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Harvard University posted its first operating loss since the coronavirus pandemic after US President Donald Trump cut off billions of dollars in federal research funding in an effort to control college campuses.
Harvard reported a $113mn deficit in its 2025 fiscal year, the university’s first since it lost $10mn in 2020 due to turmoil caused by the pandemic. The losses are its largest since 2011.
Harvard president Alan Garber said the blow could have been worse had the university not quickly resorted to lay-offs and freezes on hiring and salary increases, among several emergency tools used to conserve cash.
“Even by the standards of our centuries-long history, fiscal year 2025 was extraordinarily challenging,” Garber said in a statement accompanying the school’s annual report. “We announced a hiring freeze and painful lay-offs, kept salary increases flat for exempt employees, and scaled back projects and expenditures.”
The Trump administration froze multiyear federal funding to Harvard totalling more than $2.7bn earlier this year, and has threatened tuition income by seeking to prevent it from admitting international students. Both actions have been overturned by judicial rulings, and some money has been restored since the end of Harvard’s financial year. Still, some faculty have said they were told they will not receive additional money even on previously agreed government grants.
Harvard warned of more challenges ahead, including a tax increase on its endowment investment returns, leading the university to seek additional budget cuts. “We are also examining operations at every level of the university as we seek greater adaptability and efficiency,” said Garber.
The university said “daunting challenges await” and warned of additional cuts. It raised more than $1bn in debt financing earlier this year to offset the cuts, and said it received more than $600mn in current use gifts by alumni and others, a record for the university. Current use gifts are applied to their designated charitable purpose when they are received.
“Structural changes and reductions across our schools and units will be necessary, and they will not be easy. Our work is far from finished,” said finance chief Ritu Kalra and treasurer Timothy Barakett.
Even still, Harvard’s finances were buoyed by investment gains from its $57bn endowment. Assets rose 11.9 per cent in the year, its largest increase since 2021, when exuberant financial markets led to a more than 30 per cent gain.
Harvard’s endowment provided a record $2.5bn to the university to cover its operations, amounting to 37 per cent of the school’s overall operating spending.
While the university’s investment results increased from prior years — above its 8 per cent benchmark — a lower exposure to surging public equities meant that its results were lower than some peers such as the Massachusetts Institute of Technology, Stanford and the University of Pennsylvania.
But Narv Narvekar, chief executive of Harvard’s endowment, said the investment results reflected the beginning of a pay-off from its recent decision to increase its equity exposure.
The White House is continuing to put pressure on Harvard and other universities, pursuing claims of antisemitism and seeking the imposition of a compact to freeze tuition fees, cap international student numbers and guarantee conservative viewpoints on campus.
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