Stanford University will cut $140m from its budget citing ‘federal policy changes’

Stanford University will cut $140m from its budget in the coming academic year, citing “consequences from federal policy changes” including “reductions in federal research support and an increase in the endowment tax”. The news came in a letter Jon Levin, the university president, and Jenny Martinez, the provost, sent to faculty and staff last week.

The budget cuts will likely necessitate staff layoffs, deepening the impact of a staff hiring freeze the university announced in February. The university will continue hiring faculty, “although the pace may be somewhat slowed”, Levin and Martinez wrote. The cuts exclude the School of Medicine, which will make its own budget reductions.

“We believe deeply in the value of universities, in federal support for basic research, and in the endowment model that underpins financial aid and graduate fellowships. We will continue to advocate for these things,” Levin and Martinez said. “At the same time, we need to be realistic about the current landscape and its consequences.”

Stanford has been hit particularly hard by federal changes to research grants and a proposed endowment tax.

The university has lost millions of dollars in federal grants this year, according to databases tracking cuts to National Institutes of Health and National Science Foundation grants maintained by Noam Ross of rOpenSci and Scott Delaney of the Harvard T H Chan School of Public Health.

The university would also keenly feel the impact of an endowment tax such as that proposed by Donald Trump’s “big, beautiful bill.” The House of Representatives has passed a version of the president’s budget which would levy a 21% tax on schools like Stanford, up from 1.4%. The Senate is currently debating a version of the bill which would set the endowment tax at 8%. According to the student newspaper the Stanford Daily, a 21% endowment tax would cost the university approximately $750m annually.

At $37.6bn in August 2024, Stanford has the third-largest endowment of any university in the United States, after only Harvard and Yale. During the 2024-2025 academic year, the university disbursed $1.8bn of that endowment to support financial aid and academic programs. In preparation for coming federal cuts, Levin and Martinez said the university would increase its endowment disbursement by 2.9%.

That increased disbursement is intended to support financial aid and doctoral student funding, Levin and Martinez said, as well as continued research. To lessen the impact of budget cuts, the university said it would limit capital and facilities expenditures to the most critical ones or those with external funding.

Stanford has faced growing federal scrutiny this year apart from its finances. In March, the justice department announced it would investigate whether Stanford, alongside three other California universities, was complying with the supreme court’s ban on affirmative action.