Harvard plans to borrow $750 million after federal funding threats

[BumRushDaShow]

Source: Reuters

April 8, 2025 12:53 AM EDT Updated 11 hours ago


WASHINGTON, April 7 (Reuters) - Harvard University plans to borrow $750 million from Wall Street as part of contingency preparations, it said on Monday, days after President Donald Trump's administration announced a review of $9 billion in federal grants and contracts to the Ivy League school in a crackdown on alleged antisemitism on campuses.

In a letter to Harvard last week, the government listed conditions that Harvard must meet to receive federal money, including a ban on protesters wearing masks to hide their identities and other restrictions. Harvard acknowledged receiving the letter but did not comment further. "As part of ongoing contingency planning for a range of financial circumstances, Harvard is evaluating resources needed to advance its academic and research priorities," Harvard University said in Monday's statement.

Harvard's plans come less than a week after Princeton University said in a notice dated April 1 that it was also considering the sale of about $320 million of taxable bonds later this month. Princeton said last week the U.S. government froze several dozen research grants to the school. Harvard intends to issue up to $750 million of taxable bonds for "general corporate purposes," a spokesperson said. The university had $7.1 billion of debt outstanding at the end of fiscal year 2024, and anticipated about $8.2 billion after the proposed bond issuance.

The university most recently issued $434 million in tax-exempt bonds in March 2025 and $735 million in tax-exempt bonds in spring 2024, its spokesperson said, adding it also issued bonds in 2022. Harvard has a $53 billion endowment, the largest of any U.S. university. Advocates, students and several faculty members have called on university leadership to resist the demands from the Trump administration.

Read more: https://www.reuters.com/world/us/harvard-plans-borrow-750-million-after-federal-funding-threats-2025-04-07/

[murielm99]

1. I hope they continue to stand up to tsf,

but why can't they rely on their endowment?

[marble falls]

2. Why did they give in, why do they need to borrow ...

The Harvard University endowment, valued at $50.7 billion as of June 30, 2023, is the largest academic endowment in the world. Its value increased by over 10 billion dollars in fiscal year 2021, ending the year with its largest sum in history. Along with Harvard's pension assets, working capital, and non-cash gifts, the endowment is managed by Harvard Management Company, Inc., a Harvard-owned investment management company.

[BumRushDaShow]

5. It's probably because of what happened during the 2007 - 2009 "Great Recession"

Financial crisis knocks value of Harvard and Yale endowments

They may be thinking beyond the "funding threats" and also looking at the state of the economy and possible collapse. Bonds tend to be a safer bet.

I remember reading all kinds of articles back then when they lost a significant portion of their endowment due to investments that cratered with the market. As an example, the Dow had eventually dropped from a high of about 14,000 in Oct. 2007 to near 6000 in March 2009.



(above from here - https://www.denverpost.com/2013/03/05/dow-twists-its-way-back-to-a-record-high/ (updated 2016)

That was like a drop of 54% (where "20% = "bear market" ).

[lapfog_1]

3. why borrow when...

Harvard University's endowment, managed by Harvard Management Company (HMC), is the largest university endowment in the world, valued at $53.2 billion as of June 30, 2024, with a 9.6% return for fiscal year 2024.

when your endowment earns over $5B a year... why would you ever need to borrow money from a bank, unless they give you the money for next to no interest?

[Irish_Dem]

4. I was just about to ask the same question.

[BumRushDaShow]

6. See this

https://www.democraticunderground.com/?com=view_post&forum=1014&pid=3436138

(they probably remember what happened when Shrub was in office - and probably that shock of 2020 during Covid when 45 was in office)

[Irish_Dem]

7. Thanks, makes sense.

Trying to hedge their bets and protect the endowments.

[BumRushDaShow]

8. They may be "canaries in the coal mine"

I.e., when you see these institutions with big funds (and that would probably include the state pension funds too) start moving money around, they are hedging for what's to come.

[Irish_Dem]

9. Yes of course. Good point.

Yes the state pensions will take a big hit too.
Everyone is scrambling.

[BumRushDaShow]

10. That's why you have the NY state government asking that their pension funds file suit (in the below case against Tesla)

https://www.democraticunderground.com/10143431196

[Irish_Dem]

11. Wow, good for them. Of course the Supreme Ct will back Musk in the end.