Stanford University has announced a $140 million cut to its operational budget as it faces mounting financial pressure stemming from federal policy changes. In a letter to faculty and staff, President Jon Levin and Provost Jenny Martinez emphasized the university’s commitment to its academic mission while acknowledging the “significant budget consequences” posed by reduced federal research funding and a proposed increase in the federal endowment tax.
“There is significant uncertainty about how federal support for universities will evolve,” Levin and Martinez noted. “But it is clear that the status quo has changed.” Despite the fiscal tightening, the university leadership reaffirmed its dedication to advocating for higher education, the importance of federal research support, and the endowment model that sustains student financial aid and graduate fellowships.
Stanford University Impact of Federal Cuts and Endowment Tax Proposal
Stanford University, one of the top beneficiaries of federal research grants, has already experienced the loss of hundreds of millions of dollars in funding from the National Institutes of Health (NIH) and the National Science Foundation (NSF). This trend reflects broader cuts introduced during the Trump administration. According to data compiled by researchers at rOpenSci and Harvard’s T.H. Chan School of Public Health, Stanford’s losses rank among the most severe nationwide.
Further compounding the financial pressure is a proposed increase to the endowment tax, currently at 1.4%, as part of President Trump’s domestic policy package. While the House proposal seeks to raise the rate to 21% for the wealthiest institutions, the Senate version suggests an 8% increase. With a $37.6 billion endowment—one of the largest in the country—Stanford stands to face a substantial new financial burden under either scenario.
Layoffs, Hiring Freezes, and Program Protections
Despite the looming cuts, Stanford University has committed to maintaining funding for key academic priorities, including undergraduate financial aid and PhD student support. However, the university warned that job losses are likely. “The most difficult part of these decisions is that they will require some reduction in staff positions,” the university leaders acknowledged, noting that not all of these reductions can be achieved through natural attrition or by leaving vacancies unfilled.
To mitigate the impact, Stanford plans to lean on its compensation and benefits programs to assist affected employees. Additional cost-saving measures include scaling back on non-essential capital and facility projects, continuing a hiring freeze, slowing down faculty recruitment, and limiting salary increases to cost-of-living adjustments.
In closing, Stanford University leadership stressed the importance of adapting to the shifting economic landscape while preserving the institution’s core mission. “We will continue to advocate for the value of higher education and for the resources that support it, even as we make difficult choices to navigate the current reality,” Levin and Martinez said.