A full-blown financial reckoning is underway at American universities. Both prestigious Ivy League institutions and state-run schools have been hit hard by recent funding cuts imposed by the Trump administration. The reduction in federal funds, amounting to billions of dollars earmarked for research, has led to a series of drastic measures: hiring freezes, pauses in research projects, widespread budget interruptions, and in some cases, significant layoffs.
Citing concerns related to antisemitism and DEI (Diversity, Equity, and Inclusion policies) the Trump administration has challenged the traditional financial support for campuses on multiple fronts, introducing restrictions on foreign funding and considering measures to increase taxes on university endowment funds.
Ruth Johnston, Vice President of the National Association of College and University Business Officers, an organization representing over 1,700 academic institutions in the United States, stated that the situation should prompt a deep rethinking of the current “feeding” model of higher education.
This model is based on high tuition fees, declining public funding, and an increasing reliance on private financing. Universities invest heavily in marketing, infrastructure, and administration, often at the expense of accessibility and their core educational mission. According to Johnston, it is time to radically rethink this approach in order to build a system that is more equitable, sustainable, and student-centered.
At Harvard, the epicenter of a legal battle with the government, the consequences are tangible. President Alan Garber has agreed to a 25% salary cut, while internal committees are reviewing staff and exploring strategies to keep research active. Hopi Hoekstra, Dean of the Faculty of Arts and Sciences, emphasized that the university must act immediately to preserve its mission, acknowledging that even in the event of a legal victory, funding levels are unlikely to return to their previous highs. The university’s School of Public Health, which heavily relies on grants, has already implemented layoffs and reduced admissions, in addition to cutting everyday expenses such as catering and printing services.
Despite the heavy blow, the campus has announced an extraordinary $250 million commitment to temporarily offset losses. Analysts predict that universities will try to protect the academic core for as long as possible, delaying the most painful measures.
Columbia University has also had to face the loss of over 300 multi-year grants, leading to the layoff of about 20% of staff connected to those resources and pushing researchers to tap into internal funds to save short-term projects. University leadership admitted to being under significant pressure, requiring a fundamental rethink of budget structures.
Robert Kelchen, a professor at the University of Tennessee, explained that these elite universities, which in the past had weathered many economic challenges, are now among the hardest hit by the current shift. He also noted that institutions in Democrat-controlled states are confronting the crisis openly, while those in Republican states tend to avoid public exposure.
The State of Michigan, for example, has already announced the need to revise its financial plans, while Princeton University has warned its departments to prepare for budget cuts of 5% to 10% over the next three years, in anticipation of austerity policies.
