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Universities face rising liability risk as enrollment pressure strains budgets

Risk and insurance executives warn that cost cutting tied to declining enrollment could increase claims, especially on the liability side.

Reported · Written up by our desk · Liability Insurance

Risk & Insurance reports that declining enrollment and other headwinds are straining college and university finances, leaving schools with fewer dollars to manage exposures that can translate into more claims. Gallagher managing director Stacie Kroll said institutions are being squeezed as expenses rise at the same time revenues fall, and insurers are watching for an increase in liability losses.

The outlet also cites concerns around campus-related incidents and legal issues, including protests, occasional violence, and disputes tied to antitrust and sexual misconduct, which it says have tarnished higher education’s image. Christine West, vice president and chief underwriting officer of education at CM Regent, a subsidiary of Church Mutual, said enrollment pressure is most acute for private colleges and universities.

According to National Student Clearinghouse Research Center findings referenced in the story, fall 2025 post-secondary enrollments totaled 19.4 million, a 1.0% increase year over year. Growth was driven by community colleges, while private four-year institutions saw declines of 1.6% at nonprofit schools and 2.0% at for-profit institutions.

West added that stagnant enrollment reflects students and families focusing more on value and return on investment, with tougher questions about cost and career outcomes. She said insurers are seeing early signals that some institutions may be forced to make additional cuts that could create new vulnerabilities.

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