The Innovation Paradox
99% of campuses leverage technology to address budget pressures yet 44% can't implement their investments.
Five critical areas reveal where connection determines success.
Higher education's digital transformation is happening faster than predicted. The Higher Ed Innovation Index 2025 documents this remarkable momentum while revealing the operational challenges that determine whether these investments deliver their promised value.
The research shows institutions making measurable progress: 30% now run core systems fully in the cloud with about 80% planning complete migration within 24 months. About 40% plan to migrate within the next year alone. AI adoption is broad: 97.4% of institutions are exploring or beyond, and 84.4% are already piloting, rolling out, in early production, or looking to scale. Reported benefits include 66% reduced staff burnout and 63% cost savings. Yet implementation remains the critical challenge, with 44% of institutions citing technological change management as their most impactful challenge and 39% identifying lack of system integration as their primary technology gap. Compounding these challenges, half of institutions report insufficient training for new digital tools (49%) and limited technical expertise among staff (50%). The human challenge exceeds the technical one: barriers related to staff expertise (50%) and insufficient training (49%) actually outpace the 39% citing lack of system integration, revealing that the people problem may be larger than the technology problem.
This implementation complexity creates divergent perceptions of technology's impact: while 79% of technology leaders report cost savings from digital transformation, only 52% of finance leaders see the same savings. Meanwhile, 52% of finance leaders report costs increasing compared to just 19% of technology leaders, a gap that can create tension in budget conversations about technology investments.
Cloud Infrastructure Transformation
30% fully cloud, 69% hybrid—integration determines success
Cloud migration has reached a tipping point; the focus now is maximizing value through integration.
Private institutions lead this transformation at 36% fully cloud compared to 25% at public institutions (an 11-point gap). Mid-to-large schools (1,000–19,999 employees) show the highest migration rates at 33–34%.
Yet the research reveals a critical gap. While 67% of institutions report their infrastructure is well-prepared to scale cloud usage, 39% cite lack of integration between systems as their top technology gap. This disconnect creates a paradox: institutions have the infrastructure but lack the connections to maximize its value.
The barriers are primarily human and organizational, not technical. Half (50%) face limited technical expertise among staff, 49% report insufficient training for new digital tools, and 37% struggle with inadequate digital infrastructure despite their cloud investments. The institutions seeing the greatest returns from cloud migration are those that prioritize integration from day one.
Technology leaders feel these infrastructure challenges most acutely: 54% cite inadequate digital infrastructure as a barrier to digital transformation compared to 28% of finance leaders, revealing how different institutional roles experience the same constraints differently.
30%
Fully Cloud
69%
Hybrid
80%
Planning migration in 24 months
39%
Lacking integration
Artificial Intelligence Delivers Results
From exploration to execution: 84% actively piloting or deploying AI, with only 3% having no plans
84%
Exploring or Beyond
71%
Actively Piloting/Deploying
66%
Burnout Reduction
63%
Cost Savings
Adoption is broad (97.4% exploring or beyond) and deep (84.4% already piloting, rolling out, in early production, or looking to scale; only 2.6% have no plans).
The benefits are measurable and significant. Two-thirds (66%) report AI reducing staff burnout which is a critical win as institutions struggle with retention and morale. The same percentage (66%) cite time savings on routine tasks, while 63% document actual cost savings. Beyond efficiency, 53% report improved administrative operations and 46% note enhanced data-driven decision-making.
However, AI success depends on integration. While 84% of institutions report having data readily available for critical decisions, those achieving the best AI outcomes are institutions where AI tools connect with existing systems. When AI operates in isolation, benefits plateau. When integrated, AI becomes transformative.
The Evolution of Campus Payments
67% of students use a mix of payment methods for tuition, creating back-office complexity
Student payment behaviors have fundamentally shifted. The data shows 96% of institutions report increased student preference for ACH payments, digital wallets are rising, and preference for checks is down at about a third of schools (~31.1% report a decrease).
Digital wallets are rapidly gaining ground. More than half of schools accept them (52.6%). Student preference for ACH has surged (Top-2 increase: 96.3%). A capability gap remains: 98.1% of institutions accept ACH payments, but only 66.7% offer direct banking, even as 70% report rising student preference for this option. This 30+ point gap between student demand and institutional capability represents a significant opportunity for real-time payment modernization.
The rise of digital wallets represents a seismic shift: at 28% of tuition payments, they've achieved parity with ACH (also 28%)—remarkable for an emerging payment method. However, a critical gap remains: while 98% of institutions accept ACH payments, only 67% currently offer direct banking capabilities, even as 70% report increased student preference for this payment method. This 30+ point gap between student demand and institutional capability represents a significant opportunity for real-time payment modernization.
This payment flexibility serves students well, offering options that match their financial realities. Yet the operational impact is substantial. Institutions report a 44% increase in costs associated with managing diverse payment platforms. The complexity extends beyond payment methods to funding sources: 52% of institutions experience delays in receiving funds from mixed sources, while 37% report increased administrative workload. When students piece together tuition from multiple funding sources (out-of-pocket, grants, 529 plans, scholarships, and loans) each additional source adds reconciliation complexity.
The data reveals a clear progression: as tuition gaps widen at 40% of institutions, payment plans have surged (76% report increases), but without integrated backend systems, 52% experience delays in receiving funds from mixed sources. Payment modernization is no longer optional. Students expect it. But the current approach of adding payment options without addressing back-end integration is creating unsustainable operational strain. With 49% of institutions reporting increased mixed funding source usage over the past 12 months, this challenge will only intensify.
