Immigration Policy and the Reshaping of Nonprofit University Finance

Recent reporting confirms what many higher ed observers have feared: U.S. universities are now cutting budgets, laying off staff, and freezing hiring in response to a sharp drop in international student enrollment—largely triggered by seismic federal shifts in immigration and research policy.

Per the article I linked above, institutions like DePaul University, Johns Hopkins, Northwestern, and USC have made substantial cuts to operations. DePaul, for instance, saw a 30% decline in international enrollment this fall—translating to 755 fewer students and a nearly 62% drop in first-year international graduate students. The loss of these tuition-paying students, paired with reduced federal research support, has had immediate budgetary consequences, prompting measures like hiring freezes and program reductions. 

What is clear is that this isn’t just an enrollment problem but is instead a structural financial shock for many private, nonprofit universities.

For those of us working at the intersection of tax, law, and higher education, the implications are manifold. Here are just two that come to mind. First, with public and political pressure to prioritize domestic students, legal scholars may need to revisit how the “charitable” mission of education is framed under §501(c)(3). Second, downsizing decisions could run afoul of restricted gift agreements or charitable trust principles under state law, which only further complicates the precarious position in which universities now find themselves.

Higher education nonprofits are walking a tightrope between federal hostility and financial instability. While many, including yours truly, have focused on endowment taxes or 501(c)(3) revocations, this new front—immigration-fueled fiscal crisis—may be the more urgent threat. As legal academics, we must examine not only how the law shelters these universities but also how it exposes them to political retaliation.

CJR