Summary of Key Points
This news report reveals that some universities in the United States are facing severe financial crises: not only are regular faculty members being laid off, but even tenured professors, who were once considered to have secure jobs, are at risk of losing their positions (for example, the founding dean of Illinois Institute of Technology was dismissed). Some schools have even misappropriated funds designated by donors (such as using scholarships intended for accounting students’ athletes to pay for utilities). The underlying reasons include a declining birth rate in the U.S., high tuition discount rates, a sharp decrease in the number of international students, and increased financial burdens on top-tier universities due to tax reforms. The article also warns families of international students that when choosing a university, they should not rely solely on rankings and should learn to recognize signs of financial distress to avoid the risks of the school closing down or ceasing operations after enrollment.
I. Why are Tenured Professors Laid Off?
Tenure is synonymous with job security at American universities; once granted, it is only under two extreme circumstances that a professor can be dismissed—either if the university enters a financial emergency or if their department or program is discontinued. The salaries and benefits of tenured professors represent long-term, fixed expenses for the school, akin to assets that are invested for the long term.
For instance, Illinois Institute of Technology had to dismiss its founding dean, Fortnow (a Ph.D. from MIT and member of the ACM), because the university lost 1,200 international students (42% of its total student body), which led it to declare a financial emergency. Laying off tenured professors in large numbers is like sacrificing a “queen” in a chess game—this move is only made as a last resort, as it can lead to lawsuits, industry condemnation, and damage to the university’s reputation, making it difficult to attract top professors and students. In 2025, more than 9,000 teaching positions were eliminated from the national higher education system, and by February 2026, over 300 more positions were lost, including many tenured professor positions, indicating that the crisis is spreading.
II. Misappropriation of Donated Funds: Is It “Stealing Money”?
Donated funds are a vital source of revenue for universities. The schools cannot touch the principal amount; they can only use the investment earnings (about 4%-5% per year). There are two types of donations: those with no specific purpose (which the school can spend as it sees fit) and those with designated uses (such as scholarships for accounting students or purchasing equipment for sports teams). To use funds for a different purpose, the university must obtain the donor’s consent or court approval; otherwise, it is illegal.
In the news, an elderly teacher named Natalie set up a scholarship of $30,000 saved from frugality to honor her husband, only for the money to be used to pay bills when the school closed down. Fourteen board members and executives privately misused over $2 million in designated funds, which is essentially embezzlement. There is an unwritten rule in the American higher education community: misappropriating donated funds signals that the university is in a desperate situation.
III. The Three Major Causes of University Financial Crises
1. The Demographic Cliff: Last year saw the largest number of students enrolled in U.S. universities, and this trend will reverse, with the number of students expected to decrease by 13% by 2041. Fewer students mean less tuition revenue.
2. Excessive Tuition Discounts: Private universities offer average tuition discounts of 56.3% (with listed prices of $65,000 but actual receipts of less than $30,000). However, 88% of the so-called “scholarships” are actually reductions in tuition fees, meaning the schools are competing with lower prices to attract students, resulting in thinner profit margins.
3. The Disappearance of International Students as a Lifeline: The number of new international students in the spring of 2026 decreased by 20%, and the number of graduate students decreased by 24%. Many universities rely heavily on international students for their tuition revenue (for example, Illinois Institute of Technology receives 42% of its income from them); with fewer international students, revenue is halved.
IV. The Different Strategies of Top-Tier and Lower-End Universities
- Top-Tier Universities (Harvard, Yale, etc.): They are not short of money but are affected by tax reforms. In 2025, the tax reform increased the donation fund tax rate from 1.4% to 8%, resulting in additional costs of over $368 million for Harvard alone (more than its undergraduate scholarship budget). As a result, they have taken drastic measures such as reducing doctoral programs, cutting administrative positions, and halting recruitment (Stanford laid off 363 people, Brown 48).
- Lower-End Universities: They are in a desperate struggle to survive, cutting departments, programs, and faculty members (the Oklahoma State system cut 70 programs). In 2025, 16 universities closed, and another 8 did so in 2026; over the next decade, more than 440 could close or merge.
V. How International Students Can Avoid Problematic Universities
International students face greater risks when a university encounters financial difficulties: Their F-1 student status is linked to the school’s SEVIS record, and they must transfer to another institution within a short period if the school closes, otherwise, they may be forced to leave the country. New DHS regulations have also shortened the grace period (from 60 days to 30 days), further limiting their options. Here are three tips for identifying potential problems:
1. Watch for Three Levels of Warning Signs:
- Level 1 (routine): Suspension of recruitment, halting infrastructure projects, reduction in enrollment programs (not necessarily cause for panic).
- Level 2 (alert): Large-scale layoffs of administrative/contractual staff, suspension of doctoral admissions, mergers of colleges (indicating structural deficits).
- Level 3 (dangerous): Declaration of a financial emergency, dismissal of tenured professors, misappropriation of designated funds (action required immediately).
2. Check Public Data:
- Ratings from the Federal Department of Education: Universities with ratings below 1.5 should be considered carefully; those with ratings below 1.0 are considered unqualified (available at studentaid.gov).
- Forbes financial rankings: Be wary of universities rated D or lower (latest edition in 2026).
- IPEDS database: Pay attention to a continuous decline in the number of full-time students over three years; full-time students generate more revenue.
3. Counterintuitive Signals: Universities with average rankings offering exceptionally high scholarships may be trying to fill empty dormitories due to financial constraints.
The news report also mentions Illinois Institute of Technology as a “canary in the mine”—the first to show signs of trouble, not necessarily the weakest. When choosing a university, it is more important to consider its financial health than just its rankings. After all, graduating successfully is what truly matters.