Higher education institutions across the United States are facing unprecedented financial pressures. Institutions must navigate shrinking budgets, rising costs, governmental policy changes, and an increasingly volatile economic landscape. In this environment, traditional methods of procurement and cost management are proving insufficient.
Institutions must look for more strategic, efficient ways to manage spend, and one proven strategy is cooperative purchasing. Through cooperative purchasing, higher education institutions can achieve significant savings, improve compliance, streamline procurement processes, and better navigate the evolving financial landscape. As the challenges in higher education continue to multiply, collaborative procurement strategies are becoming indispensable.
For many academic institutions, the financial crisis has officially arrived.
According to an analysis by the Chronicle of Higher Education, two-thirds of all colleges are demonstrating at least one sign of financial stress.
For many colleges and universities, budget deficits are no longer an occasional concern but a chronic reality. Many institutions are operating with slim margins, if not outright deficits, prompting cuts to programs, staff layoffs, and a renewed focus on financial efficiency.
A quick search shows the impact:
These are just a few of the institutions looking at significant budget shortfalls.
Federal and state policies are adding to financial uncertainty in higher education. Reducing caps on indirect costs for research grants from an average of 27–28% to 15% may cause institutions to lose in reimbursements, according to Inside Higher Ed. Individual institutions could lose an average of $9.6 million while some could lose $50 million or more.
Significant cuts to the Department of Education (DOE), including a 95% reduction in staff at the National Center for Education Statistics (NCES), have increased concerns about oversight of FAFSA and Pell Grants.
Disruption to student aid could be catastrophic.
“Only a select group of wealthy institutions have the financial flexibility to manage such a scenario without likely seeing steep enrollment decline.” – Moody’s
Institutions that rely heavily on NIH research grants are feeling the sting. Public battles between the current administration in DC and Columbia, Harvard, and others are dominating the headlines, but nearly 220 organizations have had NIH grants canceled or paused.
This creates a ripple effect as grants are paused, leading to project cancellations, layoffs, and the loss of billions of dollars generated from research. Some schools have stopped accepting applications or rescinded admissions for graduate students.
The so-called Endowment Tax Fairness Act proposes to raise the tax on endowments from 1.4% to 21%. In many cases, this would force sell-offs to pay taxes, reducing the funds available for scholarships, research, and operational support.
Recent political decisions have tied federal funding to institutional positions on diversity, equity, and inclusion (DEI) initiatives and other controversial issues, further complicating budget planning.
Compounding financial pressures is the demographic cliff—the significant drop in the college-age population starting around 2025. This decline will likely exacerbate enrollment challenges, further shrinking tuition revenue for many institutions.
Although the International Monetary Fund does not predict a U.S. recession in 2025, it raised the probability to 37%, up from 25% six months earlier. Goldman Sachs increased its estimate to 45%, while James Rossiter, head of Global Macro Strategy at TD Securities, put the odds at 50/50.
Historically, economic downturns strain state budgets, reducing appropriations to public colleges and universities, as tax revenues fall. Many states are already grappling with severely underfunded pension funds, a situation worsened by recent market volatility. According to the Equable Institute, the top 25 state and local pension funds lost a combined $169 billion in assets in early April 2025.
Operating costs for higher education rose by 3.4% in 2024, outpacing average tuition increases.
Why are higher education costs rising across the world?
Did we say ripple effect? All of these issues in higher education are forcing across-the-board cuts that may undermine future sustainability.
“As U.S. institutions brace for possible federal or state reductions in institutional funding and/or student aid, they are also aware that budget reductions to programs and services can significantly affect student retention and recruitment, setting up a potential cycle of fiscal distress.” – Hanover Research
As colleges and universities navigate these threats to funding and financing, group purchasing organizations stand poised to help.
A group purchasing organization (GPO) aggregates the purchasing power of multiple members to negotiate better pricing and terms with suppliers. By combining the needs of many institutions, a GPO can secure volume discounts and favorable contract terms, which would be unattainable for a single institution acting alone.
GPOs serve a variety of industries, but there is only one member-owned nonprofit cooperative that focuses exclusively on the education sector: E&I Cooperative Services. E&I is uniquely qualified to understand the unique compliance, budgeting, and operational challenges colleges and universities face. Many members of the E&I team come directly from higher education procurement, bringing firsthand experience and deep insight into the needs of colleges and universities.
When an institution joins a GPO, it gains access to pre-negotiated contracts across a broad range of categories. For example, E&I Cooperative Services has hundreds of cooperative contracts across categories such as:
COMMON GROUP PURCHASING CATEGORIES THAT YIELD SIGNIFICANT SAVINGS | ||
Athletics | Food & Food Services | Offices & Classrooms |
Facilities & MRO Services | Information Technology (IT) | Professional, Consulting & Administrative |
Financial Services | Logistics & Travel | Research & Scientific |
Procurement professionals competitively solicit contracts that meet the needs of member institutions, significantly reducing the time members need to spend sourcing, issuing RFPs, vetting suppliers, and negotiating agreements.
