On "Forbes Newsroom," Forbes Staff Writer Emma Whitford discussed her report detailing the 39 colleges and universities with the ability to resist President Trump, as Harvard has.
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00:00Hi, everyone. I'm Maggie McGrath, senior editor at Forbes. President Trump has frozen federal
00:09research funding for a number of American colleges and universities. He's issued demands
00:15from many of these schools in exchange for federal dollars. Harvard has particularly
00:20been in the headlines this week. In light of this, Forbes has produced a list of 39
00:27institutions that have the ability to join Harvard in its resistance to President Trump.
00:33Joining me now to discuss this list and her article with it is Emma Whitford. She's a staff
00:38writer covering K through 12 and higher education. Emma, thank you so much for joining us.
00:44Thanks for having me, Maggie.
00:45So let's set the table before we get into this list. What exactly is the tussle between American
00:51universities and President Trump? What's going on here? So President Trump has been coming after
00:57American universities through a variety of different channels. One of the more recent ones is he's been
01:04freezing federal funding or threatening to do so for some prominent research universities under the
01:11guise that they have somehow failed to protect Jewish students from anti-Semitism. There's a lot
01:18of arguments about the legality of those claims and those are being battled out in the courts. But in
01:23the meantime, universities are risking losing billions of dollars in federal funding for research.
01:32And I mentioned in my intro that Harvard made headlines this week. President Alan Gerber basically
01:38said he'd refuse to cave to demands that the university eliminate diversity programs. What else did
01:44Harvard say this week and why is it such a big deal? Yeah, not very many colleges so far have
01:50stood up to Trump and said, you know, we're not going to do the myriad demands that you've given us.
01:56Do what you will. We're going to keep our diversity programs. We're not going to review
02:01academic programs. We're not going to punish students. They've been issuing a slew of different
02:07things that usually the federal government would not be involved in. So Harvard's sort of the first one
02:12that's gotten a specific list of demands and decided not to do it. I will note that Princeton University
02:18has been pretty outspoken as well, but they have yet to receive any sort of specific demands from the
02:25Trump administration. So we're getting basically the situation where an American president is
02:33threatening American universities financially. And within the course of academia, we know this,
02:40some universities are better positioned to have funding pulled than others. Can you talk about
02:45the conversations you've been having with editors and what led to this list of 39 Trump-proof
02:51universities? For sure. I want to start with the caveat that no one's really Trump-proof,
02:59but these are sort of the 39 schools that probably stand the best chance to standing up to Trump and to
03:06figure out who they were. We want to take a look at their financials. So one of the first things we
03:11considered was their endowment. So how much money do they have sort of to keep operations running
03:19into perpetuity? I will note that endowment is different than a savings fund or a rainy day fund.
03:25They can't just tap into that money and move it. So Harvard couldn't say, you know, we're going to
03:30take $2.2 billion from our $53 billion endowment and cover the research funding. They'd have to
03:37jump through a lot of hoops if they want to use endowment funding on research. Usually it's earmarked
03:41for things like student aid or a faculty position. They'd have to go back to the donor, whoever gave
03:47that specific money, and sort of ask if they can reallocate it to something like research, which is
03:52possible but difficult. And then another thing that we were looking at was their financial grade,
03:59which is a list that Forbes puts out every year. We evaluate private colleges on a variety of
04:04metrics, everything from endowment size, return on assets, to how much are they discounting tuition,
04:11what is their admissions yield, to sort of determine the overall financial health of the school.
04:17So we were looking at colleges that also had pretty high grades. I think all the schools on our
04:22list of 39 are B plus or above. And does that grade incorporate the credit rating on the institution?
04:29Because your story notes that Harvard has a triple A debt rating and also relatively little reliance on
04:36federal support for operations compared to others. How important is that debt rating in this calculation
04:44for the 39 schools? We actually don't include the debt rating in that calculation. That's just
04:50something I wanted to know about Harvard and a handful of the schools on our list is that they
04:55want to access debt. They can do so pretty easily. We do factor into that list the reliance on federal
05:04dollars. So a lot of those schools, it makes up less than 20% of their operating revenues every year.
05:13So that could be things like Pell grants, which are grants for student tuition
05:18that most schools receive. And then a lot of it is also research funding from NIH or
05:23NSF. But the schools on our list have other revenue streams, things like tuition that they can sort of lean
05:31back on if their federal funding is to decrease. So a lot of them are small private liberal arts colleges that
05:38really focus on undergraduate teaching and don't do as much research as some of the big public R1
05:45universities. Interesting. So a more research focused university might not be on this list.
