Higher education is entering a period of unprecedented financial volatility—and the first to feel the shockwaves aren’t just students. It’s the CIO trying to secure infrastructure budgets. The IT director planning long-term system upgrades. The program administrator fighting for tech resources. The AV architect tasked with future-proofing learning spaces. These are the decision-makers whose day-to-day responsibilities are already being reshaped by Washington’s decisions.  

With the recent dismantling of the U.S. Department of Education and sweeping cuts to grant-based programs like the Teacher Quality Partnership (TQP), higher education institutions are facing a stark new financial landscape. The erosion of federal oversight means fewer protections and less predictability for schools that rely on government support to maintain their operations.  

Federal education funding has long served as a lifeline—not just for students, but for the infrastructure that supports them. That lifeline is fraying fast.  

For IT departments and administrative teams, this translates to greater uncertainty around technology budgets, longer approval chains, and fewer guarantees for mission-critical upgrades that often stay behind the scenes but power the entire campus. As Moody’s Ratings recently warned, “The large and growing backlog of capital need poses a significant credit risk for the higher education sector” (Higher Ed Dive, 2024). 

For higher education administrators, program directors, and IT leaders, this isn’t just another belt-tightening cycle. It’s a moment of reckoning. In February, Northwestern University announced a 10% reduction in non-personnel funding due to financial uncertainty (Daily Northwestern, 2025). With future funding at risk, the ability to spend wisely now becomes not just an option—but a survival strategy. 

The New Normal: A Shrinking Support System 

The downstream impact of these cuts is far-reaching. In 2024, grants from the Department of Education totaled $150.3 billion, $5.5 billion of which was used specifically for a variety of school improvement efforts which included making better use of classroom technology (Pew Research, 2025). Without this pipeline, many institutions—particularly public universities and community colleges—will be left without the resources to support modernization initiatives or maintain current systems. 

Further complicating the picture is the sudden transfer of the $1.6 trillion federal student loan program to the Small Business Administration (SBA). As law school deans and financial aid leaders voiced in a recent Forbes analysis, this decision will “disrupt how tuition gets paid, how loans are processed, and ultimately how schools plan their budgets” (Forbes, 2025). Institutions that previously relied on predictable grant disbursements and long-term aid forecasts are now flying blind. 

CapEx vs. OpEx: Understanding the Stakes 

In this landscape, higher education institutions must be more strategic than ever about how they invest in the tools and infrastructure that keep campuses running. That starts with understanding the difference between capital expenditures (CapEx) and operational expenditures (OpEx): 

• CapEx involves up-front purchases of physical technology—hardware, AV systems, servers, or collaborative platforms. These are owned assets that provide long-term utility. 
• OpEx refers to ongoing subscription or service-based costs—cloud hosting, managed services, or SaaS tools—that are paid over time and classified as recurring expenses. 

Recently, institutions have leaned toward OpEx for flexibility and lower upfront spend. But in a climate where tomorrow’s funding is a question mark, CapEx may now be the most reliable way to guarantee critical technology near term before the budget floor disappears. 

Why CapEx Is a Smart Bet Right Now 

Let’s be blunt: If you’re in a leadership role and sitting on unallocated technology budget, this may be your last chance to spend it before that funding is slashed, reabsorbed, or delayed indefinitely. 

Here’s why CapEx makes strategic sense today: 

1. Control and Ownership: When you invest in CapEx, the technology is yours. You’re not beholden to price hikes, vendor contracts, or unpredictable renewal costs. 
2. Lock in Future Value Now: Buying a solution outright—especially one that’s scalable and regularly updated —lets you hedge against inflation, licensing fluctuations, and federal delays. 
3. Budget Predictability: In an era where federal reimbursements are vanishing, CapEx delivers cost certainty. One-time investments are easier to plan, justify, and defend. 
4. Long-Term Stability: There’s no telling what funding will look like a year from now and many universities fear being stuck with outdated infrastructure they can’t afford to replace. CapEx protects against exactly that. 

OpEx Still Has a Role—And It’s Only Going to Continue to Grow

To be clear, OpEx has benefits – particularly for institutions navigating tight cash flows, subscription models can offer quick deployment and agility. If the present moment teaches us anything about the inherent instability of leaning too heavily on grant-based budgeting, it’s that – whenever possible – it’s best not to leave it to chance. Building out more reliable budgeting infrastructure through OpEx spend gives you control, predictability, and momentum. CapEx can help resolve some of the short-term challenges you’re facing. But OpEx, long term, builds stability into your budget in a way CapEx cannot.

Three Strategic Recommendations for IT and Admin Leaders 

If you’re an AV architect, IT director, or administrator weighing tech decisions before the fiscal year ends, here are a few immediate steps: 

1. Prioritize Mission-Critical Investments: Focus CapEx on collaboration tools, wireless infrastructure, and hybrid learning tech that will future-proof your classrooms and lecture halls. 
2. Evaluate Total Cost of Ownership (TCO): Don’t just look at line-item costs—evaluate support, maintenance, and long-term compatibility. 
3. Act Before You’re Frozen: With future budgets on the chopping block, committing dollars now ensures you get the tech you need before approval processes become even more paralyzed. 
4. Start Planning for More Flexible Futures: Mitigate your dependency on large-scale grants where you can. Building out space for more adaptable and scalable OpEx models in your budget creates resiliency for when you’ll need it most.

   

Final Thought: Spend Like the Future Depends on It—Because It Does 

The truth is no one has all the answers right now. But acting with foresight, clarity, and urgency is one of the few things institutions can control. For higher education leaders looking to shore up their systems before the storm hits harder, CapEx may be the most stabilizing move you can make. Because in times like these, the best way to prepare for the future is to secure what you need today. 

And while CapEx may make strategic sense for your organization in the short term, keep in mind that fundamental shifts in funding and budget allocation at the federal level mean that the flexibility of OpEx SaaS and HaaS subscriptions may make more strategic sense in the future.

Connect with Mersive to learn more about our pricing plans exclusive to higher education.