Harvard To Borrow $750 Million From Wall Street After Trump Funding Threat

Harvard University plans to borrow $750 million from Wall Street amid mounting threats to its federal funding from the Trump administration. 

"As part of ongoing contingency planning for a range of financial circumstances, Harvard is evaluating resources needed to advance its academic and research priorities," a spokesperson for Harvard said in an emailed statement on Monday when asked about the bond sale. 

The debt will be taxable, and proceeds will be used for general corporate-purposes, according to bond documents. Goldman Sachs Group Inc. is the sole bookrunner on the transaction. 

Schools across the US are bracing for potential funding hits after President Donald Trump escalated scrutiny of colleges accused of mishandling allegations of antisemitism on campuses, threatening to revoke billions of dollars in federal aid. The administration has frozen funding for Columbia and Princeton universities, while Harvard faces potential losses of as much as $9 billion in grants and contracts unless it complies with a list of federal demands.

To prepare for the uncertainty, some schools have tapped short-term borrowing to preserve cash. Selling taxable bonds, which have a more flexible use of proceeds than traditional tax-exempt debt, is another option to shore up liquidity. Harvard also has a $1.5 billion revolving credit facility with banks as well as $3 billion of commercial paper capacity, according to its financial report for the 2024 fiscal year.

For colleges, it's a "strategic and very fiscally astute decision to shore up any liquidity that they have due to the extreme uncertainty," said Lisa Washburn, a managing director at Municipal Market Analytics. She said she wouldn't be surprised to see more colleges tap the taxable market. 

Princeton University is also considering the sale of taxable bonds. The school announced last week that US government agencies have suspended dozens of its research grants. 

Harvard warned investors about the federal funding threat in its bond documents. 

"While the financial impact on the university of any developments at the federal level cannot be quantified at this time, they may, directly or indirectly, have a material adverse effect on the current and future financial profile and operating performance of the university," Harvard said in its bond documents dated April 6. 

The new bonds are rated Aaa by Moody's Ratings, according to a Monday release. 

The rating "reflects Harvard's superior credit quality as a premier and globally recognized comprehensive university benefitting from extraordinary student demand, exceptional fundraising and extensive research capabilities," the Moody's analysts led by Susan Shaffer wrote in a report. They highlighted Harvard's "substantial wealth" and "exceptional market position."

While Harvard is the richest US college with a $53 billion endowment, it's highly dependent on federal funding, especially for its research operation. In offering documents, the school said it has historically received "substantial" support for research from Washington, a sum that totaled 11% of operating revenues in the fiscal year that ended June 30. 

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