Public colleges and universities across the United States are confronting a severe financial squeeze as federal funding cuts, declining state support, and enrollment uncertainties converge to create what education leaders warn could be a prolonged fiscal crisis.
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"Even in states that avoided outright cuts, flat funding or small increases effectively translated into reductions for many institutions after accounting for inflation and rising operating expenses," the Pew report states.
The University of California system warned state legislators in September that "recent actions by the federal government, with the distinct possibility of more to come, place the entire University of California at risk" and would cost an additional $4 billion to $5 billion annually to compensate for lost federal funding.
President Donald Trump's preliminary fiscal 2026 budget proposes cutting nearly $18 billion from the National Institutes of Health compared to fiscal 2025 levels and $5.1 billion from the National Science Foundation since fiscal 2024. These reductions target agencies that provide the bulk of university research funding, which totaled $60 billion in fiscal 2023.
The Pew analysis warns that "the ripple effects of these budget decisions are likely to intensify as the impact of federal changes on higher education and state budgets becomes clear."
The funding crisis has forced swift action at state university systems nationwide. The University System of Maryland's Board of Regents slashed its fiscal 2026 budget by 7% to offset a $155 million state funding reduction—the second consecutive year of cuts. The system raised tuition and fees while warning that furloughs or pay cuts may still be necessary at some campuses.
