‘Very Significant Risks’: Stanford Announces Hiring Freeze as Universities Brace for Funding Cuts

Stanford is the latest university to impose a school-wide hiring freeze as academic institutions nationwide brace for federal funding cuts under the Trump administration. The elite university’s president and vice provost announced the hiring notice in a statement issued last week. The freeze will only apply to staff and not to faulty positions, contingent employees, or student workers, they note. “We are in the process of developing Stanford’s budget for the 2025-26 academic year, ” President Jonathan Levin and Provost Jenny Martinez wrote. “This work is occurring as potential financial uncertainties are mounting for universities across the United States.” Such financial uncertainties, the two leaders write, include President Trump’s move to slash research grants from the National Institutes of Health as well as current Congressional proposals to raise the university endowment tax. “Taken together,” the two Stanford leaders write, “these are very significant risks to the university.” The Trump administration announced in February its plan to reduce by half the NIH funding given to universities, hospitals, and research institutes to cover facilities and administrative needs — known as “indirect costs.” The administration said that the move would save the federal government more than $4 billion a year. A coalition of 22 state attorneys general quickly sued the Trump administration and the proposal was temporarily blocked by a federal judge. Should the measure be implemented, it would “have a significant negative budget impact at Stanford,” the two Stanford leaders note. A steeper endowment tax would pose a similar challenge given that “the annual payout from the endowment forms a crucial part of our yearly budget,” they write. According to the statement, the endowment supports “roughly two-thirds of the budget for undergraduate and graduate aid” in addition to “a significant portion” of faculty salaries, research, “and key programs like libraries and student services.”Several bills advocating for a jacked-up endowment tax have been introduced to Congress this year. A measure proposed in February by New York Congressman, Mike Lawker, seeks to raise the current endowment income tax to 10 percent from the current 1.4 percent. Congressman Troy Nehls, from Texas, is pushing a bill that proposes hiking the tax to be in line with the corporate rate of 21 percent. Stanford boasts one of the largest endowments in the country at an estimated $36 billion. “We have more work to do on our next budget, and we will learn more in the coming months about the outcomes of the various federal policy proposals,” the president and provost write. “Given the uncertainty, we need to take prudent steps to limit spending and ensure that we have flexibility and resilience.” Just last week, the university reversed course on its four-year effort to buy the Notre Dame de Namur University campus in nearby Belmont. The university, in announcing the decision, explained that “the landscape for research universities has changed considerably” from when negotiations first started. “These changes are resulting in greater uncertainties and a different set of institutional and financial challenges for Stanford.” Stanford joins the likes of Northwestern University, MIT, Cornell, Washington State University, North Carolina State University, and numerous other institutions which have implemented hiring freezes or budget cuts. Other universities are tightening their belts by rolling back graduate admissions and freezing PhD programs. The University of San Diego opted to cut the number of students accepted into its biological science program by 30 percent. The University of Pennsylvania’s administration instructed department chairs to “significantly reduce admissions rates across graduate programs in the face of federal research funding cuts.”Although many American universities are supported by huge endowments — Harvard tops the list with an eye-watering $52 billion — the funds cannot just be pulled at will. Given that endowments are meant to provide universities with perpetual financial funding, schools adhere to strict guidelines regarding the amount of investment income that can be spent on an annual basis. Endowment spending is further strapped by the fact that donors will often issue “restricted” gifts, which require the university to spend the donation on a specific department or program.

‘Very Significant Risks’: Stanford Announces Hiring Freeze as Universities Brace for Funding Cuts

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