Harvard Kennedy School Announces Layoffs Amid Federal Cuts and Endowment Tax Hike Threat

The Harvard Kennedy School (HKS) has initiated a wave of staff layoffs and sweeping budget cuts, citing a confluence of federal funding reductions and a proposed tax hike on Harvard University’s $53.2 billion endowment. In a message to faculty and staff, Dean Jeremy M. Weinstein described the situation as “unprecedented,” underlining the severe financial strain on one of America’s top public policy schools.

The announcement, first reported by the Harvard Crimson, highlights a stark new era of fiscal austerity, even for elite institutions with vast financial reserves. The layoffs mark a sobering development, reflecting broader systemic threats to U.S. higher education stemming from federal policy changes, particularly those enacted under the Trump administration.

Key Factors Behind the Budget Crisis

1. Federal Funding Reductions

The most immediate source of financial distress comes from multibillion-dollar cuts to federal research funding, a historically critical revenue stream for HKS. The cuts, part of a broader realignment of federal spending under the Trump administration, have sharply reduced the resources available for policy research and innovation at Harvard.

2. International Student Restrictions

Visa restrictions and travel bans targeting international students, who comprised 59% of HKS's student body last year, have dealt another major blow. Policies affecting student visas and attempts to revoke Harvard’s certification under the Student and Exchange Visitor Program (SEVP) have significantly complicated admissions and enrollment processes. Although courts have temporarily blocked some of these measures, uncertainties persist.

Dean Weinstein said this policy landscape has added massive unpredictability to HKS’s financial planning. “We began planning for budget cuts as early as February, but the Trump administration’s actions have since brought on unprecedented new headwinds,” he wrote.

Specific Budget Cuts and Layoff Measures

To mitigate the budget crisis, HKS has implemented a series of austerity measures:

• Ending the lease on key office space at 124 Mt. Auburn Street
• Halting all non-essential construction and renovation projects
• Implementing across-the-board departmental budget reductions
• Freezing hiring and pausing merit-based salary increases

Despite these steps, Weinstein acknowledged that layoffs were unavoidable. While the number of affected staff has not been publicly disclosed, the move represents one of the most drastic cost-cutting actions in the school’s recent history.

Contingency Plans for International Student Decline

HKS is preparing for potential further declines in international enrollment. Among the proposed contingency strategies:

• Shifting courses online to maintain access for remote students
• Establishing a visiting program in Canada to provide a location unaffected by U.S. visa restrictions

These measures underscore the administration’s awareness of the vital role international students play in the school's intellectual and financial health.

In addition to direct enrollment impacts, Trump’s 12-country travel ban currently affects at least five HKS students, adding another layer of disruption and inequity to the school’s academic environment.

Threat of Endowment Tax Hike Adds Long-Term Uncertainty

Further compounding the crisis is a congressional proposal to increase the federal tax on large university endowments. Under the legislation:

• The House proposed a 21% tax on Harvard's endowment earnings
• The Senate Finance Committee later revised this to 8%—still a dramatic jump from the current 1.4% rate

If enacted, the increased tax could cost Harvard $200 million per year, severely constraining its ability to fund core programs, financial aid, and faculty research.

University President Alan M. Garber has voiced grave concerns, calling the endowment tax “the threat that keeps me up at night.” For HKS, which relies on a portion of endowment income to subsidize operations, such a hike could result in even deeper cuts.

A Broader Higher Ed Crisis

The situation at HKS is emblematic of broader pressures facing American higher education. Federal policy shifts on funding, immigration, and taxation test the financial resilience of even the most well-endowed institutions. Public and private universities are grappling with similar budget challenges, often with far fewer resources than Harvard.

The layoffs at HKS mark a turning point—from cost containment to direct workforce reduction. Weinstein concluded his message to staff with a pledge of transparency and mutual support, urging the Harvard community to rally around affected colleagues:

“I hope we can support each other and our departing colleagues during this difficult time.”

Conclusion: A Pivotal Moment for Harvard and U.S. Higher Education

The institution finds itself at a crossroads as Harvard Kennedy School navigates the fallout from a changing federal landscape and looming tax reforms. The measures taken—while necessary for short-term stabilization—signal the deepening vulnerability of higher education to external policy shifts.