Harvard could lose $1B/year if Trump's plans take effect
03 Jul 2025

Harvard University could face a staggering $1 billion annual budget shortfall if the US President Donald Trump implements his plans and threats related to research funding, tax policy, and student enrollment.

The estimate (by The Wall Street Journal) is based on a worst-case scenario where Harvard loses all federal research funding, federal student aid, and its ability to enroll international students.

Potential shortfall would put pressure on Harvard's annual operating budget
Financial strain

The potential shortfall would put immense pressure on Harvard's $6.4 billion annual operating budget.

Despite having a $53 billion endowment, over 80% of the funds are donor-restricted, making it impossible to use for bridging budget gaps without risking lawsuits.

Robert Kelchen, an education finance professor at the University of Tennessee, Knoxville, said this could force substantial cuts and change the institution's future.

Trump administration has targeted Harvard in battle against institutions
Policy clash

The Trump administration has targeted Harvard in its battle against institutions it accuses of ignoring antisemitism and diversity concerns.

However, the university has maintained that it is committed to fostering intellectual openness in classrooms and enrolling students willing to engage across perspectives.

Talks between both sides were ongoing as recently as mid-June, according to a social media post by the US president.

Harvard has sued Trump administration over research funding withdrawal
Ongoing lawsuits

Harvard has sued the Trump administration twice over the withdrawal of research funding and the ban on international students.

A federal judge has blocked the ban, but the Trump administration plans to appeal.

Meanwhile, lawmakers are working on tax legislation that includes increasing the endowment levy.

Harvard President Alan Garber has expressed concerns that reduced government funding for basic research could threaten Harvard's position as a leading global research institution.

Harvard still has more options than many other schools
Fundraising efforts

Despite the financial challenges, Harvard still has more options than many other schools with $3 billion in cash reserves and borrowing capacity.

The university often runs a budget surplus, with operating revenue for the 2024 fiscal year exceeding expenses by $45 million.

It borrowed $750 million in April to cover budget gaps and allocated $250 million of its cash to support affected research as an interim solution.

University has pledged over $12 billion in private equity
Investment risks

Harvard's investment commitments to private equity, including venture capital and fast-growing private companies, create other financial obligations.

Private-markets fund managers can demand hundreds of millions of dollars in previously committed cash from Harvard at any time.

The university has pledged over $12 billion over the next decade as investment opportunities arise.