The News
As the White House pulls billions of dollars in federal funding, elite US universities face a problem of their own making: Their money is tied up in investments they can’t cash out.
The historic mainstays of university endowments were stocks and bonds, with a smattering of riskier bets on real estate and leveraged buyouts. Over the past decade, Harvard, Princeton, and other schools already or likely to be in Trump’s crosshairs barrelled into the latter bucket — investments that produced high paper profits but little cash to fund research, scholarships, and other operating expenses. In 2014, Harvard had almost half of its assets in bonds. In 2024, that number was 5%. Other endowments have also swapped readily saleable investments for private funds that offer higher returns but don’t spit out much cash.
Now, many of those elite institutions are facing the threat of budget shortfalls. The Trump administration is yanking funding, and the prospect of a recession could prompt deep-pocketed donors — many of them Wall Streeters already angered by campus protests and university responses — to pull back. Even the donations they do have come with strings attached: About 56% of Princeton’s endowment and 80% of Harvard’s are earmarked towards specific purposes set out by donors and can’t be easily redirected.
Universities are doing what everyone does when they need cash: They are borrowing. But Harvard’s $750 million bond offering is a fraction of the $2.2 billion in federal funding the White House yanked yesterday in response to the university’s defiance.