Bullying universities

The Trump administration's pressures go beyond bespoke deals and attack all the ways universities are funded.

By Kim Lane Scheppele

Columbia University’s David Pozen called Columbia’s new agreement with the federal government “regulation by deal.” In regulation by deal, the administration forgoes the process of developing general standards enforced by regular processes, under the watchful eyes of courts, and instead bargains directly with institutions, striking a bespoke arrangement with each. This approach permits what Pozen called a “government-enforced restructuring” of an institution that is far more detailed and intrusive than any general regulatory approach would permit. As Pozen put it, “the agreement gives legal force to an extortion scheme.”

In many ways, this regulation-by-deal approach is similar to what President Donald Trump is doing with tariffs, leveraging the United States’s economic power to force particular countries to particular bargaining tables where the United States demands what it wants from each one separately. There is no general policy, only particular extortion agreements. And we can expect that the regulation by deal will not end there. The format is similar across sectors: Trump withholds some benefit that his targets were promised in agreements, and he makes them beg to get those benefits back. It’s a strategy that uses the power of the government outside the development of general rules and therefore outside the law.

Of course, Columbia should have learned by now that making a deal doesn’t mean that the pressure stops. Appeasing a bully only empowers the bully—and he’ll be back for more. Regulation by deal, precisely because it bypasses general lawmaking procedures, leaves open the possibility that any deal can be supplemented with even more demands in the future. It can provide no legal guarantees of security.

But as we learn more about what Trump has done to Columbia, we should also keep in mind a bigger picture that Trump and his allies envision for the future of universities. The Trump administration follows other leaders like Viktor Orbán, who brought Hungary to heel by weaponizing the national budget. (Background: I lived and worked in Hungary’s judicial system for most of the 1990s and have been a critic of Orbán since he came to power—to the point that I am persona non grata there.) Orbán learned that money is the avenue to political control. And the Trump administration has learned that it can force universities to cave by following (and controlling) the money.

In a modern state, virtually all corners of society—even institutions that think of themselves as otherwise independent—are fiscally dependent on powerful national governments. States can leverage grants, payment for services, tax breaks, and regulatory enforcement to change the fiscal prospects of everything from the media to non-governmental organizations to law firms to universities. Once a leader realizes he can use the state budget to force compliance with whatever agenda he is pushing, then institutions that have become dependent on state funds, tax breaks, or regulatory forbearance are caught between caving in, making radical cutbacks, or experiencing institutional death. That’s what’s happening now with universities.

The pressures on universities go beyond these bespoke deals. Trump’s team has figured out all the different ways that universities are financially vulnerable, and it is using all of them to create fiscal pain. A university’s particular points of vulnerability depend on how that university is funded.

First to suffer months ago were the universities highly dependent on biomedical research grants. Virtually all universities with big hospitals and medical centers and universities heavily dependent on their STEM (science, technology, engineering and math) programs found themselves in the crosshairs first. Cutting huge swaths of federal research grants without warning and without time to transition to alternative funding (if it exists) has meant disaster for large swaths of university faculty and hit university budgets hard. That’s how the attacks on institutions such as Columbia and Harvard started.

But that wasn’t the end of it. Congress included a significant increase in a tax on university endowments. The old tax system meant that that 1.4% net investment income of the endowment each year would be paid in federal taxes. The new endowment tax is capped at 8%. That’s much better than the 21% tax rate (for some universities) that passed in the House version of the bill, but it will hit endowment-dependent universities heavily anyway.

And that, too, is not the end. The ground rules for the federal student loan program have changed. Many students who previously qualified for federal student loans will either be pushed into the private market or forgo university educations entirely.

Attacking international student visas hits another pressure point. Some universities are heavily dependent on international students from wealthy foreign families to pay full tuition and subsidize domestic students as a side benefit. Losing this revenue if the United States refuses to approve visas will blast open a hole in many university budgets.

And finally, faux regulatory enforcement is another weapon. Anti-discrimination enforcement has been the leading edge of this strategy. Many universities—including Columbia and Harvard and at least 58 others—are under attack from the federal government, which has been insisting that these universities take radical steps to fight antisemitism. Not only has the federal government not followed the steps required by Title VI to enforce federal anti-discrimination law, but it has also made these accusations without the evidence to back up the charges. It could be that weaponizing anti-discrimination laws is just the beginning. What happens when the administration finds other regulatory levers to press? Already, the government is weaponizing the regulation of foreign funds going to universities. Is it going to use other regulatory levers like new enforcement guidelines or fraud prosecutions? The possibilities are endless.

People on Trump’s team have targeted all the ways universities keep themselves afloat financially, not just by making deals but by changing the law, by using the discretion that they have over other programs universities rely on (like student visas) and by using their regulatory enforcement and prosecutorial power (especially through enforcement of anti-discrimination law) to leverage what universities do.

Trump’s policies will hit every university eventually—though in different ways depending on how any particular university gets its funding. The only way that universities can push back against this juggernaut of funding threats is to organize to present a united front. If the Trump strategy pits universities with large research grant portfolios against those who are most affected by the endowment tax against those who are dependent on student loans against those who fund themselves with foreign student tuition, then it will have succeeded in dividing and conquering. Universities like Columbia who decide to go it alone and strike a bespoke deal weaken collective solidarity, which is the only way that universities can become too big to bully.

Kim Lane Scheppele is the Laurance S. Rockefeller Professor of Sociology and International Affairs in the Princeton School of Public and International Affairs and the University Center for Human Values at Princeton University. She is a regular contributor to Verfassungsblog, a global forum of scholarly debate at the interface of academy and society.

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