A wave of staff layoffs is sweeping through some of the US’s most prestigious universities despite their massive endowments. Institutions like Harvard, Stanford, and Johns Hopkins, often seen as financially secure, have announced significant job cuts following federal funding freezes and budget constraints introduced under President Trump’s 2025 funding policies.The 2025 federal budget introduced drastic cuts to research grants and higher education funding, including slashes to agencies such as NIH, NSF, DoD, and USAID. Additionally, a steeper excise tax was imposed on university endowments, affecting many private universities with large funds. This combination of reduced federal support and increased tax burdens has created financial pressures that even the wealthiest universities cannot ignore.Universities respond with large-scale layoffsStanford University, with an endowment of around $40 billion, announced the layoff of 363 employees. The university cited the decline in federal research funding, the new endowment tax, and the need to cut over $200 million from its budget as primary reasons, as reported by Stanford administration sources.Johns Hopkins University, renowned for its medical and public health programmes, reported over 2,200 layoffs. These cuts came after an $800 million reduction in USAID funding, which previously supported many of the university’s global health initiatives. According to Johns Hopkins officials, much of its $10 billion endowment is restricted and cannot be used freely to cover salaries or replace lost federal funds.Duke University also faced similar challenges, with a freeze on $108 million in federal grants prompting layoffs, voluntary buyouts, and restructuring. Duke’s endowment, just over $13 billion, is largely committed to long-term investments, limiting its ability to cover immediate operating costs.Northwestern University, with a $15 billion endowment, eliminated 425 jobs following a sudden $790 million freeze in research funding. University administrators highlighted concerns about maintaining long-term financial health while managing the current budget shortfall.Harvard University, holding the largest endowment of over $50 billion, announced staff contract non-renewals, a freeze on pay raises, and is facing legal challenges related to the increased endowment tax. University officials spoke of preparing for a “structural realignment” amid these new fiscal realities.How endowment size affects flexibilityDespite their large endowments, universities face limits on how much they can spend annually. Much of these funds are restricted by donors to specific purposes such as scholarships or infrastructure, and are intended to last indefinitely. The federal cuts directly reduce operating budgets rather than endowment principal, forcing institutions to make difficult staffing decisions.
What universities say about the cutsStanford officials reported that nearly half of their sponsored research relied on federal funding, making the university vulnerable despite its wealth. Johns Hopkins emphasised that the $10 billion endowment is restricted and cannot offset the federal shortfall, as quoted by university representatives.Harvard administration acknowledged the legal and financial challenges brought by the endowment tax, stating in official communications that they are preparing for structural realignment, as reported by university spokespersons.The funding freeze under President Trump’s administration has thus exposed the fragility of even the most well-funded US universities, leading to widespread job cuts among faculty and staff, raising questions about the future stability of academic employment.TOI Education is on WhatsApp now. Follow us here.
