By Natasha Sokoloff
New Haven Register, Conn.
(TNS)
July 11 — Yale University has frozen hiring as it begins to brace for an expected major funding gap that the school says is due to a hike in the federal endowment tax and other cuts by the Trump administration.
The announcement comes alongside the passage of President Donald Trump’s major spending legislation, dubbed the “big, beautiful bill,” which raises the tax on university endowments as Yale and other higher education institutions face further federal research funding cuts.
Yale officials told faculty and staff on June 30 that they would be implementing a 90-day hiring pause to ensure “the university remains as financially nimble as possible over the coming months,” and would be planning for other cost-cutting measures for the school year ahead.
“This begins to address, but does not fully cover, the budget shortfall we anticipate we are going to experience,” Yale President Maurie McInnis said in a July 3 university-wide message after Congress passed Trump’s megabill, which includes an 8% endowment tax for wealthier universities.
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And with a $41.4 billion endowment, Yale is among the American universities hit hardest by the new legislation.
“In the coming months, we will face difficult choices that will require careful thought and consideration to maintain resources for our mission and support for faculty, students, and staff,” McInnis said in her July 3 message.
The increased endowment tax will cost Yale an estimated $280 million in the first year it is in effect, and likely more in subsequent years, she said. Previously, Yale’s endowment tax equated to approximately $45 million, according to the provost’s website.
“This is money that would otherwise support our students, faculty, staff, and local partnerships with the city of New Haven,” McInnis said. “The impact of this tax will also be felt far beyond our campus and our hometown. Taxing universities undermines the education and research that fuel life-saving medical breakthroughs, life-changing innovations, and economic growth in communities across the country and around the globe.”
Trump has long pledged to hit large, private university endowments with taxes and fines—prior to his first term, university endowments were largely untaxed. Under the 2017 Republican-backed tax overhaul legislation, Trump had signed a 1.4% endowment tax for wealthier colleges into law.
Now, schools with endowments worth $2 million or more per student are hit with a much steeper 8% tax. The new legislation also imposes a 1.4% tax for universities with endowments worth at least $500,000 per student, and a 4% tax for endowments worth at least $750,000 per student, according to a July 7 release from the The National Association of College and University Business Officers.
While Yale’s endowment is by far the largest in Connecticut (and among the largest in the nation), it appears Wesleyan University will also be hit with a new 1.4% tax, as its endowment value per full time student just barely surpassed $500,000 threshold that triggers the tax, according to NACUBO’s 2024 endowment value study.
But the increased endowment tax was “just one way Yale and our peers are facing threats to the resources that advance our mission,” McInnis said in her July 3 message.
Yale and other higher education institutions in Connecticut and across the nation have already been hit with grant terminations, and McInnis said that the university was preparing for even deeper funding cuts around research.
“While the outlines of the new system are still taking shape, it is likely to result in fewer funds reimbursed to universities for the costs they incur to conduct federally sponsored research on behalf of the American public,” according to the provost’s website.
The Trump administration has proposed drastic cuts to the National Institutes of Health and National Science Foundation (facing 40% and 56% budget cuts), which support research at Yale, McInnis said.
“In fiscal year 2024 alone, Yale faculty and students received approximately $900 million from federal agencies to support critical research and scholarship,” according to the provost’s website. “The grants they were awarded supported, for instance, efforts to develop a quantum computer, advance medical breakthroughs that help infants with heart defects, and identify treatments that prevent diabetes, in addition to other critical endeavors. Deep cuts to federal agencies will limit the funds available to conduct this and other important work that improves human health, contributes to national security, and generates economic growth.”
Other proposals, like a cap on reimbursements for research infrastructure, could result in the loss of hundreds of millions of dollars that Yale relies on each year, university officials said.
“Even as we continue to advocate for these and other programs, we must be prepared for additional funding cuts,” McInnis said. “In the face of such uncertainty, we will continue to plan carefully, spend responsibly, and implement measures to ensure we can continue to advance Yale’s mission.”
The new 90-day hiring pause will apply to positions across Yale, including new, replacement, casual, and temporary positions, and was effective June 30, according to the university message.
“We do not make this decision lightly, recognizing that recruiting and hiring exceptional faculty and staff play a critical role in advancing our mission,” according to the June 30 message. “Due to the substantial uncertainties ahead, however, we must focus on supporting our current faculty, students, and staff. The hiring pause will position us to adapt when we fully understand the magnitude of the financial impact on the university.”
In addition, Yale’s approved fiscal year 2026 budget includes a 5% reduction in non-salary expenses, delay of several capital building projects, and reduction in the merit pool for annual salary increases that impact faculty and managerial and professional staff, according to the June 30 message. McInnis said in her message that university officials had more decisions to make based on contingency plans would share more information as the federal picture becomes clearer.
“For decades, the federal government has supported scholarship and research at universities like Yale—not out of charity, but because it recognized the power of higher education to advance the public good,” McInnis said. “We must keep making the case for higher education to lawmakers and the American people as we prepare for many challenges ahead.”
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© 2025 New Haven Register (New Haven, Conn.). Visit www.nhregister.com. Distributed by Tribune Content Agency LLC.
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