Badly Bruised Universities Are Rushing to Cut Deals With Trump

Yahoo

2 days ago

(Bloomberg) -- As a growing number of the wealthiest US colleges capitulate in their battles with the Trump administration, the strain from lost and frozen federal funding is putting pressure on the remaining holdouts to cut a deal.
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Universities targeted by Donald Trump's crackdown on diversity programs and other policies he says show a liberal bias are essentially bleeding at the negotiating table after taking on debt, laying off hundreds of staff and slashing spending. As the fall semester approaches, they may be increasingly eager to ink accords that will stanch the flow.
Cornell and Northwestern, both of which announced steps to address major budget shortfalls this year after the federal government suspended research funds, are now close to agreements with the White House, Bloomberg News has reported.
Brown, Columbia and the University of Pennsylvania reached accords over the past month. But amid those settlements, new universities are being targeted. Most recently, the University of California at Los Angeles and Duke joined Harvard, Northwestern, Princeton and others in losing access to federal grants that are the financial lifeblood of large research institutions.
It all adds up to an unprecedented pressure campaign that's roiling the world of higher education, reverberating through faculty, student and alumni groups and clouding the outlook for the type of medical and scientific research that takes place at the colleges. The multitrillion-dollar tax law signed last month also hikes the tax on income from endowments for some of the wealthiest private schools. As the Trump administration gains leverage, colleges' bruised budgets could drive them toward making agreements quicker.
'It seems like they want to get deals done now,' said Brendan Cantwell, a professor at Michigan State University who focuses on the political economy of higher education. 'It's almost like a dam is broken. I would not be at all surprised if we saw a cascading set of agreements.'
Federal funding has been used as a cudgel by the Trump administration, which has criticized what it says is a failure by academic institutions to crack down on antisemitism during campus protests over Israel's war in Gaza. The moves also come amid a broader campaign against diversity efforts and accusations of political bias.
The fallout has already started. Northwestern said it would cut more than 400 jobs to save 5% on labor costs, with university officials calling the past few months some of the most difficult in its 174-year history. The Trump administration in April paused $790 million in research funding for the Evanston, Illinois-based school because of potential civil rights violations.
At Cornell, leaders in June warned that drastic financial austerity measures were on the table after hundreds of millions of dollars in federal research contracts were terminated or frozen.
'The spring semester was unlike anything ever seen in higher education,' they wrote in a letter to students and staff. 'We have been using institutional resources to try to plug these funding holes in the short term, but these interim measures are not sustainable.'
Late last month, the government froze $108 million in research funding to Duke University, or about 20% of its federal revenue, three Trump administration officials told Bloomberg. Duke is in talks with government officials on a settlement, according to an administration official.
Duke's press office didn't provide a comment on the funding loss or the status of government talks.
A Duke official, who asked not to be identified discussing internal deliberations, said the school is reconsidering its budget amid the funding loss, but that it hopes an end to the freeze will come soon.
Cornell and Northwestern have declined to comment on any settlement talks.
Trump Agreements
On July 23, Columbia University agreed to pay $221 million in a deal that was promptly criticized for infringing on academic freedom at the school.
Brown announced a deal on July 30, agreeing to give $50 million over 10 years to workforce development organizations in its home state of Rhode Island in exchange for the reimbursement of at least $50 million in unpaid federal grants. Shortly before reaching the deal, Brown took out a $500 million loan — a sign of how strained the school's finances had become.
Brown, the least wealthy of the Ivy League schools with an endowment of $7.2 billion, had previously warned in June of 'significant' cost-cutting measures to offset the federal funding.
The Trump administration's higher-education crackdown has exposed just how dependent some of the elite, research-focused universities are on the government. They're essentially 'major federal contractors' and stopping the stream would be catastrophic for many of them, according to Cantwell.
'Think about Booz Allen or Raytheon,' Cantwell said. 'If they said, 'All your federal funding will be frozen for 9 months,' you can imagine how those firms might react.'
The Trump administration has dealt a harsher financial blow to Harvard than any other university in its crosshairs, freezing billions of multiyear research grants and contracts.
The school estimates that the moves by the administration, as well as the endowment tax increase, will cost about $1 billion annually. Harvard's Kennedy School already cut staff.
'The unprecedented challenges we face have led to disruptive changes, painful layoffs, and ongoing uncertainty about the future,' Harvard President Alan M. Garber said in a letter to the campus.
Garber has told faculty that a settlement with the government isn't imminent and the university is considering resolving its dispute through the courts, the Harvard Crimson reported Monday.
Larry Ladd, who served as Harvard's budget director and now advises schools at the Association of Governing Boards of Universities and Colleges, said he can't criticize any college for coming to a deal with the Trump administration given what's at stake for their campuses.
'Schools are likely facing pressure to use endowment and tuition revenue, which are typically used to support students, to support some of their research enterprise instead,' Ladd said. 'They don't want to do that because they want to continue to support students. There's that pressure as well.'
Lynn Pasquerella, president of the American Association of Colleges and Universities, said campus leaders are being put in an 'untenable position' and worries that federal funds will continue to be weaponized by the Trump administration, even if schools make deals.
'The concern is the more we capitulate through making these agreements, the more the administration will be empowered to continue along these lines,' she said.
--With assistance from Janet Lorin and Akayla Gardner.
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