Key Takeaways
- • More than $2.2 billion in Harvard federal grants and contracts have been frozen, with further funding at risk if the administration's other pressures materialize, according to CNN.
- • Harvard's $53.2 billion endowment is largely restricted: about 80% is earmarked for financial aid, scholarships, faculty chairs and programs, leaving limited flexibility to backfill federal losses.
- • Harvard's payout rate of roughly 5-5.5% produced about $2.4 billion for operations in fiscal 2024, and drawing deeper would erode the endowment's corpus, which experts say universities prefer to avoid.
- • Federal funding is a major revenue source: philanthropy supplied 45% of $6.5 billion in 2024 operating revenue, and research grants supplied 16%.
- • Administration threats to Harvard's tax-exempt status and its ability to host international students, who make up 27.2% of enrollment, could further strain revenues, experts say.
Summary
The Trump administration has intensified pressure on Harvard University on several fronts. In the past week, it froze more than $2.2 billion in federal grants and contracts, and has threatened to revoke Harvard's non-profit tax-exempt status and its Student and Exchange Visitor Program certification, which allows it to enroll international students. According to CNN sources, the administration has made plans to rescind the tax-exempt status. Harvard Medical School is preparing for possible layoffs, and the School of Public Health, which received three stop-work orders on research, is winding down two off-campus leases.
Harvard's $53.2 billion endowment is the largest cushion available, but experts say access to it is limited. According to the university, about 80% of the endowment is earmarked for financial aid, scholarships, faculty chairs, academic programs or other purposes. Some unrestricted assets are held in illiquid investments such as hedge funds, private equity and real estate that cannot be easily sold. Harvard's annual payout of roughly 5-5.5% generated about $2.4 billion in fiscal 2024. The Harvard Corporation controls any change to that rate. Sandy Baum of the Urban Institute said the threat is serious and not limited to Harvard, while George McClellan of the University of Mississippi noted that dipping into the endowment's corpus is generally considered one of the last options for a higher-education institution.
The university's financial base is concentrated in philanthropy, which accounted for 45% of $6.5 billion in total operating revenue in 2024, with 21% from education, including tuition and housing, and 16% from federal and non-federal research grants. Operating expenses were $6.4 billion in fiscal 2024, with about 52% going to salaries and benefits. Harvard instituted a temporary hiring freeze last month. Universities have also raised debt at a near-record pace, and Harvard alone issued $1.2 billion in bonds so far this year, according to Municipal Market Analytics. Donations surged after the freeze, with $1.14 million collected in under 48 hours, according to The Harvard Crimson, though that is far below the funds withheld.
The cuts are already being felt. The School of Public Health, where 46% of its budget comes from federal funding, lost more than $60 million for a tuberculosis research project and made layoffs earlier. Harvard Medical School, already in deficit, expects its shortfall to worsen, and 40% of its students are international. Gregory Mankiw of Harvard described the choices ahead, including reduced financial aid, larger classes and less research, as painful and terrible for society.
Harvard's $53.2 billion endowment is the largest cushion available, but experts say access to it is limited. According to the university, about 80% of the endowment is earmarked for financial aid, scholarships, faculty chairs, academic programs or other purposes. Some unrestricted assets are held in illiquid investments such as hedge funds, private equity and real estate that cannot be easily sold. Harvard's annual payout of roughly 5-5.5% generated about $2.4 billion in fiscal 2024. The Harvard Corporation controls any change to that rate. Sandy Baum of the Urban Institute said the threat is serious and not limited to Harvard, while George McClellan of the University of Mississippi noted that dipping into the endowment's corpus is generally considered one of the last options for a higher-education institution.
The university's financial base is concentrated in philanthropy, which accounted for 45% of $6.5 billion in total operating revenue in 2024, with 21% from education, including tuition and housing, and 16% from federal and non-federal research grants. Operating expenses were $6.4 billion in fiscal 2024, with about 52% going to salaries and benefits. Harvard instituted a temporary hiring freeze last month. Universities have also raised debt at a near-record pace, and Harvard alone issued $1.2 billion in bonds so far this year, according to Municipal Market Analytics. Donations surged after the freeze, with $1.14 million collected in under 48 hours, according to The Harvard Crimson, though that is far below the funds withheld.
The cuts are already being felt. The School of Public Health, where 46% of its budget comes from federal funding, lost more than $60 million for a tuberculosis research project and made layoffs earlier. Harvard Medical School, already in deficit, expects its shortfall to worsen, and 40% of its students are international. Gregory Mankiw of Harvard described the choices ahead, including reduced financial aid, larger classes and less research, as painful and terrible for society.
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