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Time of India
2 days ago
- Business
- Time of India
The cost of prestige: Stanford slashes $140 million amid tax assault and vanishing research funds
Picture credit: Pexels Once hailed as a beacon of innovation and academic prosperity, Stanford University now finds itself navigating a financial reckoning unlike any in its modern history. The institution, revered globally for its cutting-edge research and billion-dollar endowment, is preparing to slash $140 million from its budget, a move driven not by mismanagement but by an intensifying assault from Washington. University President Jon Levin and Provost Jenny Martinez confirmed the sweeping cuts in a letter to faculty and staff last week, warning of a fiscal crisis precipitated by 'consequences from federal policy changes,' including reduced research support and a dramatic escalation in the endowment tax. 'We believe deeply in the value of universities, in federal support for basic research, and in the endowment model that underpins financial aid and graduate fellowships,' they wrote as reported by The Guardian. 'At the same time, we need to be realistic about the current landscape and its consequences,' as reported by The Guardian. Research grants dried up, and scientific ambitions stalled The foundation of Stanford's academic engine, federal research funding, is beginning to crack. Databases monitoring grant allocations from the National Institutes of Health (NIH) and the National Science Foundation (NSF) confirm the university has already lost millions in federal grants this year. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Преносим лазерен заваръчен пистолет, 50% отстъпка днес HL Купете сега Undo These are not just accounting losses; they represent halted experiments, unfunded breakthroughs, and stalled careers. Stanford's reputation as a research powerhouse, one that has historically funneled innovation into Silicon Valley and the global scientific community, now faces unprecedented disruption. The signal from Washington is clear: research, even at elite institutions, is no longer guaranteed federal backing. Endowment tax: The guillotine overhead The threat cuts deeper with the proposed expansion of the federal endowment tax. Once a symbolic 1.4%, a House-approved bill tied to Donald Trump's 'Big, Beautiful Bill' proposes to raise the rate to 21%, while the Senate debates a marginally lower 8%. Stanford, whose endowment stood at $37.6 billion as of August 2024, is bracing for the blow. As per The Stanford Daily , the 21% tax could drain $750 million annually, a staggering figure that would undercut financial aid, shrink graduate fellowships, and jeopardize core academic functions. Though the university has pledged a 2.9% increase in endowment disbursement this year to support students and research, the sustainability of such a move is questionable under rising tax pressure. Staff layoffs loom as expansion halts Beyond numbers, the human toll is mounting. Stanford has already implemented a staff hiring freeze since February, and the upcoming cuts are expected to bring layoffs. Faculty recruitment will continue, but 'the pace may be somewhat slowed,' university leaders wrote as reported by The Guardian. Capital projects will also be reined in, with only critical or externally funded initiatives moving forward. This marks a sharp reversal for an institution synonymous with expansion, now retreating under the weight of federal austerity and policy hostility. Ideological target: A university under investigation Adding to the pressure is Stanford's inclusion in a Justice Department investigation launched in March, probing whether it is complying with the Supreme Court's affirmative action ruling. The scrutiny reflects how elite universities are increasingly being politicized, targeted not just for what they spend, but for what they represent in America's cultural divide. Stanford is no longer just a university. It is a symbol of wealth, of diversity, of liberal ideals, and in the current climate, symbols are under siege. What's at stake: A model on the brink This isn't just Stanford's story. It is a snapshot of what happens when research institutions become casualties in a political war against higher education. If a university with a $37.6 billion endowment and global prestige must cut back on science, staff, and student support, what hope do mid-tier or public research universities have? The message being broadcast to campuses across the nation is stark: Excellence is no longer an asset; it's a liability in the eyes of an increasingly hostile federal apparatus. Stanford's decision to 'be realistic' may preserve its balance sheets in the short term. But in the long run, what's at risk is more than money; it's the integrity of an academic model that once defined America's global edge. Is your child ready for the careers of tomorrow? Enroll now and take advantage of our early bird offer! Spaces are limited.
