Columbia University faced a challenging fiscal year 2025, with its operating income dramatically decreasing by over 63%, settling at $112.6 million. This prestigious Ivy League institution observed only modest revenue growth while its expenses escalated at a much quicker pace, placing considerable strain on its financial health.
This financial slowdown coincides with a turbulent political landscape. Federal grant revenue remained stagnant at $1.3 billion, and a significant factor was the previous administration’s decision to terminate hundreds of grants, an event Anne Sullivan, Columbia’s executive vice president for finance, characterized as “destabilizing.”
Operating Costs Outpace Revenue Growth
A closer look at Columbia’s financial statements reveals that while operating revenues increased by 2.1%, expenses surged by 5.3% to a total of $6.6 billion. This rise in costs spanned various critical areas, including faculty and staff salaries, ongoing research projects, and the maintenance of campus facilities. Sullivan described the resulting operating surplus as “modest” and “lower than our historical average.”
Despite these challenges, net tuition and fee revenue saw a 4.1% increase, reaching $1.6 billion. However, this was somewhat offset by a 4.6% rise in institutional financial aid, totaling $622.6 million. Notably, the university maintains its commitment to providing free tuition for families earning less than $150,000 annually.
Impact of Federal Grant Terminations and Settlements
In March, the previous administration cut $400 million in federal grants and contracts. Following this, Columbia agreed to extraordinary terms to secure the reinstatement of most of this funding. These terms included a $200 million payment to the government over three years and a $21 million settlement with the US Equal Employment Opportunity Commission.
To mitigate the impact on its vital research initiatives, the university swiftly established a Research Stabilization Fund. This fund provided approximately 500 internal grants during June and September. Nevertheless, nearly 180 employees whose roles were linked to federally funded projects were unfortunately laid off due to these significant cuts.
Strong Endowment and Assets Provide Stability
Despite the notable drop in operating income, Columbia’s overall financial strength remains robust. Its net assets saw a 3.7% year-over-year increase, reaching an impressive $20.5 billion. While gifts to the endowment dipped by roughly 25% to $177.9 million, donor-restricted funds grew by 8.7% to $10.9 billion.
Columbia is not alone in facing financial headwinds; Harvard University, a peer institution, reported an operating loss of $112.6 million in FY25, marking its largest in nearly 15 years. Sullivan underscored the ongoing importance of stringent cost-containment measures to ensure the university’s financial flexibility and continued support for its core missions of teaching, research, and patient care.