Stanford University announced on Thursday that it will reduce its 2025–26 academic year budget by $140 million, citing a sharp decline in federal research funding and the looming threat of an increased endowment tax. The financial adjustment marks a significant response to mounting external pressures, including grant freezes and proposed legislative changes that could substantially impact the university’s long-term fiscal stability.
Budget cut driven by funding freeze
The decision comes amid growing financial strain caused by reduced support from key federal agencies such as the National Institutes of Health (NIH) and the National Science Foundation (NSF). These agencies have frozen funding for numerous academic institutions, slowing the review process for new grants and terminating several existing ones. For Stanford, this has meant a disruption in research continuity and a shrinking pool of federal resources that have long powered its innovation pipeline.In addition, new legislation passed by the House of Representatives — formally known as the “One, Big, Beautiful Bill” — proposes a 21% increase in the tax on large university endowments. If enacted, the bill would raise Stanford’s annual endowment tax liability to approximately $750 million. Given that more than two-thirds of Stanford’s financial aid comes directly from its endowment, the proposed tax hike poses a serious risk to both research investment and student support programs.
Layoffs expected as budget units absorb cuts
The $140 million budget cut will be implemented across Stanford’s 30 internal budget units, which include individual schools, departments, and administrative offices. Each unit has been tasked with identifying areas where cuts can be absorbed. While exact figures are still to be finalized, university officials have confirmed that the changes will include reductions in staff positions, including layoffs in some areas.Though Stanford has employee transition programs in place, university leaders have acknowledged that the human impact of these decisions will be significant. The current budget revision excludes cuts to the School of Medicine, which is expected to announce its own reductions separately in the coming weeks.
Priorities: financial aid and research continuity
Despite the scale of the cuts, Stanford has reaffirmed its commitment to safeguarding essential academic and student-centered programs. PhD students, who are guaranteed five years of funding, will continue to receive their promised support. Likewise, the university has pledged to maintain its need-based financial aid for undergraduates, a cornerstone of its accessibility model.Preserving research funding remains a high priority, particularly in light of disruptions caused by the NSF and NIH grant freezes. University officials have warned that the ongoing loss of research support threatens not only Stanford’s scientific output but the broader national effort to develop the next generation of scientists and innovators.
Concern for long-term academic investment
While Stanford leaders have avoided direct political commentary on the Trump administration’s policy decisions, they have consistently stressed the importance of federal support for higher education. The combination of declining grant access and proposed tax increases represents, in their view, a troubling shift in how universities are funded and valued in the United States.Officials underscored the critical importance of academic investment across all disciplines — from engineering and the natural sciences to humanities, medicine, and the social sciences — as essential for the future of the country and the world. With these latest budget decisions, Stanford is aiming to remain financially resilient while continuing to advocate for sustained national support of educational and research institutions.
