In his 2026 “State of the University” letter sent to students on Monday, University President Christopher Eisgruber ’83 previewed major upcoming changes to University finances. The letter, titled “From Growth to Focus,” described a move away from expansion, citing long-term economic factors.
“We expect that budgetary and operational changes will begin in the coming months and occur over a multiyear period,” Eisgruber said.
The changes will come in addition to the 5–7 percent departmental budget cuts over the last year, alongside the hiring freeze instituted last March.
“The long-term endowment trends described in this memorandum are likely to require more targeted, and in some cases deeper, reductions over a multiyear period,” Eisgruber wrote. “The change that I am describing … goes beyond the pace of construction. It will affect everyone on campus.”
The letter also detailed the University’s shift from the rapid physical development of the last decade toward a period of strategic consolidation. Eisgruber attributed the University’s shifting priorities to downgraded long-term economic projections and an increased reliance on endowment payouts in the midst of widespread federal grant cuts.
“The principal cause for this transition is economic,” Eisgruber wrote. “It results from lowered expectations about the University’s future endowment returns.”
The Princeton University Investment Company (PRINCO) reduced its expected long-term endowment return from 10.2 percent to 8 percent per year. The letter cited the endowment’s 20-year rolling average returns, which show steadily slowing growth rates since the 2008 Global Financial Crisis.
PRINCO’s revised 10-year estimates predict an endowment value $11.3 billion lower and an annual payout $500 million lower than the previous forecasts, according to the letter. The projection assumes a constant spending rate of 5 percent annually.
The letter arrives as the University faces a possible increased endowment tax amid rising threats to higher education from the federal government.
The federal One Big Beautiful Bill Act imposes an 8 percent tax on any university where the endowment exceeds $2 million per student. However, the legislation includes a specific caveat: institutions are exempt from this tax if they have fewer than 3,000 tuition-paying students.
This distinction is important for Princeton. The ‘Prince’ previously reported that approximately 65 percent of 5,826 undergraduate students may receive financial aid in excess of tuition following an expansion of undergraduate financial aid earlier this year.
The University has previously declined to comment on the number of tuition-paying students.
Eisgruber’s letter mentions the endowment tax as well as a number of other “political threats” facing the University's financial model.
“Princeton and other universities have over the past year faced a variety of threats to research funding, the immigration status of community members, free speech, academic freedom, diversity and inclusion programs, and our endowments,” the letter reads.
Eisgruber has been outspoken in his defense of higher education, appearing across national media outlets and promoting his book, “Terms of Respect: How Colleges Get Free Speech Right.” He has also launched the Stand Up for Princeton and Higher Education initiative, which members of the Princeton community can join to receive newsletters advocating for universities and colleges in America.
Aggregated survey data of undergraduates between 2017 and 2025 is provided as an appendix to the letter, assessing student attitudes towards different questions of the undergraduate experience. Since 2023, the University has expanded these surveys to specifically address “civil and respectful dialogue” amid a polarized national discourse on campus free speech.
In response to the prompt, “I feel that members of the university community engage in civil and
respectful dialogue with one another on difficult topics,” over 70 percent of undergraduates agreed or strongly agreed in 2025, compared to 62 percent in 2023.
A second prompt given to students since 2023 is the following: “I feel that I can voice my true opinions on controversial topics without fear of being unfairly judged.” Responses to this prompt reflect those given on the question of civil and respectful dialogue, with over 59 percent of undergraduates agreeing or strongly agreeing in 2025 compared to less than 55 percent in 2023.
“Free speech and academic freedom are complementary principles; both are essential to the life of a great university,” Eisgruber wrote.
According to the letter, the University community can expect to receive memoranda on budgetary and operational changes in the coming months from Provost Jen Rexford and Executive Vice President Katie Callow-Wright.
Eisgruber will answer questions from the student body during the next Council of the Princeton University Community meeting. The meeting is scheduled for Feb. 9 from 4:30–6 p.m. in the Frist Campus Center Multipurpose Room.
Kian Petlin is a senior News writer for the ‘Prince.’ He is from San Francisco, Calif. and typically covers campus events and student life.
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