The University of Chicago reduced its budget deficit from $288 million in Fiscal Year 2024 to $160 million in Fiscal Year 2025, according to its most recent financial statement, which was released on Wednesday.
While deficits of any amount — let alone one of more than $150 million — are not usually celebrated, the $128 million improvement represented a 44% reduction from the prior year’s loss and was better than university officials had anticipated, putting the institution ahead of its plan to eliminate deficit spending completely by 2028.
“Thanks to the work of so many people across the University, we took out a huge share of the deficit in FY25, and we’re on a very good path forward,” said University Provost Katherine Baicker, in a UC news release.
According to the release, the smaller deficit represents only the university’s portion of the budget. It does not include figures for the University of Chicago Medicine, which ran a surplus of $80 million in FY25. Net assets increased by $471 million year over year, and the university’s portion of the endowment increased by about $500 million, from $8.7 billion in FY 2024 to $9.2 billion in FY 2025.
Revenue grew by about 9%, outpacing a slightly smaller percentage increase in expenses for the fiscal year. Net tuition was up by more than $75 million, and private donations and contracts also increased. Although revenue from government grants and contracts decreased by $30 million, the drop was smaller than what university officials had warned, given the Trump administration’s cutbacks in research funding.
Meanwhile, the university also restricted its expenditures through a variety of means, including holding the line on salaries, tightening its belt on operating expenses and postponing or scaling back some capital projects.
“We substantially outperformed our plan for the year,” said University of Chicago Chief Financial Officer Ivan Samstein. “This is no reason for overconfidence—we still have a lot more work to do. But it is a very good start.”
The University of Chicago’s financial problems have been the subject of intense debate on campus and have recently been highlighted as a leading example of the budgetary difficulties that arise when universities overbuild, take on too much debt, and try to constantly expand their programming.
The smaller FY25 deficit sets the stage for the university continuing to strive to get its financial house in order. In August, campus leaders announced that the institution would need to slash its spending by $100 million as it sought to further reduce the deficit and a debt load that totaled about $6 billion. Those steps have included suspending or reducing new admissions in several of its PhD programs in the arts and sciences as well as graduate programs in the Crown Family School of Social Work, Policy, and Practice and the Harris School of Public Policy.
The university is also planning to lay off hundreds of staff, reconfigure its academic departments, reduce its reliance on long-term debt for financing new construction, cut back its internal support of centers and institutes, and streamline its administrative structures. In September, the institution sold off its Center for Research in Security Prices to Morningstar, Inc., an investment research company in Chicago, in a transaction valued at $375 million.
The University of Chicago committed in 2024 to operate with a balanced budget within four years. A better-than-anticipated performance in FY 2025 combined with an aggressive plan for FY 2026 suggests that — despite the financial challenges facing the institution and higher education in general — it’s on track to achieve that goal.