Harvard Officials Warn: Federal Actions Could Cost University $1 Billion Each Year – What This Means for Students and Faculty

Harvard President Alan M. Garber recently raised alarms about significant financial challenges facing the university. He stated that policy changes in Washington could cost Harvard up to $1 billion each year. This includes cuts to research funding, new threats to international students, and a dramatic rise in taxes on its endowment.

In a letter shared with the Harvard community, Garber and other leaders noted that budget constraints will likely grow. This follows a series of cuts stemming from the current administration’s policies. More than $2 billion in research funding has already been eliminated, causing major disruptions and layoffs across various schools, including the Kennedy School, the School of Public Health, and the Medical School.

Harvard has extended its hiring freeze, which began in March, limiting new hires to only essential roles tied to specific projects. Administrators are pushing for tighter spending across all departments and seeking sustainable changes to improve financial health.

A few key updates are on the way for the 2026 budget. This comes after the university allocated $250 million in temporary funding to support research into the next couple of years. However, ongoing challenges related to revenue and rising costs for research and teaching remain.

One major blow is the endowment tax hike signed into law earlier this year. This change increases the federal tax on income from Harvard’s $53 billion endowment from 1.4% to 8%. Experts suggest this could drain over $200 million from the university’s budget annually. While officials have warned about potential impacts on financial aid, this letter marks the first time they’ve formally acknowledged these financial strains.

Harvard faces a tense relationship with the current administration, which has targeted the university on multiple fronts. This includes halting billions in federal funding and scrutinizing international donations. International students have felt particularly vulnerable, with attempts to revoke Harvard’s ability to host them and new restrictions on their entry into the U.S.

Garber’s letter highlighted that this issue remains unresolved and may continue to threaten the university’s international programs. This situation adds to the heightened urgency for Harvard to adapt its financial strategies.

As Harvard navigates through these turbulent times, social media discussions suggest a mix of concern and support from students and alumni. With many calling for reevaluation of policies impacting education, expert opinions stress the importance of innovation in funding models for universities facing similar challenges.

For more context on university financial policies, you can check out the National Bureau of Economic Research.

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