Northwestern freezes hiring and cuts budgets to combat ‘increasing strain’ on finances

Dive Brief:

• Northwestern University is rolling out a host of new cuts and savings measures as it grapples with “an increasing strain” on its finances, university leaders said in a community message Tuesday. 
• Measures include a pause on employee raises, a hiring freeze on faculty and staff, unspecified health insurance changes, reduced capital spending, and diminished budgets for academic and administrative units, according to officials.
• They added that smaller unit budgets would likely lead to fewer positions. Driving the cuts, officials said, are increasing costs as well as possible federal policy changes, including a higher endowment tax, international enrollment constraints and research funding cuts.

Dive Insight:

Northwestern officials outlined myriad challenges facing the private Illinois university. Those include inflationary pressures such as rising labor expenses and double-digit percentage increases in healthcare costs, as well as costs tied to compliance and litigation in a turbulent political environment. 

“Like a number of our peer universities, we have now reached a moment when the University must take a series of cost-cutting measures designed to ensure our institution’s fiscal stability now and into an uncertain future,” Northwestern President Michael Schill, Provost Kathleen Hagerty, and Vice President and Chief Financial Officer Amanda Distel said in the message. 

Northwestern is among the elite institutions targeted directly by the Trump administration. The federal government reportedly froze $790 million in research funding to Northwestern, claiming it took the action over alleged antisemitism on the university’s campus. That’s despite Northwestern reporting an 88% year-over-year decline in complaints of antisemitic discrimination or harassment as of November 2024. 

The White House confirmed the funding freeze to multiple media outlets. Yet the university has not yet confirmed receiving official notice from the Trump administration of a freeze or instructions on how it could get its funding back. Nevertheless, by May 1 Northwestern said it had received nearly 150 stop-work orders and grant terminations from federal agencies, essentially indicating that a freeze was underway. 

Northwestern launched an initiative this spring to self-fund critical research projects under threat from Trump administration stoppages, a move meant to “keep these projects going until we have a better understanding of the funding landscape,” officials said at the time. 

In their message Tuesday, Schill, Hagerty and Distel said that university leaders “continue to fight in myriad ways to get our federal funding restored, and to minimize the impact on our community.”

Efforts to restore federal funding include discussions with lawmakers and government officials, as well as “collaborating with peer universities who face similar funding freezes,” and working with higher education organizations, including the Association of American Universities. They also noted Northwestern is exploring its legal options to restore funding. 

Northwestern is in just about as strong a financial position as any university can be in the current political and financial era. For fiscal 2024, it reported $3.3 billion in total operating revenues and a surplus of $54.6 million, with $386 million in cash on its balance sheet. 

At $14.2 billion, its endowment was the 13th most valuable among the nation’s colleges, according to the latest study from Commonfund and the National Association of College and University Business Officers. In fiscal 2024, Northwestern’s endowment paid out over $750 million, according to its financial statements.