Trump Moves Could Force Universities to Recalculate Their Bottom Lines

Summary

Trump Administration’s Policy Shifts Threaten Academic Institutions

Introduction

In the April 20, 2025 episode of WSJ What’s News, hosted by Alex Osola from The Wall Street Journal, the discussion centers on the Trump administration's recent moves that could compel universities to reassess their financial strategies. The administration is threatening to withdraw grant funding from prestigious institutions like Columbia University and has already taken action against Harvard University. Additionally, the administration is targeting individual students by revoking hundreds of student visas and initiating deportation proceedings. These actions raise significant concerns about the financial stability, reputation, and cultural landscape of higher education institutions in the United States.

1. The Critical Role of Federal Grants in University Budgets

Doug Belkin, a higher education correspondent for the Journal, elucidates the substantial impact of federal grants on university finances. He explains, “[01:48]... research mostly comes from the government... they have something called the facilities and administration, and that can be north of 50%... If that money is suddenly getting cut by two thirds, that's just less money coming into the system.”

Federal grants not only fund research projects but also cover essential operational costs such as laboratories, administrative salaries, and infrastructure. The Trump administration's decision to cap facilities and administration costs at 15%, down from the previous 50-60%, disrupts the financial equilibrium of universities. This reduction forces institutions to divert funds from critical areas, threatening their overall sustainability.

2. Administrative and Legal Challenges

Belkin further discusses the administration's novel approach to cutting grants: “[03:21]... Trump is using a new set of tools to pull grant money... they're canceling or freezing those contracts, using language in the contracts, as opposed to going through the Title 6 procedures.”

This method bypasses traditional civil rights protocols, leading to legal confrontations. The American Association of University Professors (AAUP) has filed lawsuits claiming that the administration's actions violate First Amendment rights by infringing on academic freedom. These legal battles mark uncharted territory, potentially setting precedents for federal involvement in academic affairs.

3. Dire Consequences for Researchers and Institutions

With reduced grant funding, both researchers and universities face existential threats. Belkin outlines the repercussions: “[04:19]... for the researchers, it's calamitous because this is their entire income stream... experiments or projects that may have been going on for years can get canceled.”

Universities may need to downsize their workforce, halt ongoing projects, and delay new initiatives. This financial strain compromises the research capabilities of institutions and jeopardizes the careers of countless academics and support staff.

4. Universities' Strategic Responses to Funding Cuts

In response to declining grants, universities might adopt several cost-cutting measures. Belkin notes, “[05:06]... around two thirds of the costs to run a university are people. They're going to get rid of people... Projects are going to get shelved...”

Institutions may reduce staff, freeze hiring, postpone infrastructure projects, and cut back on non-essential services. These measures aim to stabilize finances but can adversely affect the quality of education and research output.

5. Impact on Students and Admissions

Financial constraints trickle down to affect students directly. Belkin explains, “[05:43]... pressure on the admissions folks to bring in enough kids who can pay enough money to hit that number... some kids will get smaller packages and they won't go to that school.”

Universities may increase tuition fees, reduce scholarship funds, and become more selective in admissions. This shift could disadvantage students from lower-income backgrounds, exacerbating educational inequalities and limiting access to prestigious institutions.

6. Demographic Pressures and Adaptive Measures

Beyond funding cuts, universities are grappling with demographic changes. Belkin highlights, “[06:59]... they're trying to be more entrepreneurial, they're trying to attract more adults, they're trying to go more online.”

Institutions are diversifying their programs to include adult education, expanding online course offerings, and establishing partnerships with local communities. These strategies aim to tap into new revenue streams and mitigate the impact of declining traditional student enrollments.

7. Cultural Shifts and Academic Freedom Concerns

The administration's interventions extend beyond finances, touching upon the cultural and ideological fabric of universities. Belkin discusses the establishment of the Task Force to Combat Antisemitism, explaining, “[07:49]... the universities have adopted an ideology that's so progressive... we have to create a more intellectually diverse environment.”

This move challenges the long-held tradition of academic self-governance, where faculty autonomy in curriculum and research decisions is paramount. The administration's insistence on external oversight threatens to undermine academic freedom, prompting debates about the balance between governmental authority and institutional independence.

8. The Crucial Role of International Students

The latter part of the episode features Fanta Ave, Executive Director and CEO of NAFSA: Association of International Educators, discussing the vital contribution of international students to U.S. universities. Ave states, “[11:41]... international students... their economic contributions is quite significant... about $43 billion.”

International students not only bolster university finances through tuition fees but also enhance research endeavors, particularly in STEM fields. Ave emphasizes, “[12:55]... we're seeing about a 40% decline in the number of those students who are looking to the US as a destination.”