96%
ACH preference increases
67%
Mixed Methods Rising
49%
Mixed Funding sources Rising
Expanding Options for Student Affordability
Payment plans surge 76%, as tuition gaps widen at 40% of institutions, creating operational strain
The affordability crisis is reshaping how students pay for higher education, and institutions are responding with expanded flexibilityThe data reveals an expansion in payment options: 76% of institutions report increased student use of payment plans, marking a fundamental shift from upfront, lump-sum payments. Sponsorship programs are surging, with 63% seeing growth in employer-sponsored payments and 27% reporting increases in third-party sponsorships.
These adjustments directly address the enrollment challenge. Twenty-nine percent of campus leaders cite cost pressures as limiting enrollment recovery, with affordability concerns affecting student decisions across all institution types. Finance leaders are particularly attuned to this pressure: 48% cite job market and return-on-investment concerns as limiting enrollment compared to 14% of technology leaders, a 34-point gap that reveals how different departments prioritize the affordability challenge. In response, 51% of institutions are expanding scholarship offerings, 49% offer payment plans, and 49% help students apply for grants. The expansion extends beyond traditional financial aid: 43% are expanding work-study opportunities, while 37% increase availability of online courses to reduce student costs.
Yet each affordability solution adds operational complexity. The same payment plans that help students stay enrolled require robust operational systems to manage efficiently. Institutions managing multiple scholarships, employer sponsorships, third-party payments, and traditional financial aid, including grants and loans) report 52% experiencing delays in receiving funds and 33% struggling with complexity in financial aid packaging and disbursement. The administrative workload increases by 37% when managing these mixed funding sources.
The data reveals an uncomfortable truth: the more institutions do to help students afford education, the more complex their operations become. With , this complexity is unavoidable. The challenge isn't whether to offer these options, student needs demand them, but how to manage them efficiently without overwhelming already strained administrative teams.
Strengthening Security Posture
71% cyber-ready, yet fraud detection varies: 35% see increases, 37% decreases
Confidence in cybersecurity preparedness remains high across higher education, reflecting significant investment in security infrastructure and planning over recent years.
However, preparedness varies dramatically by institution type. Two-year colleges face heightened vulnerability: only 51% report readiness to handle major cybersecurity threats compared to 78% at four-year institutions—a 27-point preparedness gap that leaves community colleges significantly more exposed to cyber risks and fraud.
Yet the threat landscape is evolving in unexpected ways. The most pressing challenge isn't traditional cyberattacks but fraudulent enrollments: ghost students who drain resources while never attending class. The data shows a split reality: 35% of institutions report increases in fraudulent enrollments over the past 24 months, while 37% report decreases. This divergence isn't random. It's capability-driven. With only 50% of institutions monitoring transactions in real-time, those with robust detection systems likely see fraud decreases (or catch more attempts), while those without see unchecked increases. The gap reveals varying detection capabilities rather than a uniform rise in fraud attempts.
The research reveals critical gaps in security operations that directly correlate with fraud outcomes. Only 50% of institutions monitor transactions in real-time—a capability essential for fraud detection that appears to separate institutions seeing fraud increases from those seeing decreases. Additionally, 28% acknowledge that physical and digital security still operate in silos on their campuses, creating blind spots that sophisticated fraudsters can exploit. The challenge extends beyond technology: 43% of institutions struggle to balance security with user convenience, while 37% work to ensure compliance with evolving regulations.
Institutions are responding with multi-layer approaches. Beyond the 50% conducting real-time monitoring, 47% now require multi-factor authentication for financial transactions, 40% provide fraud detection training for staff, and 38% are enhancing overall cybersecurity measures. The data suggests that while institutions feel prepared for traditional cyber threats, the evolving nature of fraud (particularly in enrollment and financial aid) requires new strategies that integrate identity verification, payment monitoring, and cross-functional collaboration.
71%
Cyber-Ready
35%
Rising Fraud
28%
Siloed Security
50%
Real Time Monitoring
The Path Forward
The Higher Ed Innovation Index 2025 reveals higher education at a pivotal moment. Technology adoption is accelerating, flexibility is expanding, and institutions are finding creative solutions to longstanding challenges. Yet the distance between adoption and integration, between innovation and implementation, determines whether these investments deliver their promised value.
Success requires connecting systems and building organizational capacity to use them effectively. As campuses continue their digital evolution, the focus must shift from adding capabilities to integrating them, from implementing solutions to optimizing operations. The institutions that master this balance will transform technology investments into operational excellence, turning today's complexity into tomorrow's competitive advantage.
About the Research
Methodology: Online survey of 270 senior higher education leaders (VP level and above) conducted July 2025 by Hanover Research on behalf of Transact + CBORD
Respondent Profile:
- 51% public institutions, 49% private non-profit
- 74% four-year institutions, 26% two-year colleges
- Geographic representation across all U.S. regions
Citation: Higher Ed Innovation Index 2025, Transact + CBORD, July 2025 (Hanover Research)
Resources:
- Download the Full Infographic [link]
- Read the Press Release [link]
- Request an Interview: Katie Boyless, The Fletcher Group on behalf of Transact + CBORD: katie@fletchergroupllc.com | 404-791-8245