Stanford University, home to a $37.6 billion endowment, announced $140 million in cuts Thursday, citing “significant budget consequences from federal policy changes.”
The move could result in layoffs and program reductions across several of its schools, the university said in an announcement.
The cuts, which exclude the School of Medicine, are still being finalized. University leaders said schools and departments will have discretion in how to implement reductions, with guidance to prioritize research and education, preserve need-based financial aid and five-year Ph.D. student funding, simplify administrative processes, and “strengthen long-term financial resilience.”
Stanford, one of the premier research and higher education institutions on the West Coast, has the third-largest endowment in the U.S., trailing only Harvard’s $50.7 billion and Yale’s $40.7 billion. It is also Silicon Valley’s largest landowner, with more than 8,000 acres across Santa Clara and San Mateo counties.
Despite its vast wealth and influence, Stanford began signaling financial challenges earlier this year amid federal funding cuts to research and higher education under the Trump administration. Stanford also withdrew from a four-year negotiation to purchase Notre Dame de Namur University’s 100-acre nearby Belmont campus in February, citing financial uncertainties.
In late May, University of California Investments purchased the campus for an undisclosed amount.
“These plans call for a $140 million reduction in the allocation of university general funds to support operations,” university President Jonathan Levin and Provost Jenny Martinez wrote in a letter to staff and students on Thursday. “Schools and units have been preparing for this reduction and will finalize their plans over the next several weeks.”
Stanford officials said each department will handle the cuts differently, since general funds are flexible and used for a wide range of operations.
“The most difficult part of these decisions is that they will require some reduction in staff positions, not all of which can be accomplished by eliminating open positions,” university leaders said in the letter.
The university confirmed that its staff hiring freeze, announced earlier this year, remains in effect, although faculty hiring will continue at a slower pace. “Moderate” salary increases to offset the rising costs of living will continue as planned.
“We will focus capital and facilities spending on the most critical and/or externally funded projects,” the letter stated. “The most difficult part of these decisions is that they will require some reduction in staff positions, not all of which can be accomplished by eliminating open positions.”
University spokesperson Luisa Rapport said Stanford does not yet have details on specific program or staffing reductions.
Stanford operated with a $9.7 billion consolidated budget for the 2024–25 academic year, which supports teaching, research and operations across all schools and the Stanford Linear Accelerator Center National Accelerator Laboratory. The figure does not include a separate $700 million capital budget or the financial operations of Stanford Health Care and Lucile Packard Children’s Hospital.
A proposed federal endowment tax — estimated at 21% — could cost Stanford $637 million annually if implemented. Martinez told the faculty senate earlier this month the tax would “heavily impact undergraduate financial aid,” forcing the university to shift funds from other areas.
“We intend to continue the generous aid we currently provide, but that will require moving money from other areas to fill in the gap,” she said, also citing concerns about graduate student support and early-career faculty impacted by federal research funding changes.
Stanford disbursed $1.8 billion from its endowment in fiscal year 2024 to support financial aid and academic programs.
About 5% of the endowment is spent annually, according to the university, with roughly $456 million directed toward student financial aid. Another 23% supports faculty salaries, libraries, sports, student services and research.
The endowment is largely invested in real estate, stocks and bonds. More than 75% of its payout is restricted by donors for specific purposes, such as supporting first-generation college students or particular academic fields.
“It’s the income generated from investing the endowment, not the endowment principal itself, that supports our annual operating budget,” said Randy Livingston, vice president for business affairs and chief financial officer, on the university’s endowment page. “If we start to consume the endowment principal, there will be less to invest and therefore less income to support the university in future years.”
Alongside funding cuts, higher education is facing growing federal scrutiny over admissions and diversity. Earlier this year, the U.S. Department of Justice launched an investigation into whether Stanford and three other California universities are complying with the U.S. Supreme Court’s ban on race-based admissions.
Before Thursday’s announcement, university officials began holding town halls with students and campus groups in April to discuss the budget’s impacts. Despite the financial strain, leaders said the cuts are intended to protect Stanford’s long-term goals.
“Though the budget reductions in the period ahead will be painful,” Levin and Martinez wrote, “we are confident that by acting now to put Stanford on stronger and more resilient financial footing, we will be better positioned to pursue excellence and new opportunities going forward.”