President Donald Trump has made it clear that crushing elite higher education in America is a priority of his administration. He’s frozen federal research funding from NIH, threatened to withhold visas from foreign students, and opened multiple investigations at dozens of schools alleging anti-Semitism and civil rights violations over DEI. His efforts are bearing fruit.
Columbia University recently agreed to a $200 million settlement with the Trump Administration, while Brown University has agreed to a $50 million deal. Harvard was reputedly considering a settlement of up to $500 million, although that figure has since been disputed. Alumni may be chagrined, but financial realities are forcing many colleges to come to the table, says Robert Kelchen, professor and head of the Department of Educational Leadership and Policy Studies at the University of Tennessee, Knoxville.
This transcript has been edited for length and clarity.
Anne Kim:
Why are schools feeling compelled to make these deals?
Robert Kelchen:
Well, the Ivy League institutions have a lot of federal funding from research, and they’re hoping to get some of that back to the extent the administration continues any type of research funding in the future.
But there is a divide on campus and among alumni and board members about what to do. Some people want to take this all the way to the Supreme Court. Others, especially among faculty in the sciences, think that though this might be the right thing to do, it would absolutely devastate their life’s work and research. So they’re hoping they can salvage their own work by doing a settlement. There are also some people who think that a modest settlement now will save them money later because it seems like the administration wants to up the ante with new institutions.
I think all of those reasons really could justify at least thinking about a settlement. But the question is, will you get your money back and will there be pressure to settle again a few months down the road?
Anne Kim:
Now say that Harvard does decide to hold out. Realistically, how long can Harvard maintain the status quo given its current financial resources? They’re potentially losing $9 billion in federal funding, plus the loss of international students. They have a $53 billion endowment, but the government has limitless resources.
Robert Kelchen:
It’s tricky for Harvard to hold out for a long time, especially given that out of their $53 billion endowment, only about $10 billion is unrestricted. They could borrow money from the capital markets to get through, and out of that $9 billion in federal funds, some of that is through affiliated hospitals that doesn’t go directly to the university.
But basically, if they were to try to fight this for years, all their unrestricted money would go away over the next several years, even after making cuts. And for an institution that wants to keep growing and thriving, it’s more difficult to do that without having enough unrestricted funds. So they can do it. The challenge is: Are they willing to take that large of a financial hit, or are they trying to save as much of their position as possible, realizing that conditions may be difficult for years to come.
Anne Kim:
I want to ask about some financial pressures not limited to Harvard but could apply to a broader set of schools. One of these is the endowment tax included in the One Big Beautiful Bill Act. Mark Schneider at the American Enterprise Institute has created a chart revealing these really stunning figures that universities are going to have to fork over in just the next five years. Harvard, think, has to pay about $2 billion, Yale, $1.5 billion, Notre Dame, $690 million.
What is the impact of this measure going to be on elite schools that are particularly targeted but schools more broadly?
Robert Kelchen:
The endowment tax still affects a pretty small slice of American higher education, but it’s a hit on resources at a time where institutions are having to make some difficult financial decisions. But ultimately, the bigger concern over the next several years may not be an endowment tax of up to 8 percent because that tax is only on their income. It could be everything else crazy going on with the economy that could reduce endowment earnings, period. But it’s just another area of financial uncertainty where basically every part of university budgets is under stress right now.
Anne Kim:
And I want to ask about the international student picture too, because that’s another area where Trump seems to be really turning the screws. There is a new analysis from the Association of International Educators, NAFSA, predicting that international enrollment in US colleges could drop by as much as 150,000 students this fall alone – which is a 30 percent to 40 percent decline in new international students this year. What’s the financial impact of that going to be? And again, this is not just about Harvard. International students are everywhere, right?
Robert Kelchen:
We have international students here in Tennessee as well. And we’re not sure how many students are going to be here in the fall because getting visa appointments has been extremely difficult. We don’t really know what’s going on with that social media screening that they’re doing. And then also if students have options in multiple countries, are they considering the U.S.?
A one year drop of 30-to-40 percent of international students is painful, but if we end up with a permanent 30-to-40 percent reduction in international students, then that really starts hitting some institutions’ bottom lines and also really affects both undergraduate and graduate education. International students make up a larger share of grad students, and they’re also teaching classes while they’re here too.
Anne Kim:
What options do universities have for making up some of this revenue?
Robert Kelchen:
The two best options they have are trying to increase fundraising and trying to increase enrollment of American students. And there are signs that some of the big research universities are going deeper into their wait lists this fall to try to get more American students to make up for the expected loss of international students. And then they in turn are taking students from the more regionally focused public and private institutions. So this effect is cascading down higher education food chain. But given when they’re happening at this point in the spring and summer, the ability to adjust is somewhat limited, which means that colleges are going to be taking budget hits this year.
Anne Kim:
So all of this is leading me to believe that we should not be surprised if Harvard comes to the table and settles for some amount of money – principles might have to be sacrificed to pragmatism in these kinds of circumstances. Is that what you’re expecting from a lot of these schools? Is everyone going to have to come to the table at some point because of all of these pressures you’re talking about?
Robert Kelchen:
They’re going to be asked to come to the table, and this is going to go well beyond the Ivies. I could see over the course of the next few years that I could see the administration trying to get money from a couple hundred colleges.
But in terms of having to come to the table, some would rather come to the table than make really difficult financial decisions, while others may say that our autonomy as an institution is more important.
