Harvard and Yale’s Endowment Sales: A Liquidity Crisis or Strategic Move?

The nation’s most prestigious universities are making a rare and risky move: selling significant portions of their endowments. Harvard and Yale, two institutions with combined endowments exceeding $90 billion, have announced plans to offload private equity stakes amid political pressures, liquidity strains, and a shifting financial landscape. These sales, the largest in decades, reveal vulnerabilities even in the most well-funded academic institutions—and could signal a broader reckoning for endowment-dependent schools.

Harvard’s Liquidity Play

Harvard’s $1 billion private equity secondary sale, facilitated by Jefferies and Lexington Partners, underscores a desperate bid for cash. The university faces a dual crisis: federal funding freezes and an endowment structure overly reliant on illiquid assets. With 83% of its $53.2 billion endowment allocated to private equity and hedge funds—compared to just 14% in public equities—the school risks being trapped in a “liquidity crunch.”

The Trump administration’s decision to freeze $2.2 billion in research grants and label Harvard a “political entity” has exacerbated cash flow concerns. To bridge the gap, Harvard issued $1.2 billion in municipal bonds in early 2025. But the bigger move is its shift from long-term holdings to secondary sales.

Yale’s Calculated Risk

Yale’s plan to sell up to $6 billion—nearly 15% of its $41 billion endowment—is equally bold. Unlike Harvard, Yale’s sale is contingent on market pricing, reflecting its cautious approach. The university’s famed “Yale Model,” which prioritized private equity for decades, now faces skepticism as distributions slow.

“The Yale Model’s success relied on steady liquidity from exits,” said Howard Bunsis, an endowment liquidity expert at Eastern Michigan University. “But with private equity valuations under pressure, schools are forced to rethink their bets.”

Why Now? Market and Political Pressures

The sales are driven by three converging factors:
1. Political Volatility: The Trump administration’s crackdown on Ivy League institutions—targeting research grants and tax status—has created existential financial risks.
2. Market Liquidity Drought: Private equity exits have slowed, leaving schools with unrealized gains but little cash. Global secondary transaction volume surged to $162 billion in 2024 (+45% year-over-year), as institutions scramble to monetize assets.
3. Self-Inflicted Risks: Harvard and Yale’s heavy private equity allocations have backfired. Harvard’s $124 billion in unpaid capital commitments alone highlight the precarious balance between growth and solvency.

Expert Analysis: Liquidity Over Profit

Selling now may mean accepting discounts. Secondary sales typically fetch 80–90% of net asset value (NAV), but Harvard’s timing could be strategic. John Longo of Rutgers Business School noted, “If valuations drop further, Harvard’s early sale could look prescient.” Meanwhile, Yale’s flexibility—waiting for better pricing—reflects its longer-term focus.

The Bigger Picture: A Shift in Endowment Strategy

These sales mark a turning point. For decades, endowments prioritized maximizing returns via illiquid assets. Now, they’re pivoting to liquidity-building measures like debt issuance and secondary sales. The trend could pressure private equity valuations, as institutions flood secondary markets with stakes.

Conclusion: A Necessary Trade-off, But at What Cost?

Harvard and Yale’s moves are a pragmatic response to immediate risks—but the long-term consequences remain uncertain. By selling at potentially discounted prices and increasing debt, they risk diluting future returns. Yet, the alternative—suffering cash shortfalls or deeper discounts later—is riskier still.

The data underscores urgency:
- 83% of Harvard’s endowment is in illiquid assets, with unfunded commitments exceeding $100 billion.
- $162 billion in secondary sales in 2024 (up 45% YoY) signals a market-wide liquidity chase.
- Liquidity armor via bonds and sales may stave off crisis, but it could cost these institutions billions in unrealized gains.

For now, Harvard and Yale are gambling that liquidity trumps profit. Whether that bet pays off depends on whether private equity valuations stabilize—or if the secondary market becomes a self-fulfilling prophecy of declining prices. The answer could redefine how universities manage their financial futures.