9. Declining Interest and Its Repercussions

The Trump administration's restrictive policies are dissuading prospective international students, leading to a potential loss of $43 billion in economic contributions and over 300,000 jobs. Ave warns, “[14:59]... it can be a hit to the reputation of universities... international students... become very important bridge to trade and other relations for the United States.”

The decline in international student enrollment not only affects university revenues but also diminishes the United States' global educational standing and its soft power influence through alumni who become international leaders and collaborators.

Conclusion

The Trump administration's recent policies present a multifaceted challenge to American universities, threatening their financial stability, academic freedom, and global reputation. Federal grants, crucial for both operations and research, are being curtailed through unprecedented administrative measures, provoking legal battles and forcing institutions to implement stringent cost-cutting strategies. Simultaneously, the targeting of international students undermines a significant revenue stream and jeopardizes the United States' position as a premier destination for higher education. As universities navigate these turbulent changes, the long-term implications may reshape the landscape of American higher education, impacting students, researchers, and the broader societal role of educational institutions.

Notable Quotes

• Doug Belkin [01:48]: “...if that money is suddenly getting cut by two thirds, that's just less money coming into the system.”

• Doug Belkin [03:21]: “Trump is using a new set of tools to pull grant money... using language in the contracts, as opposed to going through the Title 6 procedures.”

• Fanta Ave [11:41]: “International students... their economic contributions is quite significant... about $43 billion.”

• Fanta Ave [12:55]: “We're seeing about a 40% decline in the number of those students who are looking to the US as a destination.”

Transcript

[Narrator]

Viking committed to exploring the world in comfort. Journey through the heart of Europe on an elegant Viking longship with thoughtful service, cultural enrichment and all inclusive fares. Discover [e-mail] hey, what's news, listeners?

[Alex Osola]

It's Sunday, April 20th. I'm Alex Osola for the Wall Street Journal. This is what's NEWS Sunday, the show where we tackle the big questions about the biggest stories in the news by reaching out to our colleagues across the newsroom to help explain what's happening in our world. On today's show, the Trump administration is threatening to pull grant funding from institutions like Columbia and has already done so for Harvard. And it's also taking aim at individual students, pulling hundreds of student visas and even moving to deport some. What's the impact on universities? Bottom lines, their reputation and their culture? At the end of the day, universities are businesses. Their budgets are made up of student tuition, endowments, financial philanthropic donations, and government grants. Just how big their budgets are depends on a number of different factors, including, say, how much research the university does. For example, Harvard spent $6.4 billion in fiscal year 2024. Later on in the show, we'll speak to Fanta Ave, the executive director and CEO of nafsa, the association of International Educators, about where international students fit into balancing these budgets. But first, let's zero in on the Trump administration's threats to freeze billions of dollars in grants from institutions and how it's unsettling universities across the country. Joining me now to discuss the not insignificant impact of federal grants on university budgets is Doug Belkin, who covers higher education for the Journal. So, Doug, let's jump right in. How much does grant money matter to universities, bottom line?

[Narrator]

So when you add it up, it starts to become real money. And you can see how critical the research amount is for the operating budget. Research mostly comes from the government, and the way it works is it'll be an agency, the National Institute of Health or group like that will write a check to the university. The fiduciary of the university is the board of directors of the trustees. So the check gets written to them, but it's really being sent to the researcher who came up with a really good idea that impressed a lot of people and made it through a really intense vetting process. And the NIH or whoever decided this is such a good idea, we want to fund this research, that money goes to the board and then the school is going to keep a chunk of it. They have something called the facilities and administration, and that can be north of 50% because that pays for the labs and the administrators and the electricity. And there's a lot of things that go into running a university. What's left over pays for the grad students, the researcher, whatever is needed to do the research itself. One of the things that the Trump administration has done is said, we don't want to pay 50, 60% in facilities in administration. We want that limited to 15%. So that was one of the first things that Trump did, and it really threw a monkey wrench in the budgets of these universities, because that money is used by the university to keep the lights on, and it's fungible. If that money is suddenly getting cut by two thirds, that's just less money coming into the system. And, you know, it has to come from somewhere else.

[Alex Osola]

What kinds of challenges might the president face in pulling grant money?

[Narrator]

So Trump is using a new set of tools to pull grant money. They created this task force that's looking at the contracts that the researchers have received, and they're canceling or freezing those contracts, using language in the contracts, as opposed to going through the Title 6 procedures. The Title 6 is a civil rights. You have to go through certain things in order to stop funding that way. So. So there's a different tool being used, and that's part of why this is sort of legally on new ground. The faculty, the aaup, which is the union for the faculty at Harvard and at Columbia, has filed a lawsuit on the ground that the Trump administration does not have the right to cancel research grants and to tell them what to research and what to teach on campus, that that's a violation of their First Amendment rights. And we're moving into unchartered territories here. So the courts are going to have to weigh in on this.