05:52Right. So there are some on here, a lot of the big private schools like Harvard, like Washington
05:57University, Vanderbilt, Johns Hopkins, schools that really focus on research. You will see on there,
06:06but that's because they are also so wealthy on their own. But a lot of the public schools that
06:12have a little bit smaller endowments and still do a ton of research and get a ton of funding from the
06:19feds, they wouldn't be included on this list. So let's get into it. I won't make you do all 39 from
06:25memory, but can you take us through some of the highlights of this list of colleges that have the
06:32endowment, the financial health and the revenue to push back against Trump's overarching federal
06:38funding stipulations? For sure. So you will see a school like Princeton University on there.
06:45They have the highest endowment per student. So it's not the largest endowment in total. But if you look
06:53at how much money they have for their relatively small enrollment, it is larger than any university in
06:59the country. So they're pretty well off. And even though they get about 43% of their operating
07:05revenues from federal dollars, their president's already been very outspoken about not wanting to
07:10keep Trump. So we want to keep them on the list because we expect them to continue to push and try
07:15and outlast any sort of federal overreach. And then you've got some small liberal arts college,
07:21liberal arts colleges like Pomona College, Principia College, Williams in Massachusetts. And those are
07:30all pretty focused on the undergraduate teaching experience. They only get a few percent of their
07:36revenue from the federal government. They're not doing a lot of research. And then they also are very,
07:42very independently wealthy. So we expect they would be able to outlast four years of any federal
07:48institutions. Let's get into that endowment per student really quickly. So I understand some
07:54commenters are saying, you know, you can't just look just at endowment. So why is it important to break
08:01that in that big endowment figure down to the endowment per student? Yeah, so if you think about schools
08:09like Columbia University, which has already caved to some of Trump's demands, or Cornell University, they have
08:16these really large endowments, but they also enroll so many students that those endowment earnings just
08:23aren't going to go quite as far because their expenditures are so much higher. So then if you
08:27look at a school like Princeton that does have that really high endowment per student number, they've just
08:33got so much more saved compared to what their relative teaching expenses are that it would go a lot
08:40farther to help them. One of the figures here that's really interesting to me, a longtime Forbes
08:46staffer, I love the math, I love the numbers, is federal funding as a percentage as of operating
08:51revenues. And some of these schools, it's remarkably little. Grinnell is 1.4 percent, Williams 2.3.
08:59Swarthmore College from where I'm from in Pennsylvania is 2.1. I'm surprised by some of these figures.
09:07You report on this on a regular basis. Did any of this surprise you, or is this kind of standard
09:13fare? A little bit. I'll note that these numbers are a little bit crude because I use federal data
09:20to calculate these, and it doesn't split that up into different types of federal money. So I can't
09:26tell, you know, what is research, what is student grant aid, that kind of thing. But schools like the
09:33ones you mentioned, like Grinnell or Swarthmore, you know, they're very reliant on tuition. They,
09:39schools or students pay a pretty high price tag to attend. So a lot of their funding is coming from
09:45that stream and less so from the federal government, which would be supporting a lot more research
09:51behind the scenes kind of things.
09:52What surprised you about this list that you put together here? Was there a name of a university
09:59or college that once all the math was done, you were like, wow, I did not expect to see that name
10:04here?
10:06Yeah, there was one that surprised us all, I think, which is Soka University of America.
10:12I don't know if you've heard of it. It's very tiny. It's in California, and it's very wealthy
10:18compared to the number of students they have. It's supported by Japanese, a Japanese Buddhist sect
10:25that has given them quite a bit of money and seems to operate pretty independently. So
10:30that was kind of a strange, cool name to see on here.
10:38And there's also a few just smaller specialized schools like the Juilliard School,
10:43Curtis Institute of Music, that seem to have pretty low enrollments, but pretty healthy endowments and
10:50low reliance on federal dollars. So they'll probably do fine as well.
10:55Were there any schools you expected to see come out in this ranking that ultimately did not make the cut?
11:03I was a little bit surprised not to see Columbia or Cornell on here. I knew that they had high
11:10enrollments, but I thought their endowments were big enough that they would still make this list.
11:15So it was a little bit eye-opening to see just how vulnerable they still may be, even though
11:22they are seen as really prestigious, untouchable schools. It's precarious, even for the big guys
11:30like Harvard. I mean, they're standing up, but it's tough for everybody.
11:35What you said about how endowments are earmarked, I think, is really interesting and also important.
