Stanford University to lay off more than 300 employees; blames federal policy changes

By Suzanne Phan

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    STANFORD, Calif. (KGO) — Stanford University announced on Tuesday they will lay off more than 300 employees this fall.

University leaders say they “face significant budget consequences from federal policy changes and those changes will cost Stanford $140 million.”

The layoffs take effect September 30. 363 positions will be impacted. But it’s unclear which departments will be affected by the layoffs.

Stanford’s president and provost stated in a letter to faculty and staff last Thursday :

“…The university is making a $140 million reduction in the general funds budget for the upcoming year. This is the product of a challenging fiscal environment shaped in large part by federal policy changes affecting higher education…these are difficult actions that affect valued colleagues and friends who have made important contributions to Stanford.”

The federal government has slashed millions of dollars in research grants and higher education funding.

Under President Donald Trump, the government is also increasing the tax on the university’s endowment.

Julian Vogel is an assistant professor of finance at San Jose State University.

“Stanford has a very large endowment,” said Vogel. “And therefore, even small changes in the tax rate on that endowment would have a big impact.”

As of August last year, Stanford University’s endowment was $37.6 billion. That’s the fourth largest of any U.S. university.

President Trump’s spending bill passed by the House in May proposed a 21% tax on some university endowments.

Stanford’s current endowment tax rate is 1.4%, according to the Stanford Daily student newspaper.

The proposed endowment tax would cost the university about $750 million a year.

That would place some financial aid at risk. According to the Stanford Daily, two-thirds of financial aid comes from the endowment.

“That is significant and of course it creates a huge financial burden for Stanford,” said Vogel.

Some ask why Stanford University couldn’t avoid layoffs by tapping into its endowment. An economics professor at Santa Clara University explained.

“Even though universities like Harvard, Stanford, and Brown have large endowments, most of these endowments are restricted to certain purposes. So, they don’t have a great deal of flexibility. And the other thing, much of their assets would be difficult to liquidate quickly and be used for operating expenses,” said Professor Alex Fields.

Economic experts say as troubling as these layoffs are, it’s necessary for Stanford to make cuts.

“There are other factors at play like the demographic shift in the higher education world, lower enrollments overall,” said Vogel. “The changes in federal regulations certainly have played a role in this but there are other factors at play.”

San Mateo County Board of Supervisors President David J. Canepa issued a statement, responding to the layoffs, writing:

“Stanford’s announcement that it is laying off hundreds of hardworking employees is a gut punch to our local economy and to families already struggling to make ends meet,” Canepa said. “Make no mistake, these cuts are the direct result of the so-called ‘Big Beautiful Bill’, a devastating piece of federal legislation that prioritizes politics over people. Raising the endowment tax from 1.4% to 21% isn’t reform, it’s economic sabotage. I stand with the workers, not with the ivory towers or reckless federal overreach.”

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