[Alex Osola]

What is the result of less money coming in for this purpose?

[Narrator]

Right. So there's two actors here. There's the researcher and there's the institution. So there's less money for the institution. So they're figuring out how to cut back. For the researchers, it's calamitous because this is their entire income stream. One NIH grant can keep dozens of people employed and an entire research project, which may be spread across several institutions or even around the globe. Now, the checks stop cashing, the research comes to an end, people lose their jobs unless there's a way to tap another source, and experiments or projects that may have been going on for years can get canceled. And that's why it's such an existential issue for the research community.

[Alex Osola]

So what can these universities do if they see that Grants are no longer as reliable a funding stream potentially as it has been in the past. Where else can they look?

[Narrator]

She so around two thirds of the costs to run a university are people. They're going to get rid of people they're not going to fill positions, they're going to hold off on raises, they're going to trim benefits. It's like every other corporation. When there's not enough money coming in, the workers are going to feel a pinch. That's going to be the main thing. Projects are going to get shelved. Things that were going to be built, there was money earmarked for them from a particular donor. But maybe the school had to match a piece of that. Now the school can't match it, so they're going to postpone that. That's the sort of thing that's likely to happen.

[Alex Osola]

How could students feel any of these changes?

[Narrator]

Some schools are really dependent on tuition and some schools less so. Right. Some schools are getting 75% of their revenue from tuition. But if there's less money in the pot, usually what happens is the chief financial officer says to the admissions director, we need to generate $50 million from this year's class and so you can give scholarships and grants, but we need to get that much money coming through the front door. Which means that there's pressure on the admissions folks to bring in enough kids who can pay enough money to hit that number. And ultimately that will mean some kids will get smaller packages and they won't go to that school and the field will sort of tilt in favor of kids who are able to pay in full. So that's how this will round out at some schools. But you say that there's not that many kids in America, families in America, who are able to pay full freight for universities. So the sticker price for schools keeps going up, but the net price is now going down because there's fewer people who can afford it. So there creates pressure kind of at every point.

[Alex Osola]

These aren't the only pressures on universities, budgets. Right. I'm thinking of the fact that right after the Great Recession, people had fewer babies. Those babies are now ready to go to college, which means fewer students actually entering college. Now what does all this mean for universities?

[Narrator]

The pressure that universities are under is to maintain the money. So they're turning more toward adults and people who didn't graduate college. They're trying to be more entrepreneurial, they're trying to attract more adults, they're trying to go more online. You see little one offs, assisted living and senior living. Popping up near universities so that those people can enjoy what's happening on a college campus and the resources there, which is, you know, also a financial benefit for universities. So there's little green shoots happening around the country that universities are experimenting with to bring in more money.

[Alex Osola]

We've been talking hard numbers here about some of the impacts of what the Trump administration is doing. But I want to talk about the sort of softer, the cultural impact, because what the Trump administration is talking about doing is installing federal oversight at Columbia, reforming campus culture at Harvard. These are characteristic changes right, to these institutions.

[Narrator]

So I guess sort of to back up a little bit, the name of the task force is the Task Force to Combat Antisemitism. And the reason it was stood up is, is because Jewish students on campuses, particularly at Columbia and Harvard, were being harassed. They were getting screamed at on the way to class. And that's the focus of the task force. What Trump and folks in the task force are saying is that, listen, the universities have adopted an ideology that's so progressive and leans so far to the left that they've accepted these notions which ultimately believe that Israel Zionism is a form of racism and it's a settler colonial state that doesn't have a right to exist. And so this way of thinking has led to people promoting Hamas and these groups that are at war with the United States. And so we have to create a more intellectually diverse environment and we have to make sure that folks who are enemies of America don't have a place in the university and they're not comfortable there. So universities are largely self governing. The faculty determines who is gonna be on the faculty, who is gonna get tenure. And they guard this jealously. They have the freedom to decide what to think, what to study, what to research. Other places don't have that. They have ministers of education. And there's more of a top down approach. It's bottom up here. So if the government says we wanna be the ones who decide who's teaching what you're teaching, then they're challenging this notion of academic freedom. And that's sacrosanct on college campuses. And that's why people are this notion. Donald Trump or anybody else in the federal government gets to determine what should be on a curriculum, on a syllabus. That's a First Amendment issue. So on the one hand, you've got overreach from the left that squashed intellectual debate on college campuses because they said, we'll cancel you if you say certain things, if you believe certain things. And a lot of faculty were aligned with that. And now you've got the right coming in and saying we're going to take over and we're going to be the ones who decide. And so there's this sense of overreach from the right. But the university also has an obligation to regulate itself so that it is not so far out of touch with the American public, in this case politically, that the support that the American public is giving them makes sense to the public. And so this disconnect is why this is happening.

