WSJ What’s News - Trump Moves Could Force Universities to Recalculate Their Bottom Lines

Episode Date: April 20, 2025

The Trump administration has already pulled grant money from Harvard and is threatening to do so at other institutions too. Meanwhile,the administration is pulling hundreds of student visas and moving to deport some. WSJ’s Doug Belkin explains how losing federal grant money could affect universities’ bottom lines. And Fanta Aw, executive director and CEO of the Association of International Educators (NAFSA), explains how much international students contribute to universities’ budgets and the impact that losing them could have. Further Reading:  Trump Is Going After Universities’ Federal Funding. Here’s What to Know.   The Little-Known Bureaucrats Tearing Through American Universities   Trump Team to Freeze Nearly $2 Billion at Cornell and Northwestern Universities   How Harvard Ended Up Leading the University Fight Against Trump  Trump Administration Wants to Install Federal Oversight of Columbia University  Former College President Explains Funding Strategies Behind Universities  Chinese Students on U.S. Campuses Are Ensnared in Political Standoff  Student Visas Are Being Revoked Without Reason or Warning, Colleges Say  Harvard-Bound Students Stand Firm While Some Columbia Prospects Think Twice  Learn more about your ad choices. Visit megaphone.fm/adchoices

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This is What's News Sunday, the show where we tackle the big questions about the biggest stories in the news by reaching out to our colleagues across the newsroom to help explain what's happening in our world. On today's show, the Trump administration is threatening to pull grant funding from institutions like Columbia and has already done so for Harvard. And it's also taking aim at individual students, pulling hundreds of student visas and even moving to deport some. What's the impact on universities' bottom lines, their reputation, and their culture?

At the end of the day, universities are businesses. Their budgets are made up of student tuition, endowments, philanthropic donations, and government grants. Just how big their budgets are depends on a number of different factors, including, say, how much research the university does. For example, Harvard spent $6.4 billion in fiscal year 2024. Later on in the show, we'll speak to Fanta Av, the executive director and CEO of NAFSA, the Association of International Educators, about where international students fit into

balancing these budgets. But first, let's zero in on the Trump administration's threats to freeze billions of dollars in grants from institutions and how it's unsettling universities across the country. Joining me now to discuss the not insignificant impact of federal grants on university budgets is Doug Belkin, who covers higher education for the journal. So Doug, let's jump right in. How much does grant money matter to universities' bottom line? So when you add it up, it starts to become real money and you can see how critical the research amount is

for the operating budget. Research mostly comes from the government and the way it works is it'll be an agency, the National Institute of Health or a group like that will write a check to the university. The fiduciary of the university is the board of directors, the trustees, so the check gets written to them. But it's really being sent to the researcher

who came up with a really good idea that impressed a lot of people and made it through a really intense vetting process, and the NIH or whoever decided, this is such a good idea, we wanna fund this research. That money goes to the board and then the school is going to keep a chunk of it. They have something called the facilities and administration

and that can be north of 50% because that pays for the labs and the administrators and the electricity and there's a lot of things that go into running a university. What's left over pays for the grad students, the researcher, whatever is needed to do the research itself. One of the things that the Trump administration has done

is said, we don't want to pay 50, 60% in facilities and administration. We want that limited to 15%. So that was one of the first things that Trump did and it really threw a monkey wrench in the budgets of these universities because that money is used by the university to keep the lights on and it's fungible. If that money is used by the university to keep the

lights on and it's fungible. If that money is suddenly getting cut by two thirds, that's just less money coming into the system and it has to come from somewhere else. What kinds of challenges might the president face in pulling grant money? So Trump is using a new set of tools to pull grant money. They created this task force that's looking at the contracts that the researchers have received and they're canceling or freezing those contracts using language in the contracts as opposed to going through the Title VI procedures. The Title VI is a civil rights, you have to go through certain things in order to stop funding that way. So there's a different tool being used and that's part of why this is sort of legally

on new ground. The faculty, the AAUP, which is the union for the faculty at Harvard and at Columbia has filed a lawsuit on the ground that the Trump administration does not have the right to cancel research grants and to tell them what to research and what to teach on campus that that's a violation of their First Amendment rights. We're moving into uncharted territories here, so the courts are going to have to weigh in on this.