11:41Did any of your sources talk about how long it would take to perhaps un-earmark those dollars
11:47from the endowment in order to make up for any federal funding dissipation?
11:52It would really vary. I think it would depend on the scale of how many people you're approaching to
11:58talk about this. I asked my sources if there had been any historical events where schools have had
12:03to do this in the past. And there really haven't been, except if the school is somehow in dire
12:09financial circumstances for some other reason. So maybe they're facing closure and they want to tap
12:14that endowment more so than they would year to year. Then they might go back to donors and talk about
12:21that, but it would involve a lot of man hours, a lot of paperwork, and a lot of legal hoops to jump
12:28through. So it's not necessarily a practical solution that colleges have, but it could be an option.
12:36One of the other factors that comes up in your piece is international students,
12:40which you mentioned when talking about MIT. MIT did not make this list of Trump-proof universities.
12:47So I'm wondering, how does a college or university's international student population play
12:54into its ability to counteract the effects of the administration?
12:59Right. So the Trump administration has really gone after international students. They've been
13:04revoking visas all over the place with loosely justified reasoning or sometimes no reasoning at all.
13:10And this is a problem for colleges financially because a lot of them rely on international students
13:17to come and pay full tuition, which even though private colleges have these really high tuition
13:24rates, like somewhere in the $70,000, $80,000 range, most domestic students don't pay that. They get some
13:30sort of merit scholarship that discounts that rate. So maybe they're paying only $40,000 a year out of
13:37that $70,000. But international students don't tend to get that kind of financial aid. So schools rely on
13:44them to pay that full fare and that sort of works out to help discount for domestic students. So if they
13:51lose that stream of enrollment from international students, it's another financial hit that they're
13:58having to deal with. I'm going to ask a question that might be a story idea for you in the future. But
14:03back when I was covering student loans and student debt in 2013 and 14, something that came up a lot was
14:09the idea of net tuition revenue and then how much aid is left over from the money a college has, I'm
14:17speaking super crudely, to give aid to students. Have any of your sources indicated that schools could
14:22start offering less financial aid, fewer scholarships, fewer grants in order to protect
14:28their revenue stream, their bottom lines from federal action?
14:34I have been asking about that. And they're in a bit of a pickle. Because as much as yes, it would save
14:44them money to start offering less grant aid to students. They also would not necessarily be able
14:50to attract that student. So if you're going to offer 50% aid on a $80,000 tuition fee, so the students
15:00only paying $40,000 to attend, they might opt to enroll because they can afford that. Whereas if
15:05you're only offering a 25% scholarship on the $80,000 fee and they can't necessarily afford the $60,000
15:13bill, then you're not getting any money from that student at all. So it's not necessarily a good idea
15:19for them to decrease those discounting rates because it might just end up to enrollment declining and then
15:24they're facing an even greater financial challenge.
15:28That's one of the big questions that remains. And as you described that situation, I'm also
15:32picturing a homogenization that could occur to some student bodies, right, if you're offering
15:37less in grants and aids, which would perhaps go towards the administration's goal of rolling back
15:42DEI, just perhaps in a way that was not intended, or at least we can't say if it was intended. But Emma,
15:48as we look towards the future, towards the end of the school year, what are the questions that are
15:53at the top of your mind and that you'll be asking sources in the days and weeks to come?
15:58Yeah, it changes every day because there's always new news coming from this administration and how
16:04colleges are responding. One of the things I'm looking at right now is what role philanthropy might
16:11play in this. In the past, the federal government has always been sort of the main funder of research
16:19at universities, but maybe we'll see foundations start to step up and try and fill some of those gaps.
16:26Another thing I'm wondering about is how this is going to impact international student enrollment.
16:30There's been a ton of speculation about it. And this month is when students will start putting
16:36down their deposits. So we'll get to see if there's actually going to be a decline if students from
16:42outside the U.S. don't want to come here anymore and what kind of impact that will have on classes next
16:47fall. Of course. May 1st is decision day. Is that right? Yes, it is. So we'll have data pretty soon
16:54after that? Yeah, they tend to release numbers throughout May. All right. Well, we'll have to
17:00have you back to give us an update based on what you're seeing then, because I am also interested in
17:04these questions and their answers. But before I let you go for now, is there anything else you want
17:10the Forbes audience to know about your story on these Trump-proof universities? I don't think so. I think
17:16we've covered us a bit. Thanks. Great. Thank you so much, Emma. I appreciate your time. Thank you.