Can Trump's fund freeze hurt Harvard? Here's how rich the university really is

Harvard University Campus in Cambridge - File Photo

Elite US university Harvard found itself at the centre of a financial storm after the Trump administration announced a freeze on more than $2.2 billion in federal grants and contracts to the varsity, citing its alleged failure to address campus anti-Semitism and implement ideological reforms.

The call for changes to its governance, hiring practices and admissions procedures expands a list Harvard received on April 3, which ordered officials to shut diversity offices and cooperate with immigration authorities for screenings of international students.

In a letter to students and faculty, Harvard president Alan Garber vowed to defy the government, insisting that the school would not "negotiate over its independence or its constitutional rights."

At the heart of the standoff between the prestigious university and Trump administration are sweeping federal demands: from “merit-based” hiring to audits of diversity offices and immigration screenings.

This unprecedented move has reignited a long-standing debate about the university's immense wealth and its responsibility to utilize its vast resources for the public good. Meanwhile, this raises a deeper question: Does cutting off federal money really hurt an institution like Harvard – one with an endowment that rivals the GDP of many small countries?

An endowment bigger than GDP of many nations

Harvard's endowment, a massive pool of invested funds, is the largest university endowment in the world. This financial powerhouse serves as a perpetual source of income, funding everything from academic research and scholarships to faculty salaries and campus maintenance.

Harvard’s financial power lies in its massive endowment, valued at approximately $53.2 billion as of 2024. To put that into perspective, it exceeds the GDP of at least 100 countries, including Iceland, Tunisia, and Bahrain.

In fact, numbers suggest that if Harvard were a corporation, it would be among the top 200 US companies by assets. Moreover, this staggering figure isn’t just cash in the bank. It’s an investment portfolio managed by the Harvard Management Company (HMC), which operates like a global hedge fund with deep ties to Wall Street, real estate, private equity, and more.

How the endowment functions?

The endowment operates on a spending rule, typically distributing a percentage of its value each year to support the university's operations. This ensures a stable and predictable source of income, allowing Harvard to maintain its academic excellence and expand its research initiatives. A large portion of the endowment is made up of restricted funds, that are donated for specific purposes.

Instead of spending the principal, Harvard spends about 4.5-5% of it annually, based on rolling average returns. That amounts to roughly $2.2–$2.5 billion a year, covering 35–40% of the university’s operating budget.

Can Harvard afford to lose funding?

While $2.2 billion over multiple years isn’t quite existential for Harvard, the freeze targets critical areas:

• Federal research grants, especially in medicine and public health
• Science labs and innovation projects, many of which depend on NIH and Department of Energy partnerships
• Student financial aid programs that rely on federal contributions

Broader implications

The Harvard funding freeze is not an isolated incident. The Trump administration cut $400 million in grants to the private New York school, accusing it of failing to protect Jewish students from harassment as protesters rallied against Israel's Gaza offensive.

There is a growing demand for greater accountability and transparency in how universities manage their endowments. Critics argue that these institutions should be more responsive to public needs and contribute to addressing societal challenges.

Harvard charges over $80,000 a year

According to Harvard's website, the average annual tuition for an undergraduate student is $56,550. But with additional expenses such as housing, food, health services and other student services, the annual cost of attending Harvard can easily run over $80,000.

Harvard enrolls about 24,500 undergraduate and graduate students a year. In 2024, the school accepted 3.59% of the 54,000 applicants for the class graduating in 2028. Previously, only families with incomes under $85,000 were offered free tuition.

The university argues that it uses its wealth to subsidize access:

• 55% of undergraduates receive need-based aid
• Families earning under $85,000 pay nothing
• Middle-income families often pay reduced rates
• The average financial aid package is around $60,000 per year