What is the result of less money coming in for this purpose? Right. So there's two actors here. There's the researcher and there's the institution. So there's less money for the institution, so they're figuring out how to cut back. For the researchers, it's calamitous because this is their entire income stream. One NIH grant can keep dozens of people employed

and an entire research project, which may be spread across several institutions or even around the globe. Now the checks stop cashing, the research comes to an end, people lose their jobs unless there's a way to tap another source, and experiments or projects that may have been going on for years can get cancelled.

And that's why it's such an existential issue for the research community. So what can these universities do if they see that grants are no longer as reliable a funding stream potentially as it has been in the past? Where else can they look? So around two-thirds of the costs to run a university are people. They're going to get rid of people, they're not going to fill positions, they're going to hold off on raises, they're going to trim benefits. It's like every other corporation, when there's not enough money coming in, the workers are going to feel a pinch. That's going to be the main thing. Projects are going to get shelved. Things that were going to be built.

There was money earmarked for them from a particular donor, but maybe the school had a match, a piece of that. Now the school can't match it, so they're gonna postpone. That's the sort of thing that's likely to happen. How could students feel any of these changes? Some schools are really dependent on tuition and some schools less so, right? Some schools are getting 75% of their revenue from tuition. But if there's less money in the pot, usually what happens is the chief financial officer says to the admissions director, we need to generate $50 million from this year's class. And so you can give scholarships and grants, but we need

to get that much money coming through the front door, which means that there's pressure on the admissions folks to bring in enough kids who can pay enough money to hit that number. And ultimately, that will mean some kids will get smaller packages and they won't go to that school. And the field will sort of tilt in favor of kids who are able to pay in full.

So that's how this will round out at some schools. But you say that, there's not that many kids in America, families in America who are able to pay full freight for universities. So the sticker price for schools keeps going up, but the net price is now going down because there's fewer people who can afford it. So there creates pressure at kind of at every point.

These aren't the only pressures on universities' budgets, right? I'm thinking of the fact that right after the Great Recession, people had fewer babies. Those babies are now ready to go to college, which means fewer students actually entering college now. What does all this mean for universities? The pressure that universities are under is to maintain the money so they're turning more toward adults and people who didn't graduate college. They're trying to be more entrepreneurial. They're trying to attract more adults.

They're trying to go more online. You see little one-offs, assisted living and senior living popping up near universities so that those people can enjoy what's happening on a college campus and the resources there, which is also a financial benefit for universities. So there's little green shoots happening around the country that universities are experimenting with to bring in more money We've been talking hard numbers here about some of the impacts of what the Trump administration is doing

But I want to talk about the sort of softer the cultural impact Because what the Trump administration is talking about doing is installing federal oversight at Columbia reforming campus culture at Harvard These are Characteristic changes, to these institutions. So I guess sort of to back up a little bit, the name of the task forces is the Task Force to Combat Anti-Semitism. And the reason it was stood up is because Jewish students on campuses, particularly at Columbia and Harvard, were being harassed. They were getting screamed out on the way to class. And that's the focus of the task force.

What Trump and folks in the task force are saying is that, listen, the universities have adopted an ideology that's so progressive and lean so far to the left that they've accepted these notions, which ultimately believe that Israel, Zionism, is a form of racism, and it's a settler colonial state that doesn't have a right to exist. And so this way of thinking has led to people

promoting Hamas and these groups that are at war with the United States. And so we have to create a more intellectually diverse environment and we have to make sure that folks who are enemies of America don't have a place in the university and they're not comfortable there. So universities are largely self-governing. The faculty determines who is going to be on the faculty, who is going to get tenure,

and they guard this jealously. They have the freedom to decide what to think, what to study, what to research. Other places don't have that. They have ministers of education and there's more of a top-down approach. It's bottom-up here. So if the government says, we wanna be the ones who decide who's teaching, what you're teaching,

then they're challenging this notion of academic freedom. And that's sacrosanct on college campuses, and that's why people are going crazy. This notion, Donald Trump or anybody else in the federal government gets to determine what should be on a curriculum, on a syllabus, that's a First Amendment issue. So on the one hand, you've got overreach from the left

that squashed intellectual debate on college campuses because they said, you know, we'll cancel you if you say certain things, if you believe certain things. And a lot of faculty were aligned with that. And now you've got the right coming in and saying, we're gonna take over and we're gonna be the ones who decide. And so there's this sense of overreach from the right.

