Dive Brief:
- Stanford University laid off 363 staff members last week as part of a plan to reduce its budget by $140 million for the 2025-26 academic year.
- In a July 31 message to campus, senior university leaders attributed the need for cuts to "a challenging fiscal environment shaped in large part by federal policy changes affecting higher education."
- The private California institution warned of forthcoming layoffs in June, when it extended a hiring freeze implemented in February and said it would focus capital spending on critical projects or those with external sources of funding.
Dive Insight:
"Ongoing economic uncertainty" has created serious challenges for the higher education sector, according to Elizabeth Zacharias, Stanford's vice president for human resources.
"At Stanford, anticipated changes in federal policy — such as reductions in federal research funding and an increase in the excise tax on investment income — are expected to have significant budgetary consequences," Zacharias said in a July 31 filing with the California Employment Development Department.
Like many research institutions, Stanford has suffered under the tidal wave of efforts by the Trump administration to slash federal spending on research and development — despite some of those moves being blocked in court for the time being.
Changes to the endowment tax could also hit Stanford hard.
In fiscal 2024, the university had the fourth-largest endowment among U.S. colleges, valued at $37.6 billion, according to research from the National Association of College and University Business Officers and asset management firm Commonfund.
Before 2017, colleges did not pay taxes on their endowment earnings. That year, a GOP-controlled Congress enacted a 1.4% tax on private nonprofit colleges with at least $500,000 in endowment assets per student.
But President Donald Trump's signature spending bill introduced a tiered tax based on endowment assets per student that will more than quintuple the tax for the wealthiest institutions from 1.4% to 8%. Stanford, with roughly $2.1 million in endowment assets per full-time-equivalent student, will likely pay the top rate.
These shifts, combined with rising operational costs and changes to funding sources and programs, pushed Stanford to implement layoffs, Zacharias said.
Stanford employs 18,000 staff and faculty, according to its website.
The affected employees — about 2% of its workforce — worked in departments from across the university, ranging from student support services to libraries to donor and alumni relations, according to legal filings.
In addition to 60 days of legally mandated paid notice to impacted workers, eligible employees received severance packages and career transition services, a university spokesperson confirmed Wednesday.
