Over the last few months, conversations about the financial stability of higher education have intensified. Many universities now face structural deficits that deepen year after year. There are several reasons for these deficits, including declining enrollments driven by demographic shifts and rising tuition costs, federal visa and immigration policies that have reduced the number of international students entering the U.S., shrinking research funding, and administrative bloat.
As a result, universities are making difficult decisions, cutting programs that are not financially sustainable and reducing redundancies where possible. Some of these changes may have been overdue, as administrative and professional staff positions have grown much faster than either enrollment or tenure-track faculty lines in many institutions. At the same time, faculty have increasingly relied on external research grants to buy out teaching obligations, yet those funding sources are becoming scarcer.
Although restrictions on international student enrollment and reductions in research funding have intensified the problem, these are not its only causes. Even without such external pressures, higher education would likely be under financial strain due to long-term structural inefficiencies. Recent federal and institutional policies have simply exacerbated pre-existing weaknesses.
With so much attention on budgets, it is worth asking: what exactly does a university produce, and how does it profit from that production? At its core, a university trains students and generates knowledge. Most of its direct revenue comes from tuition, its teaching mission. Faculty are also paid to produce knowledge through books, journal articles, and presentations, but universities themselves rarely earn direct income from these activities. In fact, they often pay for them.
Universities fund faculty travel to conferences, pay publishing companies for access to the very journals their professors write for, and sometimes provide course releases so that professors can serve as editors. In some cases, they even subsidize publication fees for books or articles.
Ironically, academic publishing is a highly profitable, multibillion-dollar global industry valued at roughly US $19–27 billion annually. Major publishing companies rely on unpaid academic labor at every step: faculty submit manuscripts without compensation, review peers’ submissions without compensation, and increasingly perform their own formatting and editing. Publishers then sell those same articles and books, often for $30–$50 per article or $100 or more per book—with profit margins exceeding 30 to 40 percent for some firms.
While universities bear much of the cost of producing this research, they receive almost no direct revenue from it. To be clear, some universities have their own presses or licensing operations, but the vast majority of research output enriches commercial publishers rather than the institutions that make the work possible.
If universities are serious about addressing their financial challenges, they must reconsider how they value and manage the knowledge they produce. The intellectual labor of faculty is one of higher education’s most significant, and most underutilized, sources of value.