Trump administration places new restrictions on Harvard, citing financial concerns

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By Nate Raymond

BOSTON (Reuters) -President Donald Trump’s administration escalated its campaign against Harvard University on Friday by placing new restrictions on the Ivy League school’s ability to access federal funds for student aid, citing concerns about the “financial position” of the oldest and richest university in the United States.

The U.S. Department of Education said it had placed Cambridge, Massachusetts-based Harvard on “heightened cash monitoring” status, a shift from the typical practice that will force it to use its own funds to disburse federal student aid before drawing down funds from the department.

The department is also seeking to have Harvard post a letter of credit for $36 million to ensure its financial obligations are met. In a letter, it said recent events raised concerns about Harvard’s finances, citing its decision to issue bonds and conduct layoffs amid its conflict with the White House.

“While Harvard remains eligible to participate in the federal student aid program for now, these actions are necessary to protect taxpayers,” U.S. Secretary of Education Linda McMahon said in a statement.

The Education Department said Harvard was at risk of losing access to all federal student aid funding by not complying with requests for records from its Office of Civil Rights, which a separate letter warned may pursue an enforcement action.

That office has been reviewing whether Harvard still considers race in its undergraduate admissions process even after the U.S. Supreme Court in 2023 ruled that affirmative action practices that schools relied on to boost enrollment of racial minorities were unlawful.

Harvard did not respond to requests for comment.

Harvard, which has a $53 billion endowment, has never suggested it was on the verge of financial catastrophe.

But it has cut spending after Trump’s administration launched a campaign to leverage federal funding to force change at it and other universities, which the president says are gripped by antisemitic and “radical left” ideologies.

Harvard in July said the combined impact of recent federal actions on its budget could approach $1 billion annually. It has sued over some of those actions, leading a judge this month to rule the administration had unlawfully terminated more than $2 billion in research grants awarded to Harvard.

The administration has been seeking a settlement with Harvard. Trump during a recent cabinet meeting said the university should pay “nothing less than $500 million” as it had “been very bad.”

(Reporting by Nate Raymond and Bhargav Acharya; Editing by Rosalba O’Brien)