Harvard Warns of $1 Billion Annual Loss Due to US Actions

Harvard University estimates that federal actions against it could cost the school almost $1 billion annually. The university has cut expenditures and implemented a hiring freeze for faculty and staff due to the challenges it faces. The Trump administration has targeted Harvard, freezing research funding and threatening its tax-exempt status, among other actions. The school's $53 billion endowment provides 40% of its annual operating budget, which could be impacted by the recent reconciliation bill that could raise the federal tax on income from the endowment to 8% from 1.4%.

Harvard University has warned that federal actions against the institution could cost the school almost $1 billion annually. The university has implemented a series of cost-cutting measures and a hiring freeze for faculty and staff in response to these challenges. These actions include a federal funding freeze, potential loss of international students, and a significant increase in the tax on endowment investment gains from 1.4% to 8% [1].

The Trump administration has been particularly aggressive in its targeting of Harvard, freezing over $2.6 billion in research funding and threatening its tax-exempt status. The administration has also accused the university of failing to protect Jewish students, which could lead to a cut in all federal funding if the school does not take corrective action [3].

Harvard's $53 billion endowment provides approximately 40% of its annual operating budget. The recent reconciliation bill could have a substantial impact on this revenue stream, as it raises the federal tax on income from the endowment to 8% from 1.4% [1]. The university has begun to lay off staff across various schools and institutes, with the T. H. Chan School of Public Health being the most affected due to its high reliance on federally sponsored research and international student tuition [1].

The varied impacts across different schools highlight the risks of Harvard's financial operating model, traditionally described as "every tub on its own bottom." The university's reliance on global engagement at a time of rising nationalist actions by the federal government has also contributed to the current financial strain [1].

Harvard's leadership, led by President Alan Garber, has emphasized the ongoing challenges and uncertainty. The university has stated that it will continue to cut expenditures and maintain a hiring freeze until a resolution is reached [2].

References:
[1] https://www.harvardmagazine.com/2025/07/harvard-layoffs-across-university-schools
[2] https://www.bloomberg.com/news/articles/2025-07-14/harvard-warns-us-actions-will-cost-almost-1-billion-annually
[3] https://news.wttw.com/2025/06/30/trump-administration-finds-harvard-failed-protect-jewish-students-threatens-cut-all