Harvard University officials warned the campus community on Monday that the combined impact of various federal policies and cutbacks could cost the institution as much as $1 billion annually.
A “Financial Stewardship Update” letter from Harvard President Alan M. Garber, Provost John F. Manning, Executive Vice President Meredith Weenick and Chief Financial Officer Ritu indicated that an updated budget plan for Fiscal Year 2026 would be released later this week and would “build on steps initially announced in March.”
As part of those plans, Harvard will continue its university-wide hiring freeze for faculty and staff, “with accommodations for extraordinary cases such as positions essential to fulfilling the terms of gift- or grant-funded projects.”
In addition, each individual school and unit within the university will be expected to “continue to reduce expenditures, streamline and simplify administrative processes, and make strategic, structural, and sustainable decisions that create greater financial capacity while accounting for distinctive priorities and needs.”
The administrators cited four specific actions by the Trump administration that were contributing to its overall financial difficulties.
- The termination of upwards of two billion of dollars in federal research grants and contracts that had previously been awarded to Harvard.
- Dramatic reductions in the budgets of NIH, NSF, and other federal agencies, including the possibility of severe cutbacks in both direct and indirect cost payments by those agencies.
- Ongoing challenges to Harvard’s ability to admit and host international students and scholars.
- An increase from 1.4% to 8% on income earned by Harvard’s endowment, the result of the recently enacted federal reconciliation bill. That increase is projected to cost Harvard more than $200 million annually, according to The Harvard Crimson.
While the letter indicated that Harvard officials hoped that the institution’s ongoing “legal challenges will reverse some of these federal actions and that our efforts to raise alternative sources of funding will be successful,” it acknowledged at the same time that ”we also need to prepare for the possibility that the lost revenues will not be restored anytime soon.”
As an example of its attempt to maintain core aspects of its mission, the letter pointed to Harvard’s allocation of “substantial bridge funding, including the allocation of more than $250 million to a research continuity fund for FY25 and FY26.” However, in a signal that such contingency funding had its limits, the administrators wrote that “additional steps are needed to address long-lasting declines in important sources of funding and increases in the costs of research and teaching.”
Harvard has been locked into a highly publicized and protracted dispute with President Trump over various allegations and demands that federal officials have leveled against the university, including claims of antisemitism, complaints about its admissions practices and challenges to its institutional governance.
While President Trump recently hinted that settlement talks with Harvard would probably soon lead to “a deal” with the government, those negotiations appear to have hit some snags according to media accounts. In fact, pressure by the Trump administration on the university appears to be intensifying, with the governement threatening Harvard’s accreditation and subpoenaing its records for “relevant information” about international students.
Harvard officials acknowledged that the university was facing “disruptive changes, painful layoffs, and ongoing uncertainty about the future,” while concluding that “as we meet these challenges together, we will continue to benefit from our commitment to one another and the commitment of Harvard and every research university to serving the nation and the world through our core mission of teaching, learning, and research.”