- A number of top colleges have tapped the bond market in recent weeks.
- A spate of bond sales from elite schools comes amid Trump’s threats to slash funding for some universities.
- MIT, Harvard, and Princeton are among those who sold or are planning to sell bonds.
Top colleges are rushing to borrow money in the bond market amid the tussle between higher education and the Trump Administration over federal funding for universities.
The Massachusetts Institute of Technology plans to sell $750 million worth of taxables bonds, according to preliminary offering documents published on May 2. The bonds, which have a maturity of 30 years, are set to be priced on Tuesday, Bloomberg reported.
In its offering document, MIT said that “The Institute continues to monitor policy developments involving the federal government and universities.” It added that policies related to research funding may be shifting, resulting in less money going to universities.
For the year ending June 30, 2024, MIT received $648 million in federal funding, it said in the offering document.
“MIT manages its resources to ensure it can advance the Institute’s mission in a wide range of conditions. This bond issuance will provide us additional flexibility to achieve this goal,” Glen Shor, the executive vice president and treasurer for MIT, told Business Insider in a note.
The school is following other top universities into the bond market. Harvard sold $750 million worth of taxable bonds in April, bringing its total for the fiscal year to $1.2 billion.
The school could lose around $9 billion in funding in the coming fiscal year if the administration follows through with its proposed cuts. Trump has already blocked $2.2 billion worth of federal funding from the university, and threatened last week to revoke the school’s tax-exempt status.
“As part of ongoing contingency planning for a range of financial circumstances, Harvard is evaluating resources needed to advance its academic and research priorities,” a spokesperson from the school told BI.
Yale University said it was planning an $850 million bond sale this month in two offerings, both of which are expected to be priced this week, Bloomberg reported.
Princeton sold $320 million worth of taxable bonds in April. The school risks losing $210 million worth of funding, according to the White House. Last month, the university said it had been affected by the suspension of dozens of federal grants.
Stanford also offered $327 million worth of taxable bonds this year in February. A spokesperson from the school told BI the bond issuance was part of the “normal course of business for the university.” The school said it was at risk of losing around $160 million in research funding at the start of the year, after the White House proposed slashing the budget for the National Institutes of Health.
Yale, Princeton, and the White House did not immediately respond to a request for comment from Business Insider.
Trump has threatened to cut around $163 billion in the government’s non-defense discretionary spending budget in the coming fiscal year, which would represent a 22% cut compared to the current budget.
