As of Friday, the department said, Harvard must “use its own funds to disperse federal student aid before drawing down funds from the department,” officials said. Typically, federal funds are a key part of the financial aid mix.
Harvard will still have access to federal student financial aid, but it will have to spend its own money first and then be reimbursed by the federal government, representing an enormous change to how the school doles out millions to hundreds of qualifying students and their families.
“Harvard will be required to cover the initial disbursements as a guardrail to ensure Harvard is spending taxpayer funds responsibly,” officials said.
Additionally, Harvard must show its own credit is good for $36 million “or provide other financial protection that is acceptable to the department,” officials said.
Harvard has retained its AAA credit rating amid federal funding cuts, according to Morgan Stanley. Friday’s announced financial stipulations from the federal government are meant to put more pressure on the university at a time when it could lose even more federal funding, officials said.
If Harvard were to take on more debt and lose federal funding at the same time, officials said, it would be “materially more difficult for Harvard to satisfy any liabilities with the department,” officials said.
The federal government’s financial stipulations placed on Harvard are a direct result of concern that Harvard is trying to make its budget stretch after the loss of billions in grants, officials said on Friday. The university got its first federal payment from restored grants on Friday, when it received $46 million from the US Department of Health and Human Services, spokesperson Jason Newton told the Globe. But far more funding is still in the process of being paid out.
“Moreover, the department is concerned that Harvard has taken steps to issue over $1 billion in bonds to fund its operations,” the department said in a news release.
The announcement came after Harvard’s “refusal to provide documents and information” related to admissions practices, the department said in a separate news release.
Trump’s education department opened its civil rights investigation into Harvard’s admission process in May, arguing the university violated the Title VI of the Civil Rights Act of 1964’s prohibition on race-based discrimination, the press release said.
After the US Supreme Court ruled in 2023 that race-based affirmative action in college admissions is unconstitutional, using race as a factor is admissions decisions illegal. Harvard was a a defendant in the case.
Now, Harvard has 20 days to provide the education department with the required admissions documents “or face further enforcement action,” the press release said.
“The Department has both the right and responsibility to verify Harvard’s compliance with federal civil rights laws. For all their claims, they refuse to provide evidence necessary for the Department to make that determination. What are they hiding?,” U.S. Secretary of Education Linda McMahon said in a statement on Friday.
Harvard officials did not immediately respond to a request for comment.
Tal Kopan of the Globe staff contributed to this article.
Claire Thornton can be reached at [email protected]. Follow Claire on X @claire_thornto.
