This policy paper explores the financial sustainability challenges faced by Pakistan’s public sector higher education institutions (HEIs) following the 18th Constitutional Amendment, which devolved education to provincial governments. It highlights the severe budget deficits, declining research output, and overreliance on government funding. Drawing on global best practices, the paper proposes a strategic framework emphasizing diversified income sources such as endowments, industry partnerships, research commercialization, alumni engagement, and online education. A phased implementation plan—short-term pilots, medium-term expansion, and long-term autonomy—along with PKR 5 billion in seed funding and capacity building, aims to ensure institutional resilience and sustainable growth in Pakistan’s higher education sector.