Objective: Coffee holds a cherished place in Ethiopian culture, its consumption among students raises concerns despite its perceived benefits for alertness and productivity. Moderate caffeine intake remains unproblematic, but exceeding 400 mg daily can trigger detrimental health effects such as fatigue, memory impairment, and even attention-deficit disorder. Research on problematic coffee use among young adults, specifically Ethiopian students, remains limited, hindering our understanding of its potential scope and impact. To address this knowledge gap, researchers at Dilla University, Ethiopia, undertook a comprehensive study in 2022, focusing on the university’s student population. This investigation holds significant potential to unveil the previously obscured landscape of excessive coffee consumption in this demographic and inform future research and potential interventions. Methodology: An institutional-based cross-sectional study design was conducted in August–July, 2022. To measure problematic coffee use, this study used the Diagnostic Statistical Manual five criteria for substance use disorder. Those who scored >2 out of 11 criteria were considered to have problematic coffee use. To measure a significant association between the outcome and independent variable, a multivariable logistic regression analysis at p < 0.05 and 95% confidence interval was employed. Result: This study included 414 respondents. More than half of the respondents, 347 (59.7%) were male. Out of all respondents, 182 (44.0%) had a boy/girlfriend. Nearly half of the respondents, 218 (52.7%) were orthodox, Christian religion followers. According to this study’s findings, 137 (33.1%) respondents were considered to have problematic coffee use. Multivariable logistic regression analysis showed that 5–10 years duration of coffee use (AOR = 4.62, 95% CI: 2.96–7.85; p = 0.001), start to use coffee before joining university (AOR = 2.977, 95% CI: 1.332–6.653; p = 0.008) and 6–9 cups of daily coffee use (AOR = 3.26, 95% CI: 2.14–5.89; p = 0.00) were associated with problematic coffee use. Conclusion: This study showed that one-third of the respondents had problematic coffee use. The starting point, duration, and amount of use had a strong association with problematic coffee use. Hence, focusing on addressing the mental health challenges associated with problematic/excessive coffee consumption among higher education students is advisable. Additionally, promoting awareness of problematic/excessive coffee use and its potential remedies is recommended.