MIT Provost Anantha Chandrakasan outlines Institute strategy for navigating new financial burdens
Recent federal policy could dramatically increase financial pressures on MIT
Samuel Yuan–The Tech
At the Sept. 17 faculty meeting, MIT Provost Anantha P. Chandrakasan and Executive Vice President and Treasurer (EVPT) Glen Shor shared insights into the Institute’s strategy as it navigates a perilous financial landscape ahead.
Recently, federal policy has created a challenging financial climate for higher education, particularly for wealthy institutions like MIT. The “One Big Beautiful Act,” signed into law on July 4, 2025, is projected to raise MIT’s endowment tax rate from 1.4% to 8%, effective fiscal year 2027. A new White House order on H1-B visas could compel MIT to spend over $10 million per year on visa sponsorships. And federal agency efforts to limit reimbursement for indirect research costs would hamper MIT’s ability to maintain its academic infrastructure.
Combined, these factors pose serious risks to the overall health of the Institute and amount to hundreds of millions in additional costs — more than a tenth of MIT’s annual central budget. In turn, Provost Chandrakasan and EVPT Shor have formed a “Financial Scenarios Working Group” composed of faculty and staff experts to map out a response.
Two new pages on the Provost’s website relating to the Institute’s response have recently been made accessible to the MIT community.
One details the working group’s priorities, which include protecting financial aid and student support, “remaining a magnet for top student, faculty, and staff talent,” and “raising more budget-relieving gifts.”
The other page, titled “Exploring New Academic and Institutional Models for MIT,” addresses concerns regarding MIT’s response to a changing higher education landscape. It also summarizes faculty suggestions for changes in education and research.
“Several participants raised the idea of reducing the ‘sticker price’ of an MIT education, or even of going tuition-free altogether for undergraduate and PhD students,” the page states. “MIT should consider ways to reimagine graduate education — shorten PhD timelines, introduce more hybrid formats, and introduce focused, stage-based approaches.”
These are the latest updates from the MIT administration in regards to their strategy as the Institute adapts to the developing financial situation. The revisions came just before the Trump administration asked MIT to sign a compact in return for funding preferences. MIT formally rejected the compact on Friday, Oct. 10, 2025.
Under the endowment tax provisions outlined in the “One Big Beautiful Bill Act,” universities with at least 3,000 tuition-paying students would be forced to pay either 1.4%, 4%, or 8% excise taxes on investment returns depending on their endowment sizes per student. MIT is among just five schools estimated to fall into the 8% tax bracket.
During the faculty meeting, questions about whether MIT could reduce its tax burden by increasing enrollment arose, according to a written statement to The Tech from MIT spokesperson Kimberly Allen. Allen wrote that while the MIT administration is “looking at all dimensions of how the tax applies” in terms of class size, it would take “approximately an additional 6,000 students to move from the 8% tax bracket to the 4% bracket.” She stated, “It is appropriate for MIT to plan for an 8% tax liability and to make budget changes to afford it.”
Some have speculated that Princeton may try to sidestep the endowment tax by increasing financial aid, thereby reducing its number of tuition-paying students to under 3,000.
The White House’s compact demands that the Institute waive tuition for undergraduate students in the “hard sciences,” with “exceptions” for “families of substantial means.” Under MIT’s undergraduate financial aid program — in which around 40% of students paid no tuition in the 2023-2024 academic year — there are an estimated 2,700 tuition-paying undergraduate students.
The Provost’s website recognizes how, in a country where only around 40% of adults hold a Bachelor’s degree or higher, it can be difficult for research universities — especially those with large endowments — to convey their value and argue why they should receive public funding from American taxpayers over other pressing issues.
“Multiple faculty participants saw a need for MIT — and universities more broadly — to do more to communicate the value they provide to society,” the page states. “Communications should correct misinformation but should be conducted with humility. They should aim to explain how universities work, why people should care about what universities do, and the return on investment that universities provide for Americans.”
Institute staff were invited to a webcast forum on Monday, Sept. 29 to ask questions about MIT’s response to these new financial pressures; however, a recording of the staff webcast is unavailable. Allen also encouraged all community members to share their thoughts about the Institute’s response to the financial landscape by emailing budgetsolutions@mit.edu.