Standardized terms for cooperative purchasing agreements also help streamline compliance checks to further accelerate the procurement process.
Cooperative or group purchasing can be a powerful strategy to help overcome the financial challenges in higher education. Let’s take a closer look at the benefits of partnering with a cooperative like E&I Cooperative Services.
Cooperative purchasing aggregates demand, enabling institutions to achieve volume discounts, which can range from 10% to 15% or higher. For small colleges, these savings can amount to hundreds of thousands of dollars annually. For large university systems, savings can reach into the millions.
Longer-term contracts negotiated through cooperative purchasing protect against sudden market price fluctuations. Institutions benefit from flat pricing, guaranteed discounts on product catalogs, and scheduled price adjustments. If you know when price resets are coming, you can more accurately budget and avoid sticker shock.
Competitively solicited contracts significantly reduce the time and resources required for procurement. Staff can focus on strategic initiatives rather than administrative tasks, improving overall efficiency.
As procurement teams are asked to do more with fewer resources, the time savings can be significant.
Cooperative contracts typically meet the strictest public procurement standards. This is critical for institutions relying on federal grants or facing state-level procurement audits.
GPO members often enjoy enhanced service levels, with preferred supplier relationships offering better account management, technical support, and customer service.
Cooperative contracts often produce deeper relationships. Agreements typically span years, which gives time to work collaboratively to find innovative solutions. Cooperatives also help manage relationships and monitor performance.
Because these agreements represent significant revenue for suppliers, they are more likely to provide improved service to make sure they keep the business. In many cases, this produces additional value.
Cooperatives may have other resources that can help improve your procurement. For example, E&I offers Strategic Spend Assessments (SSA) that can be exceptionally valuable in today’s cost-cutting environment.
SSAs are available for members at no cost and include a thorough review of procurement spend by E&I’s data analysts. SSAs often uncover hidden savings by evaluating contract portfolios for:
E&I’s team has in-depth expertise in higher education procurement, product categories, and supplier offerings. This knowledge can be highly useful to augment your procurement or finance team, filling in knowledge gaps or sharing best practices.
Members are also active in the organization, sharing their strategies and successes. The EdPro Hub online community is a place where procurement professionals share insights and support each other’s growth.
There are also resources for professional development. E&I’s NextGen Leadership Program, in partnership with eCornell, helps procurement pros prepare for Chief Procurement Officer (CPO) roles. This program is fully funded by E&I to help foster the development of next-generation procurement leaders.
There is no cost to join E&I Cooperative Services and no minimum buying obligation. Members can access cooperative agreements and choose those that make sense for their institution. At any time, there are hundreds of cooperative contracts available.
Learn more about the benefits of E&I membership and how you can optimize your education dollars.
The challenges in higher education are intensifying, and financial stability is becoming harder to maintain. Budget deficits, shifting political winds, demographic changes, and the risk of recession create an urgent need for strategic cost management.
Through cooperative purchasing, institutions can tap into the power of collective buying to reduce costs, improve operational efficiency, and maintain compliance—all while preserving their ability to deliver high-quality education.
E&I Cooperative Services offers a proven, education-focused pathway to better procurement outcomes. As colleges and universities seek to navigate an increasingly complex financial environment, embracing cooperative purchasing is a powerful solution to help overcome today’s challenges in higher education.
What is the biggest financial problem facing higher education today?
It’s hard to isolate just one in today’s climate, but the biggest issues in higher education all revolve around finances. Enrollment declines, rising costs, shifting government programs, canceled NIH grants, and threats to federal funding and endowments add up to significant challenges.
What is a GPO, and how can it help with financial challenges in higher education?
GPOs help colleges and universities aggregate purchasing power to achieve lower costs, better supplier terms, and streamlined procurement, helping to reduce the financial pressures institutions face.
How do cooperative purchasing contracts differ from standard supplier discounts?
Supplier discounts are typically limited promotions, while cooperative purchasing contracts are competitively sourced, long-term agreements designed to provide consistently better pricing and service levels.
Are there GPOs specifically for educational institutions?
Yes. E&I Cooperative Services is the only member-owned nonprofit sourcing cooperative exclusively focused on education, offering contracts tailored to the needs of higher education institutions.
How much can a university save by using cooperative purchasing?
Savings vary, but many institutions report savings of 10% to 15% across major categories. For large purchases, cooperative purchasing can result in six- or seven-figure savings annually.
Contact the education procurement experts at E&I Cooperative Services to discuss your challenges and see how we can help you save money and streamline your procurement process. Call 1.877.MYEANDI (877.693.2634) or get in touch with your dedicated E&I member representative online.