And then the Trump administration on the other hand, is likely to up the ante if you don’t settle. They are going to try to get a higher price out of you and try to freeze every source of federal funding that they can find potentially up to and including financial aid for students.
Anne Kim:
In fact, that is what may be happening with Harvard because the number that was bandied about for a while was $500 million, but then Harvard denied that that was the number and said it was a White House leak. But that’s 10 times more than what Brown settled for.
Robert Kelchen:
And it’s two and a half times more than Columbia as well.
But it’s clear the administration really wants Harvard – in part because Harvard is the name “Harvard” and also because Harvard has shown that they’re willing to fight back to some extent. And that’s not the behavior the Trump administration wants. They want institutions to roll over. And they seem very willing to increase the price for not complying.
Anne Kim:
Do we have any idea what the Trump administration is going to do with the money that it’s collecting from these institutions?
Robert Kelchen:
That is a great question. We have absolutely no idea where the money is going. The president has talked about wanting to redirect money from Harvard to trade schools, so I’m not expecting a big boost to community colleges. I think it’s going to go to some other mysterious project. Maybe it helps pay for Air Force One. A slush fund of this kind is rather unusual and we’re not sure what’s going to happen.
Anne Kim:
Right, and we no longer have a Department of Education to administer said slush fund, which complicates things even more.
But I do wonder if the money is actually the point. The University of Pennsylvania was one of the very first of the Ivies to settle and there wasn’t actually any money involved – they simply agreed to ban transgender athletes. Brown and Columbia have both agreed to some pretty major restrictions on various operational issues at their universities that have nothing to do with finances.
Robert Kelchen:
Brown is settling by paying workforce development nonprofits $50 million over 10 years. The White House isn’t getting anything, but they’re getting some control over institutional operations. And for Columbia, there’s a provision in there saying that Columbia will work to enroll fewer international students. So Columbia got hit with both a financial penalty and some substantial restrictions and operations, even though Columbia is trying to spin it as we keep our autonomy.
Anne Kim:
What’s happening with all of this makes me think that the relationship between higher education and the federal government is changing in perhaps irreparable ways. And you had a recent post on your website pointing out that the job of the university president is now very much a political appointment. So I wonder if you could talk a little bit about where you see the higher ed-government relationship going in the future.
Robert Kelchen:
We had a delightful era since roughly World War II where higher education was relatively apolitical and enjoyed a fair amount of support across the political aisle. Now we’re seeing higher ed used more as a partisan tool or in some cases, such as in Florida, a spoils system where this is the retirement home for former politicians.
And for Republicans, they saw that the congressional hearings against the Ivy league presidents a couple of years ago were massively successful with respect to their base, and that means they’re going to continue going after higher education. And now in a number of conservative States, the state governor or attorney general is teaming up with the Trump administration to try to make significant policy changes, such as ending in-state tuition for undocumented students, or even trying to throw out university presidents as successfully happened at the University of Virginia. I also really wonder who in the world would want a job as a university president right now? It’s just a brutal job.
And part of what’s driving some of these investigations as well is personal grudges by a number of key administration officials. One of the reasons why Duke is in the crosshairs over something in their student law journal is that Stephen Miller went to Duke, and he’s got connections there, and he’s not happy with the way things are going.
Part of the reason why Trump has been focused on the Ivy league is that’s where he got his education. And then we see complaints against seemingly random institutions that come in because someone knows somebody who made a complaint or they saw a complaint come up on TV. It’s just whatever gets on their radar, they’re going there first.
Anne Kim:
So what do you think Trump’s end game is on all of this? Is there anything that’s going to make him happy, short of the utter destruction of American higher education? Does he have a vision for what he wants you think? Or is it really just about the retribution?
Robert Kelchen:
At this point, the goal seems to be to make higher ed fully under him in a way that the federal government historically has not done because we’ve had decentralized higher education. And we’ve been very proud of things like academic freedom and religious freedom in higher education institutions. But under the Trump administration, the focus is bringing elite higher education to heel.
And I think the only way that really changes is if that suddenly becomes politically unpopular. And if you’re attacking the Ivies, it’s difficult for the average member of the public to sympathize as much. But if it starts going broader than that into a lot of the big state universities, then that may be where you start seeing more pushback.
And we’ve even seen with the congressional hearings, as they kind of ran out of Ivy league presidents and started going elsewhere, public attention to those hearings has pretty much fizzled out. For someone who really wants to control that news cycle, the goal is to try to hit, hit, hit right now, especially when the administration is desperately trying to change the national attention from the Jeffrey Epstein scandal.
Anne Kim:
Right! Well, one final question for you is any advice you might have for university presidents out there who may not be in the crosshairs right now. Is there anything that you would recommend that they do?
Robert Kelchen:
The first piece of advice is to assume you will be in the crosshairs at some point, whether it’s because you have money or there’s some student complaint or someone’s videotaping a class and a professor says something that gets on Fox News. So plan for being in the public eye. What is your strategy to try to respond? And does that strategy have any chance of success?
And if you’re at a red state public university, and the administration decides to come after you, the state’s probably also going to join in. And that’s where my advice to institutional leadership is try to get a really good severance package. I hate to say it that way, but it is very difficult for leaders to survive in this type of situation when there have been numerous successes in getting rid of leadership.
Anne Kim:
Thank you, Robert. It’s always a pleasure to talk to you and hopefully the next time we talk to you there will be some more positive news. Take care.
