Funding Cuts Will Only Get Worse

There is currently a lot of doom and gloom over several R1 universities mentioning hiring freezes due to federal grant cuts. But what most people don't realize is that it will get much worse from here.

The problem is that the current assumptions made by university admin is that federal grants will be cut, but everything else remains. There are a few issues with this. For the highly prestigious R1s, many of them have endowments that are a sizable portion of their funding. However, the endowments are all invested in 1. Private assets losing money 2. Private assets that are highly illiquid (and can't be used for a few years) or 3. Public assets. As the S&P500 has performed terribly in the past month, this means that the public assets may not be as liquid or usable as they initially imagined. Soon, admin staff at universities will receive messages from their finance team explaining that their usable endowment funding for the year will be dramatically reduced.

The last piece of funding source is tuition. But with US reputational risk, macro policy risk, foreign visa cuts, and internal DOE removal, we should expect this source of funds to also go down.

In summary: it's not that bad atm, give it a month.