[Alex Osola]

That was WSJ reporter Doug Belkin. Thank you so much, Doug.

[Narrator]

Thanks very much.

[Alex Osola]

Coming up, the Trump administration's moves against foreign students threaten another of universities revenue streams. More after the break. Trustage companies simplify the complex with 90 years of delivering accessible insurance and innovative financial solutions. Let's work together and build a better tomorrow today. Learn [e-mail] WSJ Trustage is the marketing name for Trustage Financial Group, Inc. Its subsidiaries and affiliates. Corporate headquarters is located in Madison, Wisconsin. Immigration officers have detained two students, Mohsen Madawi and Mahmoud Khalil, both of whom were organizers of pro Palestinian protests at Columbia University. The government is also attempting to deport Khalil, though that effort is tied up in a legal battle at the moment. In the past few weeks, the government has also revoked a number of student visas without notice, causing confusion and panic among students. And as of this past week, the Trump administration has threatened to stop international students from attending Harvard. In a letter to the university, the Homeland Security Department said that hosting international students was a privilege, not a guarantee, and asked for information about visa holders by the end of the month. That could cause a long term problem for universities because they rely on the tuition these international students pay. I'm joined now by Fanta Ave, the executive director and CEO of nafsa, the association of International Educators. Fanta, what do international students need mean for universities?

[Fanta Ave]

Bottom Lines so international students who come to the US granted that they only make up 6% of the total population enrolled in universities, their economic contributions is quite significant. We track that on a yearly basis and for our most recent Data, it's about $43 billion. And it's not only to universities, by the way, the 43 billions are to universities, but also to the local economy of where those universities are situated. And it's also over 300,000 jobs that are created as a result of international students coming to the US to study. Most of the students who come to study tends to be graduate students. They study generally in the STEM field or in the business administration area. In terms of their source of funding, the source of funding is mostly students who are self funded. However, at the graduate level, given the importance of research and given the importance of assistantship and so forth, there are graduate students who come with funding provided to them in return for research and assistantship. At the graduate level, I want to.

[Alex Osola]

Kind of take us into the current moment that we're in. So what are you hearing from agents and prospective students about the Trump administration's actions on universities? What do they make of this?

[Fanta Ave]

What we keep hearing from students and from stakeholders is a lot of anxiety, tremendous confusion around the processes and so forth, and the need for greater answers and transparency around these processes. We're constantly hearing that for students who make the decision to come and study in the United States, that's not a small decision to make. Preliminary data has indicated that in several parts of the world where there had been previously a high level of interest in wanting to come and study in the US that we're seeing about a 40% decline in the number of those students who are looking to the US As a destination. They're looking to other parts of the world, whether it's Germany, whether it's France, whether it's Japan, South Korea, and other destinations that before the US Was perhaps their first choice or even their second choice, but now they're considering other destinations.

[Alex Osola]

So if universities have been receiving full tuition from some of these international students, or a decent number of them, and fewer international students are coming in the near future to the U.S. what would that mean for these universities, funding, what kind of impact could that have?

[Fanta Ave]

Well, it depends, right? Because a good number of them are graduate students, whether you're talking about business programs and other fields of study, graduate students are bringing in funding to the university, they're bringing tuition dollars to the university. But also for those universities that are receiving research funding, often at the graduate level, particularly in fields like the STEM field and others, a lot of times it is graduate students who are working in partnerships with faculty to in many ways be able to fuel the research engine of universities as well. And that's another component that could be potentially at risk is the research infrastructure and the ability to be able to conduct the level of research that is often needed with both domestic and international students.

[Alex Osola]

As we speak, the Trump administration's moves could potentially change how international students see American universities. Right. Like their reputation. Do you think having these universities names in the headlines a lot could be a boon or hit for these universities internationally?

[Fanta Ave]

I think it can be a hit to the reputation of universities, not in the immediate because these are universities that have had a long standing and solid reputation for decades internationally. But I do think over a period of time it could be. The other piece about this also is that international students in many ways when they come and they study and they've learned more about the United States and they go back home, they become very important bridge to trade and other relations for the United States. So the loss of that can have other consequences in the long run.

[Alex Osola]

That was fun. To AB Executive director and CEO of nafsa, thank you so much.

[Fanta Ave]

Thank you, Alex. Thank you for the opportunity.

[Alex Osola]

And that's it for what's new Sunday for April 20th. Today's show is produced by Charlotte Gartenberg with supervising producer Michael Cosmides and deputy editor Chris Sinsley. Alex, I'm Alex Osola and we'll be back tomorrow morning with a brand new show. Until then, thanks for listening.