This chapter explores how the integration of Artificial Intelligence (AI)-managed learning analytics and micro-credentials can enhance student engagement and retention in higher education. The authors analyze the growing role of AI in monitoring student learning behaviors, providing real-time feedback, and enabling personalized interventions. They discuss the potential of micro-credentials, particularly digital badges, to motivate learners by recognizing their accomplishments and encouraging skill development. While these technologies present transformative opportunities, challenges such as data privacy, lack of standardization, and accessibility issues are addressed. The chapter emphasizes the importance of collaboration between educators, technologists, and policymakers to implement these tools equitably and effectively, with a focus on fostering lifelong learning and student success.