Harvard University, the wealthiest college in the United States, is suddenly facing serious financial pressure.
The Trump administration has frozen more than $2.2 billion in federal grants and is pushing the IRS to revoke the school’s tax-exempt status.
Now, reports say Harvard may have to sell off parts of its $52 billion endowment just to stay afloat.
Chamath Responds: “Go Woke, Go Broke”
Venture capitalist Chamath Palihapitiya reacted to the news.
On X, he wrote, “Go woke, go broke,” in response to a post from Fox Business reporter Charles Gasparino.
Gasparino reported that Wall Street executives believe Harvard could soon be forced to sell liquid assets, like stocks, and possibly take on more debt.
Federal Freeze and IRS Scrutiny
Harvard’s troubles began when it refused to comply with demands from the Trump administration to audit the political viewpoints of its students and faculty. In response, the federal government halted billions in funding.
The IRS has also started looking into whether Harvard should lose its tax-exempt status, a change that could cost the university hundreds of millions in tax benefits every year.
Harvard, however, has pushed back strongly. A spokesperson told CNBC that the government has “no legal basis to rescind Harvard’s tax exempt status.”
A university spokesperson warned that doing so “would result in diminished financial aid for students, abandonment of critical medical research programs, and lost opportunities for innovation.”
Constitutional Debate and Online Reactions
Palihapitiya continued to press the issue, asking on social media: “When taxpayers from around the country are asked to pay for things at private institutions of any kind (company, university, or other) should these organizations adhere to the Constitution or not?”
He added that Harvard ranked “dead last” on its support for the Second Amendment.
Some users online supported the criticism, questioning why taxpayers fund a university with a $54 billion endowment and pointing to bloated university administrations.
Others questioned whether targeting Harvard alone is justified.
“That seems a bit unfair because in this case, the United States government is forcing the university to go broke. It has absolutely nothing to do with being woke or not. They could have and would do this to anyone they want. Times we live in,” one user wrote.
Endowment Breakdown and Asset Pressure
Gasparino noted that the situation is already having ripple effects: “Yale is already selling out of its endowment’s private equity portfolio,” he wrote, while “Harvard is highly levered to PE, close to 40% of its endowment.”
The university’s latest annual report confirms that nearly 40% of Harvard’s endowment is tied up in private equity investments, with another 32% in hedge funds.
Public equities account for 14%, while real estate and bonds make up the rest.
Experts say selling these types of assets quickly could come at a steep discount. “This could spark a fire sale in elite endowment assets,” wrote one commenter.
“Secondary funds are about to feast—deep discounts on top-tier PE.”
Budget Cuts and Bond Moves
Meanwhile, Harvard has started to tighten its belt. It paused hiring, denied admissions to waitlisted graduate students for the upcoming fall, and is issuing hundreds of millions in new bonds.
In March, Harvard announced a $750 million taxable bond offering due in 2035. That follows $244 million in tax-exempt bonds issued in February.
Despite the turmoil, credit rating agency Moody’s has maintained Harvard’s top-tier AAA bond rating, at least for now. But the agency downgraded its outlook for the higher education sector to negative.
Looking Ahead
While Harvard insists it has no intention of using unrestricted endowment funds, it has around $9.6 billion available that could be tapped “in the event of an unexpected disruption.”
It seems the nation’s oldest university is now in the middle of a financial and political storm, and there are no signs of it calming down soon.
Attribution for this photo:
IMAGE CREDIT: “Chamath Palihapitiya, TechCrunch Disrupt NY 2013 – Day 1” by TechCrunch via Flickr. Licensed under CC BY-SA 2.0. Image adjusted for layout