Trump Moves Could Force Universities to Recalculate Their Bottom Lines
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What are the Trump administration's recent actions against universities?
Hey, What's News listeners. It's Sunday, April 20th. I'm Alex Osola for The Wall Street Journal. This is What's News Sunday, the show where we tackle the big questions about the biggest stories in the news by reaching out to our colleagues across the newsroom to help explain what's happening in our world. On today's show, the Trump administration is threatening to pull grant funding from institutions like Columbia and has already done so for Harvard. And it's also taking aim at individual students, pulling hundreds of student visas and even moving to deport some. What's the impact on universities' bottom lines, their reputation and their culture? At the end of the day, universities are businesses.
Their budgets are made up of student tuition, endowments, philanthropic donations, and government grants. Just how big their budgets are depends on a number of different factors, including, say, how much research the university does. For example, Harvard spent $6.4 billion in fiscal year 2024. Later on in the show, we'll speak to Fanta Av, the executive director and CEO of NAFSA, the Association of International Educators, about where international students fit into balancing these budgets. But first, let's zero in on the Trump administration's threats to freeze billions of dollars in grants. from institutions and how it's unsettling universities across the country.
How does federal grant money affect university budgets?
Joining me now to discuss the not insignificant impact of federal grants on university budgets is Doug Belkin, who covers higher education for The Journal. So, Doug, let's jump right in. How much does grant money matter to universities' bottom line?
So when you add it up, it starts to become real money. And you can see how critical the research amount is for the operating budget. Research mostly comes from the government. And the way it works is it'll be an agency, the National Institute of Health or a group like that will write a check to the university. The fiduciary of the university is the board of directors of the trustees so that the check gets written to them but it's really being sent to the researcher who came up with a really good idea that impressed a lot of people and made it through a really intense vetting process and the nih or whoever decided this is such a good idea we want to fund this research That money goes to the board and then the school is going to keep a chunk of it.
They have something called the facilities and administration. And that can be north of 50% because that pays for the labs and the administrators and the electricity. And there's a lot of things that go into running a university. What's left over pays for the grad students, the researcher, whatever is needed to do the research itself. One of the things that the Trump administration has done is said, we don't wanna pay 50, 60 percent in facilities and administration. We want that limited to 15 percent. So that was one of the first things that Trump did. And it really threw a monkey wrench in the budgets of these universities because that money is used by the university to keep the lights on. And it's fungible.
If that money is suddenly getting cut by two thirds, that's just less money coming into the system. And, you know, it has to come from somewhere else.
What challenges do universities face with potential grant cuts?
What kinds of challenges might the president face in pulling grant money?
So Trump is using a new set of tools to pull grant money. They created this task force that's looking at the contracts that the researchers have received, and they're canceling or freezing those contracts, using language in the contracts, as opposed to going through the Title VI procedures. The Title VI is a civil rights, you have to go through certain things in order to stop funding that way.
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Chapters
6 chapters
1
What are the Trump administration's recent actions against universities?
0:32–1:51
2
How does federal grant money affect university budgets?
1:51–3:33
3
What challenges do universities face with potential grant cuts?
3:33–9:08
4
How might international students be impacted by funding changes?
9:08–10:26
5
What are the long-term trends affecting university enrollment?
10:26–11:29
6
What are the cultural impacts of federal oversight on universities?
11:29–16:48
Speakers
3 identifiedMore from WSJ What’s News
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