Officials will not draw from GW’s endowment to combat its structural deficit, a University spokesperson confirmed — echoing the Board of Trustees’ stance during a period of pandemic-induced financial instability.
As GW nears the end of FY2026’s first quarter, a faculty and staff working group is considering “additional measures” beyond University-wide budget cuts to address a yearslong structural deficit, but University spokesperson Julia Garbitt confirmed officials are not considering tapping the endowment. The assertion reflects the University’s 2020 stance — when GW faced a $180 million budget gap during the COVID-19 pandemic — and comes amid ongoing debate in higher education over whether schools should draw from their endowments to offset President Donald Trump’s cuts to federal research and student loan programs.
Garbitt said officials will continue to “responsibly leverage” the endowment and “maximize distributions,” but much of the fund is restricted, and the pool of money is not intended to cover the University’s structural deficit.
Faculty in 2020 urged officials to draw on GW’s endowment, reserves and loan funds before considering layoffs, furloughs and salary cuts after the Board pledged not to tap into the funds, citing a fiduciary duty to protect the University’s long-term financial health.
As universities grapple with a looming demographic cliff and Trump-era policies targeting higher education, school leaders, higher education experts and politicians in recent months have weighed the feasibility of institutions tapping their endowments to navigate financial instability. University leaders argue they must preserve their endowments for school-wide operations, but others — including former Harvard President Larry Summers and former U.S. President Barack Obama — have doubled down on the notion that universities should leverage their endowments to combat Trump-era cuts and defend academic freedom.
“GW is not alone in facing federal and financial challenges, and we are taking steps to address both short- and long-term financial stability,” Garbitt said in an email.
Higher education experts said GW will likely prioritize reducing personnel and boosting revenue sources before tapping the endowment, but drawing from it may become necessary if the deficit widens. GW is facing a $24 million budget deficit as of July.
GW’s endowment, which stood at $2.7 billion as of March 31, is made up of donated funds and assets that support the University’s mission, including scholarships, faculty positions, research and facilities. Donors often specify how they want their gifts to be used, resulting in legally binding restrictions for the endowment to honor donors’ wishes.
GW’s Finance Division hasn’t updated the financial highlights website with broken down-figures for the $2.7 billion endowment number, though the website states officials will update the data in October. At the end of FY2024 the endowment sat at $2.6 billion, with 55.7 percent allocated to general support — unrestricted funds, including real estate investments and other assets the Board can use at their discretion. The rest of the endowment was restricted, including for student aid, research, libraries, facilities, lectures and academic chairs and professorships.
Officials in July announced a University-wide hiring freeze and cuts to administrative and academic budget fiscal year 2026 that would likely include laying off some staff and faculty to address “unsettling” financial challenges worsened by a yearslong structural deficit and federal attacks on higher education.
Joseph Cordes, co-chair of the Faculty Senate’s Standing Committee on Fiscal Planning & Budgeting, said GW’s $24 million budget deficit as of July doesn’t yet justify drawing on the endowment — but officials may have to consider this measure in a year or two if the structural deficit continues to grow, though there’s no set benchmark that would trigger that move.
“I would think things would have to get really bad for them to consider going there,” Cordes said. “As bad as they are now, I don’t think they’re that bad.”
He said the University could see “unpleasant enrollment shocks” where international enrollment rates decline and affect GW’s revenue flow, though he’s not sure how large they would have to be to prompt officials to tap the endowment.
Vice Provost for Enrollment and Student Success Jay Goff told the Faculty Senate in August GW could face a $10 million decrease in revenue from international student tuition because officials are expecting a 15 percent student summer attrition rate, where students commit to GW but ultimately do not enroll due to visa and immigration actions taken by Trump’s administration.
Cordes said faculty during the COVID-19 pandemic persuaded the Board to consider pulling up to $10 million from the endowment to help cover its $180 million budget gap. He said because the pandemic was a temporary problem, faculty thought it would not have lasting impacts on the University, though the Board ultimately didn’t need to tap the endowment.
The University projected losing tens of millions of dollars during the COVID-19 pandemic, when officials stopped most hiring, halted base and matching retirement contributions for faculty and staff, laid off 339 staff and froze all employee salaries to mitigate the $180 million pandemic-induced budget gap in FY2020.
Officials in 2020 vowed not to tap into the endowment as they projected losing tens of millions of dollars from the pandemic. Board Chair Grace Speights at the time said officials have a fiduciary duty to protect the University’s long-term financial health despite the short-term effects of the pandemic.
Cordes said he suspects the University’s revised budget model will make the structural deficit easier to deal with, though it’s not going to fix it because it doesn’t get at the root of the problem. He said to solve the structural deficit, officials need permanent ways of reducing the University’s expenses.
Interim Provost John Lach told the Faculty Senate earlier this month officials were making progress with GW’s new budget model, which they expect to phase in during FY2027 to “iron out any potential issues” before fully implementing the new model by FY2028.
“The key here is it can’t be like temporary savings,” Cordes said. “In other words, it really has to be permanent changes that will right-size this.”
Larry Ladd, a subject matter specialist at the Association of Governing Boards of Universities and Colleges, said tapping the endowment is rarely an option because most funds are already designated for specific expenses, like financial aid and certain faculty salaries, meaning the funds are restricted.
“It’s never close to a solution because it’s restricted and all of it is committed, even if it’s not restricted,” Ladd said.
Ladd said the University has undertaken measures — like implementing a hiring freeze — that are typical for universities enduring financial struggles, in an effort to reduce expenses and minimize impact on short-term operations.
Chief of Staff Scott Mory told the Staff Council in July the University’s finance team had already provided unit leaders their budget targets for the upcoming fiscal year. He said the scope of layoffs would depend on how office and division leaders adjust their budgets to meet their assigned targets, which differ across divisions and departments.
Ladd said the University could ensure financial stability in the long term by looking at its revenue streams to either tailor their expenses to match their revenue or increase their revenue. He said the University could increase its revenue by identifying and developing attractive programs, improving marketing to attract students or combatting low student retention on campus.
“It’s highly likely that the university is doing everything it can to increase revenue,” Ladd said. “It’s more painful to cut expenses.”
Knut Anton Mork, professor emeritus of economics at the Norwegian University of Science and Technology, said universities facing financial challenges must determine whether their revenue shortfalls are temporary or permanent. Drawing from the endowment may be reasonable for short-term gaps, he said, but doing so in response to long-term structural issues could worsen the problem and delay necessary reforms.
Mork said the Board will need to “look hard” at cutting expenses, given its long-term financial challenges. He said raising tuition is another option, though doing so could risk trading student quality for those able to pay full price.
Officials have raised tuition annually since the Board announced in 2019 they were ending the University’s long-standing fixed tuition policy that guaranteed students a single, fixed tuition rate for up to 10 consecutive semesters. Undergraduate tuition increased 3.5 percent this academic year, bringing the cost of tuition to just under $70,000.
“That’s always a double-edged sword because then you may get either fewer students, and then you’re then you’re on the slippery slope, or you might not get the students that you want, and that’s another slippery slope,” Mork said.
