When President Donald Trump announced last month that universities permitting “illegal protests” could face a loss of federal funding, the implications sent shockwaves through higher education institutions. With no clear legal precedent for such a policy, public and private universities now face uncertainty about their financial future, academic freedom, and governance. This move—which, if upheld, could reshape the financial and ideological landscape of higher education—has raised urgent questions about the balance between student activism, university autonomy, and government oversight.
Public universities, which receive substantial federal funding for research, student financial aid, and operational support, are particularly vulnerable to funding cuts. Institutions such as the University of California, Los Angeles (UCLA) and the University of Michigan receive billions in federal grants each year, comprising a significant portion of their annual budgets.
“Any significant cut in funding, either at the federal or the state level, would be an enormous blow to these universities,” Kevin Carey, vice president of education and work at nonpartisan think tank New America, tells The Progressive.
The aftermath of a Palestine solidarity encampment at the University of Wisconsin–Madison (UW–Madison) in April 2024 illustrates the precarious position public universities face when navigating student activism. University administrators initially attempted dialogue with student organizers, but later authorized law enforcement to dismantle the encampment, resulting in thirty-four arrests. Despite this, students rebuilt the encampment, leading to further negotiations before the protest was eventually shut down. Less than a year later, in March 2025, UW–Madison was among sixty universities warned by the U.S. Department of Education that they may face federal funding cuts over allegations of antisemitic discrimination tied to campus protests. The university is already facing scrutiny and the threat of funding losses under the Trump Administration’s directives—highlighting the high stakes for public institutions, especially those without the financial cushion of large endowments. The list also includes private universities, many of which receive significant federal student aid and research grants now at risk under this policy crackdown.
Although private universities don’t receive direct public funding, they remain partially dependent on the government through indirect support such as student aid programs, research grants, and other federally backed initiatives. This financial reliance allows the current administration to use these funding channels as leverage to influence institutional policies and push its political agenda.
Columbia University, an Ivy League institution with a large endowment, has found itself in a funding crisis after the Trump Administration canceled $400 million in research funding and contracts, citing alleged failures to combat harassment of Jewish students during the pro-Palestine student protests on its campus last year.
In March, the Trump Administration issued a series of demands that Columbia must meet to have its funding reinstated, which include implementing a campus mask ban, reforming the admissions process, and placing the Department of Middle Eastern, South Asian, and African Studies under academic receivership—a process in which the university would lose direct control over the department, transferring authority to an external appointee or governing body to oversee its operations and ensure alignment with federal directives.
According to Carey, Columbia’s case serves as a warning for all universities nationwide. “They didn’t even have to threaten student aid,” he says. “All they had to do was threaten these large research contracts to bring Columbia right to the table.”
Just weeks later, Columbia’s interim president, Katrina Armstrong, resigned amid the university’s compliance with the Trump Administration’s demands, which led to the reinstatement of $400 million in federal funding. Armstrong’s resignation follows the university’s agreement to these conditions, which has sparked controversy among faculty, students, and free speech advocates.
Smaller private colleges without substantial endowments are particularly vulnerable in situations where federal student aid may be withdrawn. Many of these institutions rely heavily on tuition revenue, a significant portion of which comes from federal financial aid programs. The sudden loss of this funding can lead to immediate financial crises, potentially resulting in bankruptcy or closure.
While tensions between student activists and university administrators are nothing new, the use of federal funding as a punitive measure is unusual. “The government has never done this before,” Carey notes. “They’ve never cut off student aid to a university because of some accusation of harboring ‘illegal’ protests. This would be without precedent.”
Beyond the immediate financial consequences, many experts fear a chilling effect on free speech and student activism. Tyler Coward, lead counsel on government affairs at the Foundation for Individual Rights and Expression (FIRE), warns that universities may begin over-policing protests out of fear. “If the government starts dictating what speech is acceptable on campus by threatening funding, it could force institutions to take drastic measures to avoid political scrutiny,” Coward tells The Progressive.
“Unfortunately, a lot of institutions are going to choose to censor and not lose all their money, their federal dollars,” Coward says. “And I think that there is a real risk that institutions will choose that route and therefore engage in censorship.”
Carey echoes this concern, noting that universities risk compromising their academic integrity by caving to political pressure. “Why would somebody want to go to a university where you credibly might think that if you stand up in public and voice a politically unpopular opinion, you’ll face retribution?” he says. “That would have a devastating effect on [the university’s] reputation.”
Legal experts predict that any enforcement of this policy would face significant Constitutional challenges. “It’s not about enforcing civil rights laws or protecting students,” Carey says. “It’s about finding an excuse to subjugate the administration’s ideological enemies.”
Despite this, universities may hesitate to push back too aggressively. “A lot of university leaders are hoping that if they keep their heads down, they can avoid scrutiny,” Carey says. “But they are rapidly realizing that’s a failed strategy.”
As legal advocacy groups prepare potential challenges, state governments may also intervene to protect institutions in their jurisdictions. However, the effectiveness of these efforts remains uncertain in a highly polarized political climate, as universities must decide whether to defend academic freedom or yield to financial and political pressure.
Carey warns that if universities allow these threats to succeed, the consequences will extend beyond student activism. “Universities are in a terrible position,” he says. “They risk absolutely destroying their academic reputation, both among faculty and students. If they allow these threats to work, it will set a devastating precedent.”
Beyond immediate campus policies, Carey points out the long-term risk that future presidential administrations, regardless of political affiliation, may use similar funding threats to enforce ideological conformity. “They want to make an example of Columbia as a way to intimidate the sector as a whole,” he explains. “It’s like putting a head on a pike as a warning to everyone else.”
While public and private universities are likely to pursue legal action to challenge the Trump Administration’s directives, the outcome remains uncertain given the current political climate, in which courts and lawmakers are increasingly divided along partisan lines. The ability of universities to resist will depend not just on legal safeguards but also on the determination of institutional leaders, faculty, and students to stand firm against external pressure.
Carey says that institutions will likely begin stifling dissent, restricting protests to avoid scrutiny. “Authoritarianism works,” he notes. “If people are scared enough, they will change policies to suppress speech and limit activism.”