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Harvard President Alan M. Garber ’76 warned Monday that the combined financial impact of sweeping federal policy changes — including research funding cuts, threats to international students, and a sharp increase in the tax on endowment income — could cost the University up to $1 billion annually.
In a letter to University affiliates, Garber and other senior administrators warned that next year’s budgets will extend and deepen cuts to cope with mounting pressure from the Trump administration’s now months-long campaign, including the termination of more than $2 billion in research funding.
“The unprecedented challenges we face have led to disruptive changes, painful layoffs, and ongoing uncertainty about the future,” the letter read.
Garber announced in the letter that Harvard will extend its hiring freeze for faculty and staff — first issued in March — with exceptions only for roles deemed essential to the fulfillment of grant- or gift-funded projects. Administrators have also instructed each school and unit to continue reducing expenditures, streamlining administrative functions, and making "strategic, structural, and sustainable” changes to increase financial flexibility, according to the letter.
The updated budget plans for fiscal year 2026 are expected to be released this week and come in the wake of layoffs at the Harvard Kennedy School, the School of Public Health, and the Medical School, where deans have cited mounting financial strain tied to federal actions.
The letter was co-signed by Harvard Provost John F. Manning ’82, Executive Vice President Meredith L. Weenick ’90, and Chief Financial Officer Ritu Kalra.
In the letter, the officials emphasized that while the University allocated $250 million in bridge funding in May to sustain research through fiscal years 2025 and 2026, additional actions will be necessary to address what they described as “long-lasting declines” in core revenue streams and rising research and teaching costs.
They also explicitly acknowledged, for the first time, the endowment tax hike signed into law by United States President Donald Trump on July 4. The new law raises the federal excise tax on income from Harvard’s $53 billion endowment from 1.4 percent to 8 percent, a change that is expected to cost Harvard more than $200 million annually.
While University officials have long warned that the hike could significantly undermine funding for financial aid, research, and faculty support, the Monday letter marked Harvard’s first formal recognition of the legislation’s passage and its projected financial consequences.
Since April, Harvard has faced hostility from both the White House and Congress, locked in a high-stakes political tug-of-war playing out on nearly a dozen fronts. The Trump administration and its allies have frozen more than billions of dollars in federal research funding, pushed to revoke Harvard’s tax-exempt status, scrutinized foreign donations, called for the elimination of diversity programs, and targeted Harvard’s governance structure.
International students, in particular, have been caught in the crossfire. In late May, the Department of Homeland Security moved to revoke Harvard’s certification to host international students. Just over a week later, Trump signed an executive order restricting entry to the U.S. for students planning to study at Harvard. Harvard challenged both actions in court and has since secured preliminary relief.
Still, Garber and other administrators warned on Monday that the situation was far from resolved.
“Our ability to host international students and scholars on campus is subject to ongoing challenge,” the letter read.
The Monday letter is the second public statement from Harvard’s central administration describing how the University’s finances have been burdened by federal policy. The first message, issued in March, announced a University-wide hiring freeze and urged schools to identify structural savings and curb long-term financial commitments.
—Staff writer Dhruv T. Patel can be reached at dhruv.patel@thecrimson.com. Follow him on X @dhruvtkpatel.
