Harvard To Borrow $750 Million Amid Federal Funding Uncertainty

Harvard University will issue $750 million in taxable bonds this month, bringing the total offering this fiscal year to $1.2 billion, as the University faces a turbulent economy and waits to learn whether the Trump administration will shut off its federal funding tap.

The bond sale comes just one week after the Trump administration announced a nearly $9 billion federal review of multi-year research funding tied to Harvard and its affiliated hospitals in the Boston area. The government wrote on Thursday that Harvard’s access to the money would depend on compliance with a list of demands — including shutting down diversity programs and further restricting protests.

Sunday’s preliminary offering statement marks the second time Harvard has entered the debt market in as many months. Harvard issued $450 million in March to “finance and refinance certain capital projects,” according to the University’s March preliminary official statement.

In the new bond sale’s statement, the University acknowledged both a March 31 letter from the Trump administration’s task force to combat antisemitism announcing the nearly $9 billion review and the April 3 list of demands issued by the task force.

The statement, like one accompanying Harvard’s March offering, also refers to a proposed 15 percent cap on the indirect cost recovery rate for NIH grants and the Department of Education’s threats to revoke funds for universities that use race-based decision-making as potential financial concerns for the University.

“While the financial impact on the University resulting from the totality of potential developments at the federal level cannot be quantified at this time, any such developments may, directly or indirectly, have a material adverse effect on the current and future financial profile and operating performance of the University,” the statement reads. Harvard used identical language in its March offering.

University spokesperson Jason A. Newton wrote in a statement that the bond sale is “part of ongoing contingency planning for a range of financial circumstances” as Harvard evaluates necessary resources to push forward with its academic and research priorities.

Harvard’s peer schools have also turned to bond sales in 2025. Stanford University and the University of Pennsylvania also had large bond sales earlier this year, while Princeton University announced they were considering a bond sale last week.

If Harvard is able to attract investor interest in the new bond sale — as it did in March, when Harvard sold its entire offering — its total debt would increase to at least $8.2 billion, a 32 percent increase in debt over two years.

Harvard Business School professor Luis M. Viceira called the $750 million figure “sobering” in an email.

“It seems to me that Harvard is raising liquidity in light of a very challenging funding situation with the potential for a severe funding shortfall. There are three ways of addressing funding shortfalls: reduce spending, borrow money, or liquidate assets,” Viceira wrote. “We now know that borrowing is a way the university is addressing the potential shortfall.”

Rutgers Business School professor John M. Longo wrote that raising additional capital “may be prudent for Harvard and other universities” due to the economic uncertainty fueled by the Trump administration’s across-the-board tariff hikes and its rollbacks of research funds.

“The turmoil in financial markets related to the tariffs has lowered interest rates across the maturity spectrum versus even a few weeks ago,” Longo wrote.

“Concomitantly, the uncertain federal funding of grants for Harvard and many other national universities has complicated and negatively impacted operating budgets,” he added.

The University entered this year already concerned about the possibility of an endowment tax. Republicans in Congress — including now-Vice President J.D. Vance — have floated hiking the tax for years, but Republicans’ control of Congress and the White House now make the prospect more likely.

In 2024, Harvard spent the most it had in more than a decade lobbying the federal government. Filings show its efforts focused on research funding and heading off an endowment tax.

Rice Business School professor Alex Butler wrote that the taxable nature of the bond sale would allow the University to have more flexibility on what they can use the resulting funds for than the previous tax-exempt sale in March.

“Tax exempt bonds have restrictions on the use of funds, such as to fund construction of buildings,” Butler wrote. “Considering the uncertainty that higher education faces currently, I imagine that no research university in the country intends to embark on building new infrastructure right now.”

This means Harvard’s second bond sale could be a sign the University is looking for a stable way to finance its daily operations — not just capital projects, some of which Harvard is now looking to put on hold.

University of Illinois finance professor emeritus George G. Pennacchi suggested that current conditions in the bond market may let Harvard raise money for relatively cheap through bond sales.

Yield rates on U.S. Treasury notes and other relatively safe long-term bonds are falling as investors seek stable places to put their money amid market turmoil. That means Harvard — historically seen as a safe investment — can offer low yields on its own bonds, meaning the University would have to pay relatively low interest rates to investors down the line.

Viceira wrote that the bond sale “speaks to our ability to raise money in choppy markets – that is, assuming we can raise these funds at a reasonable rate.”

—Staff writer Avani B. Rai can be reached at avani.rai@thecrimson.com. Follow her on X @avaniiiirai.

—Staff writer Saketh Sundar can be reached at saketh.sundar@thecrimson.com. Follow him on X @saketh_sundar.