Stanford, CA – Jun 28, 2025 – Stanford University, which holds a $37.6 billion endowment, announced $140 million in budget cuts on Thursday, pointing to “significant budget consequences from federal policy changes.”
The university said the cuts could lead to layoffs and program reductions across multiple schools.
While the School of Medicine will not be affected, details of the cuts are still being worked out. University leaders said individual schools and departments will decide how to make reductions. They’ve been advised to focus on supporting research and education, maintaining need-based financial aid and five-year Ph.D. funding, streamlining administrative tasks, and boosting long-term financial stability.
University president Jonathan Levin and Provost Jenny Martinez announced in a Thursday letter that Stanford will implement a budget cut of $140 million
Stanford, a leading research and higher education institution on the West Coast, holds the third-largest endowment in the U.S., behind Harvard’s $50.7 billion and Yale’s $40.7 billion. It’s also Silicon Valley’s largest landowner, with more than 8,000 acres spread across Santa Clara and San Mateo counties.
Despite its immense wealth and influence, Stanford began warning of financial strains earlier this year due to federal funding cuts to research and higher education under the Trump administration. In February, the university pulled out of a four-year negotiation to buy the 100-acre Notre Dame de Namur University campus in nearby Belmont, citing financial uncertainties.
In late May, University of California Investments acquired the campus for an undisclosed sum.
“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 students and staff on Thursday. “Schools and units have been preparing for this reduction and will finalize their plans over the next several weeks.”
Stanford officials noted that each department will approach the cuts differently, as general funds are flexible and support a broad 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, is still in place, though faculty hiring will continue at a slower pace. “Moderate” salary increases to help offset rising living costs will move forward as planned.
“We will focus capital and facilities spending on the most critical and externally funded projects,” the letter said. “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 has not yet finalized details on specific program or staffing cuts.
For the 2024–25 academic year, Stanford operated with a $9.7 billion consolidated budget, which supports teaching, research, and operations across all schools and the Stanford Linear Accelerator Center National Accelerator Laboratory. This figure doesn’t 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 each year if enacted. Provost Jenny Martinez told the faculty senate earlier this month that the tax would “heavily impact undergraduate financial aid,” forcing the university to reallocate 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 expressing concern for graduate student support and early-career faculty affected by changes to federal research funding.
In fiscal year 2024, Stanford disbursed \$1.8 billion from its endowment to support financial aid and academic programs.
The university said it spends about 5% of its endowment annually, with roughly $456 million going toward student financial aid. Another 23% supports faculty salaries, libraries, athletics, student services, and research.
Stanford’s endowment is primarily invested in real estate, stocks, and bonds. More than 75% of its annual payout is restricted by donors for specific purposes, such as supporting first-generation college students or funding particular academic disciplines.
“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.”
In addition to funding cuts, higher education is under increased 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.
Ahead of Thursday’s announcement, university officials began holding town halls with students and campus groups in April to discuss how the budget would affect them. Despite the financial strain, leaders said the cuts aim to protect Stanford’s long-term priorities.
“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.”
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