The Trump administration threw higher education officials into a panic last Tuesday when the Office of Management and Budget issued a memo ordering federal agencies to halt outgoing grants and loans—effectively cutting off colleges and universities from billions in research and administrative funding. Colleges rely on federal grants to not only fund essential research but also to maintain facilities, pay administrator salaries, provide IT support and more.
For some schools, even a temporary pause in this revenue stream could wreak havoc on their research apparatuses, but the universities with giant endowments are well-equipped to handle a freeze.
“The idea that a temporary pause in an inflow of research funding should be hugely problematic for flagship state universities or Ivy League institutions would only seem to be [true] in the case of egregiously bad financial management,” explains Rick Hess, senior fellow and director of education policy studies at the American Enterprise Institute.
According to government disclosures, the top 30 private university recipients of federal grant, appropriations and contract funding received $20 billion in fiscal 2023 (see table). America’s richest college, Harvard University, received $649 million in federal grants, appropriations and contracts in fiscal 2023. It would have no problem outlasting a payment pause, even if the pause lasted for another four years.
The $649 million made up 11% of its revenues but only 1.3% of its $51 billion endowment in fiscal 2023. Each year, the Ivy League university spends about 4% to 5% of its endowment. Thanks to investments in private equities and hedge funds, Harvard’s endowment returned nearly 10% in 2024 (or nearly $5 billion) and is now worth $53.2 billion.
For rival Princeton, the $208 million in federal funding it received in 2023 accounted for nearly 43% of its revenues in 2023 but less than 1% of its burgeoning $33.4 billion endowment.
The top beneficiaries of federal government funding are science and medical research oriented colleges Johns Hopkins University, which took in $4 billion in fiscal 2023, and the Massachusetts Institute of Technology, which received $1.6 billion in federal funding in 2023. Federal funding accounts for 52% of MIT’s operating revenues and for Johns Hopkins, 40%.
While MIT’s government handout only makes up 7% of its $23 billion endowment, for Johns Hopkins the amount is 38% of a $10 billion endowment. Most schools limit annual endowment dipping to 5%, but with board approval, it’s possible for any school to tap into their unrestricted assets to support ongoing research while the federal funding is paused.