But the university also has an obligation to regulate itself so that it is not so far out of touch with the American public, in this case politically, that the support that the American public is giving them makes sense to the public. And so this disconnect is why this is happening. That was WSJ reporter Doug Belkin. Thank you so much, Doug.

Thanks very much. Coming up, the Trump administration's moves against foreign students threaten another of universities' revenue streams. More after the break. Okay, Martin, let's try one. Remember, big. You got it. The Ford It's a Big Deal event is on. How's that?

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Yeah, it's a big deal! The Ford It's a Big Deal event! Visit your Toronto area Ford store or ford.ca today. Immigration officers have detained two students Mohsin Madhawi and Mahmoud Khalil, both of whom were organizers of pro-Palestinian protests at Columbia University. The government is also attempting to deport Khalil, though that effort is tied up in a legal battle at the moment. In the past few weeks, the government has also revoked a number of student visas without notice, causing confusion and panic among students. And as of this past week, the Trump administration has threatened to stop international students from attending Harvard.

In a letter to the university, the Homeland Security Department said that hosting international students was a privilege, not a guarantee, and asked for information about visa holders by the end of the month. That could cause a long-term problem for universities, because they rely on the tuition these international students pay.

I'm joined now by Fanta Av, the executive director and CEO of NAFSA, the Association of International Educators. Fanta, what do international students mean for universities' bottom lines? So international students who come to the US, granted that they only make up 6% of the total population enrolled in universities, their economic contribution is quite significant. We

track that on a yearly basis and for our most recent data it's about 43 billion dollars and it's not only to universities by the way the 43 billions are to universities but also to the local economy of where those universities are situated and it's also over 300,000 jobs that are created as a result of international students coming to the US to study. Most of the students who come to study tends to be graduate students. They study generally in the STEM fields or in business in the business administration area. In terms of their source of funding, the source of funding is mostly students who are self-funded. However, at the graduate

level, given the importance of research and given the importance of assistantship and so forth, there are graduate students who come with funding provided to them in return for research and assistantship at the graduate level. I want to kind of take us into the current moment that we're in. So what are you hearing from agents and prospective students about the Trump administration's actions on universities? What do they make of this? What we keep hearing from students and from stakeholders is a lot of anxiety, tremendous confusion around the processes and so forth, and the need for greater answers and transparency

around these processes. We're constantly hearing that. For students who make the decision to come and study in the United States, that's not a small decision to make. Plenary data has indicated that in several parts of the world where there had been previously a high level of interest in wanting to come and study in the U.S., that we're seeing about a 40 percent decline in the number of those students who are looking to the U.S. as a destination. They're looking to other parts of the world, whether it's Germany, whether it's France, whether it's Japan, South Korea, and other destinations that before the U.S. was perhaps

their first choice or even their second choice, but now they're considering other destinations. So if universities have been receiving full tuition from some of these international students or a decent number of them, and fewer international students are coming in the near future to the U.S., what would that mean for these universities' funding? What kind of impact could that have? Well, it depends, right? Because a good number of them are graduate students, whether you're talking about business programs and other fields of study.

Graduate students are bringing in funding to the university. They're bringing tuition dollars to the university. But also, for those universities that are to the university, but also for those universities that are receiving research funding, often at the graduate level, particularly in fields like the STEM field and others, a lot of times it is graduate students who are working in partnerships with faculty

to in many ways be able to fuel the research engine of universities as well. And that's another component that could be potentially at risk is the research infrastructure and the ability to be able to conduct the level of research that is often needed with both domestic and international students as we speak. The Trump administration's moves could potentially change how international students see American universities, right?

Like their reputation. Do you think having these universities names and the headlines a lot could be a boon or hit for these universities internationally? I think it can be a hit to the reputation of universities. Not in the immediate, because these are universities that have had a long-standing and solid reputation for decades internationally, but I do think over a period of time it could be. The other piece about this also is that international students, in many ways, when they come in this study and they've learned more about the United States and they go back home, they become very important bridge to trade and other relations for the United States. So the loss of that can have other consequences in the long run.

That was fun to have, Executive Director and CEO of NAFSA. Thank you so much. Thank you, Alex. Thank you for the opportunity. And that's it for What's New Sunday for April 20th. Today's show was produced by Charlotte Gartenberg with supervising producer Michael Kosmides and deputy editor Chris Sinzley.

I'm Alex Osola, and we'll be back tomorrow morning with a brand new show. Until then, thanks for listening.