The Guardian
2 days ago
- Business
- The Guardian
Stanford University will cut $140m from its budget citing ‘federal policy changes'
Stanford University will cut $140m from its budget in the coming academic year, citing 'consequences from federal policy changes' including 'reductions in federal research support and an increase in the endowment tax'. The news came in a letter Jon Levin, the university president, and Jenny Martinez, the provost, sent to faculty and staff last week. The budget cuts will likely necessitate staff layoffs, deepening the impact of a staff hiring freeze the university announced in February. The university will continue hiring faculty, 'although the pace may be somewhat slowed', Levin and Martinez wrote. The cuts exclude the School of Medicine, which will make its own budget reductions. 'We believe deeply in the value of universities, in federal support for basic research, and in the endowment model that underpins financial aid and graduate fellowships. We will continue to advocate for these things,' Levin and Martinez said. 'At the same time, we need to be realistic about the current landscape and its consequences.' Stanford has been hit particularly hard by federal changes to research grants and a proposed endowment tax. The university has lost millions of dollars in federal grants this year, according to databases tracking cuts to National Institutes of Health and National Science Foundation grants maintained by Noam Ross of rOpenSci and Scott Delaney of the Harvard T H Chan School of Public Health. The university would also keenly feel the impact of an endowment tax such as that proposed by Donald Trump's 'big, beautiful bill.' The House of Representatives has passed a version of the president's budget which would levy a 21% tax on schools like Stanford, up from 1.4%. The Senate is currently debating a version of the bill which would set the endowment tax at 8%. According to the student newspaper the Stanford Daily, a 21% endowment tax would cost the university approximately $750m annually. At $37.6bn in August 2024, Stanford has the third-largest endowment of any university in the United States, after only Harvard and Yale. During the 2024-2025 academic year, the university disbursed $1.8bn of that endowment to support financial aid and academic programs. In preparation for coming federal cuts, Levin and Martinez said the university would increase its endowment disbursement by 2.9%. That increased disbursement is intended to support financial aid and doctoral student funding, Levin and Martinez said, as well as continued research. To lessen the impact of budget cuts, the university said it would limit capital and facilities expenditures to the most critical ones or those with external funding. Stanford has faced growing federal scrutiny this year apart from its finances. In March, the justice department announced it would investigate whether Stanford, alongside three other California universities, was complying with the supreme court's ban on affirmative action.
Forbes
5 days ago
- Business
- Forbes
Stanford University To Lay Off Staff, Cut $140 Million From Its Budget
Stanford University joins the growing list of universities forced to make major budget cuts, ... More announcing reductions of $140 million for the upcoming year. Stanford University announced this week that it would be laying off employees and cutting $140 million in general operating funds from its budget for the upcoming 2025-26 academic year. The news came in a June 26 letter to the campus from Stanford President Jon Levin and Provost Jenny Martinez. Acknowledging that the news was difficult to share, the administrators wrote that the university faces 'significant budget consequences from federal policy changes. These changes include reductions in federal research support and an increase in the endowment tax.' '(W)e need to be realistic about the current landscape and its consequences. There is significant uncertainty about how federal support for universities will evolve, but it is clear that the status quo has changed,' they warned. The Stanford campus has been bracing for bad budget news for months. On February 26, Levin and Martinez announced that Stanford had placed a freeze on staff hiring, writing that uncertainty about NSF and NIH funding and the possibility of an increased federal tax on university endowments would likely affect its bottom line. In April, Stanford deans were instructed to prepare various budget reduction models, and about three weeks ago, Martinez informed the Faculty Senate that the university "could experience policy changes that would reduce our operating budget by hundreds of millions of dollars a year.' This week that prophecy was fulfilled, and it's likely to get worse. The $140 million reduction does not include the School of Medicine, which will identify its own budget cuts in the coming weeks. Levin and Martinez instructed unit heads to formulate their budget plans, which should become final in the next several weeks, according to four principles: They also wrote that they expect schools and units to handle the reductions in different ways, and that the university will increase its endowment payout by 2.9%, which will provide departments some needed support. The administrators admitted that the budget cuts 'will require some reduction in staff positions, not all of which can be accomplished by eliminating open positions," before adding that the university will make benefits and other compensation available 'to support transitions in cases where layoffs are necessary.' Stanford's current budget plan includes several other elements. In 2024–25, Stanford operating budget was $9.7 billion, $1.8 billion, or about 20%, of which was covered by the annual payout of its more than $37 billion endowment. 'Though the budget reductions in the period ahead will be painful, we are confident that by acting now to put Stanford on stronger and more resilient financial footing, we will be better positioned to pursue excellence and new opportunities going forward,' Levin and Martinez concluded.
