The showdown between the Trump administration and institutions of higher education escalated when President Trump threatened Harvard's tax-free status on Tuesday.
His threats and the interests involved highlighted not only the billions of government funding that universities receive annually, but also how the practice began and what all of that money would do.
When did universities and universities start receiving substantial federal funds?
Around the time of World War II, the US government began funding universities with the aim of supporting war efforts and focusing funding on medical research, innovation and financial aid for students.
The relationship between the federal government and higher education quickly became symbiotic. The government relied on universities to produce educated, employable students, which led universities to rely on ongoing funding, as well as groundbreaking scientific research.
In 1970, the government spread around $3.4 billion over higher education. Today, individual universities rely on what could be billions of dollars, which is primarily directed towards financial aid and research. Only Harvard receives $9 billion.
What is the government's money fund, and what kind of programs will lose if it is reduced?
Fundraising freezes put students at risk of halting work, contract cuts and medical research. The reductions will also affect hospitals affiliated with universities, such as the Dana-Farber Cancer Institute and Boston Children's Hospital. Both are affiliated with Harvard University.
The university emphasizes that losing federal funds will put a large number of medical and scientific research at risk, including those relating to cancer and diabetes.
After the Trump administration freezes $1 billion for Cornell, the university said the affected grants will be included in “study on new jet engine materials, propulsion systems, large information networks, robotics, superconducting, space and satellite communications,” and cancer research.
When Trump subtracted $790 million from the northwest, the university said the freeze would hinder research into robotics, nanotechnology, foreign military training and Parkinson's disease.
The University of Pennsylvania, where federal funding was suspended, said faculty from seven different schools were affected. Their contracts included research into preventing infections that hospitals have been attacked, drug screening against deadly viruses and protection against chemical warfare, according to a statement by Penn's president.
Does the university have its own money to pay for this?
Yes, no. Most universities are funded by private donations, including tuition and fees, donations, research grants, and state and federal and federal funds. But much of that money comes with guardrails.
Harvard had a $53.2 billion fund in 2024. This was far more than in American universities.
However, the donation fund is not useful as an ATM for the school.
Many funds have certain limitations that determine when and how the money can be used. For example, at Harvard University, 70% of the annual distribution of donations is assigned by donors to a particular program or department. Donations are directed solely for Th Chan School of Public Health, or specifically for graduate fellowships. There are also rules regarding the amounts that can be used for discretionary spending, with legal restrictions on funds.
So, what's it now?
Harvard became the first university to refuse to comply with Trump's demands, citing their strict restrictions, including those relating to freedom of expression. In response, federal officials responded by freezing more than $2 billion in grants. But Harvard's rejection of Trump's demands could mark an inflection point in attacks on American academia.
“What if Harvard didn't take this position,” Ted Mitchell, president of the American Council of Education, told The New York Times. “It would have been nearly impossible for other agencies to do so.”
University administrators across the country are waiting to see how Harvard University and its president, Alan M. Gerber, are heading into the fight against the Trump administration, seeing Columbia admitted to Trump to avoid losing $400 million in federal funds. It is unclear what action the Trump administration will take next, but the possibilities include a survey of Harvard's nonprofit status and cancellation of more visas for international students.
