Apr 9, 2025
Updated Apr 9, 2025
5 min
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In 2025, America’s higher education landscape is being reshaped by a wave of federal funding cuts and political pressure from the Trump administration. Universities across the country are under scrutiny, not only for how they handle civil rights issues but also for their participation in diversity and inclusion initiatives. As a result, many schools have already begun scaling back their scholarship offerings, cutting graduate research funding and even laying off staff. This shift marks one of the most significant challenges to U.S. higher education in decades, particularly affecting institutions that rely heavily on federal research grants. With billions of dollars in play and political agendas now influencing financial support, students and faculty alike are facing an uncertain future.
The Trump administration’s approach to federal funding has caused ripples across nearly every sector of higher education. Historically, public and private universities have depended on federal research grants, financial aid and department contracts to sustain both scientific research and access-based scholarships. Now, that funding is being tied to political compliance.
Columbia University, for example, recently lost access to $400 million in federal grants after being accused of permitting antisemitism on campus. The administration made restoration of that funding contingent on policy changes, which critics argue infringes on academic freedom. The university ultimately complied with federal demands – a move that has sparked backlash from faculty and students who view the agreement as a capitulation.
Johns Hopkins University is facing similar challenges. After years as one of the top federal grant recipients in the nation (receiving nearly $4 billion annually, roughly 40 percent of its revenue) the institution has begun to feel the impact of a tightening federal purse. It recently announced 2,200 layoffs, attributing the move to a decline in research funding from key agencies such as the National Institutes of Health and the Department of Defense.
These cuts don’t just hurt university operations – they directly affect students. Many of the most competitive graduate and Ph.D. programs in STEM fields are funded through federal research grants. With these being delayed, reduced or suspended, some universities have already cut back on graduate admissions and related scholarships. A student from Purdue University, Alyssa Johnson, recently shared that one of the three schools she applied to had significantly reduced its admissions due to funding uncertainty. The funding pressure ultimately caused her to change her career path entirely.
The downstream effects are also impacting undergraduates. Federal scrutiny of scholarships associated with diversity and equity efforts has forced some schools to withdraw or revise scholarship programs. The Department of Education has investigated over 50 universities, accusing them of violating the Civil Rights Act by engaging in what it calls “race-exclusionary practices.”
Among those under investigation are prestigious institutions such as Cornell, Yale, Duke and Emory, as well as public universities like the University of Minnesota and the University of Alabama. In some cases, the investigations focus on partnerships with organizations like The PhD Project, which aims to diversify business doctoral programs.
Some schools have already begun adjusting their financial aid structures. For example, universities facing direct investigations have either paused specific scholarship programs or are quietly reducing the number of awards. The University of Oklahoma’s Tulsa School of Medicine, for example, is being probed for race-based scholarship allocation. Other schools, such as Grand Valley State and the University of South Florida, are facing similar federal scrutiny.
The uncertainty has prompted universities to take preemptive action. Rather than risk full loss of federal aid, some have opted to review or suspend DEI-related funding, even without a direct order to do so. This precautionary approach has caused frustration among students who depended on those scholarships to access higher education. Meanwhile, faculty leaders across the country report that schools are limiting new scholarship announcements for fear of attracting unwanted federal attention. This self-censorship further constrains financial opportunities for marginalized students.
The impact of these funding and scholarship cuts isn’t felt evenly across the academic landscape. Elite universities with large endowments, like Columbia and Yale, can often rely on private donations and investment returns to cushion the blow. But public institutions and mid-sized private colleges (especially those in states that receive less local funding) are at a greater risk.
Graduate students, particularly those in the sciences, are among the hardest hit. Many rely on stipends and tuition waivers funded by federal research grants. When that funding vanishes, so does the opportunity to pursue advanced degrees. The result is fewer research assistants, lab projects delayed or canceled and a significant bottleneck in the pipeline for new scientific talent. The reduction in federal support also affects first-generation college students and students of color, many of whom rely on need-based and merit-based scholarships that are now under threat. As scholarship programs connected to diversity initiatives come under review, the ripple effect could discourage applications and widen equity gaps.
The legality of the federal government’s approach to these funding decisions is hotly contested. Federal law requires a formal finding of noncompliance before terminating funds. That includes a hearing, congressional notification and a 30-day window before enforcement. Critics argue the Trump administration is bypassing due process, instead using audits and vague allegations as a means of intimidation. Civil rights groups like the Lawyers’ Committee for Civil Rights Under Law have accused the administration of weaponizing funding as a political tool. They point out that the Department of Education has laid off hundreds of staff members, including many civil rights attorneys, further limiting accountability.
In a recent statement, Lynn Pasquerella, president of the American Association of Colleges and Universities, said colleges feel, “beleaguered and overwhelmed,” citing a deep sense of moral distress among administrators. The policy shifts have been described by some as governmental overreach, threatening the independence and academic freedom that has long defined American higher education.
Among the schools publicly known to be affected:
These institutions collectively represent tens of billions in federal research funding and educational support. Any changes in their funding streams have national implications for medical research, climate science, public health and educational equity.
For now, many are treading carefully, balancing their academic missions against real threats to their funding. The longer-term effects (on students, research and educational access) are still unfolding, but one thing is clear: the landscape of American higher education has fundamentally changed.
What schools have cut scholarships in 2025?
Several schools under federal investigation – like Columbia, Johns Hopkins and the University of Oklahoma – have either scaled back or suspended scholarship programs due to funding uncertainty or political pressure.
Why are universities losing federal funding?
The Trump administration is conditioning federal research and grant funding on political compliance, including limiting diversity programs and responding to allegations of antisemitism or race-based admissions.
How much federal funding is at stake?
An analysis found that the schools under investigation took in over $33 billion in federal revenue in one academic year. In some cases, that funding represents nearly half of a university’s total income.
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