’re interested in, including our own.”

I think this holds well. We can’t predict but we can prepare as if.

My goal with The Leap is to provide you each Saturday with the knowledge, tools and lessons learned to help you get started and keep going toward building your future. 

Whether you are making the leap to startups, solo-entrepreneurship, freelancing, side hustles or other creative ventures, the tools and strategies to succeed in each are similar.