As the University undergoes budget reduction measures, the Board of Trustees has officially approved the operating budget for the 2026–2027 fiscal year. In a report recommending key budget parameters, the University signaled the beginning of a “gradual reduction” in graduate student enrollment, asked academic and administrative units to trim budgets, and revealed curtailed funding available for faculty raises and graduate students.
While subject to change, the total operating budget for fiscal year 2027, which runs from July 2026 to June 2027, is currently set at $3.407 billion — a small increase from this year’s projected spending of $3.336 billion. The report indicates that the 2026 fiscal year budget has already been reduced by $132 million from the March 2025 projection of $3.469 billion, meaning that the originally-planned 5.5 percent budget increase for this year from 2025 has already been slashed to 1.9 percent.
The budget will increase by 2.1 percent compared to a revised FY2026 figure, making this the “lowest annual expense growth at Princeton in many years,” said the FY2027 Report of the Priorities Committee of the Council of the Princeton University Community.
The University posits that the budget will support “continued commitments to world-class teaching, research and affordability, while also reflecting the University’s shift from a decade of historic growth to a period of focus on its core mission.” The Board of Trustees approved the budget based on the recommendations put forth in the Priorities Committee report.
The total undergraduate financial aid budget will increase by 5.4 percent — to $342 million. Last year, the total undergraduate financial aid budget for fiscal year 2025 to 2026 was projected to increase by 8 percent. It had initially been announced as $306 million; however, over the summer, financial aid was suddenly boosted, possibly allowing Princeton to avoid a new 8 percent endowment tax levied on universities with large endowments.
“Approximately 70% of undergraduates are expected to receive financial aid, more than 60% of which is supported by dedicated University endowments,” the release stated, in line with last year’s budget announcement. The budget expects 35 more undergraduate students to receive financial aid next year.
For graduate students, whose tuition is typically paid by their department, the tuition rate will remain unchanged, with the Priorities Committee recommending this on the basis of uncertain external research support opportunities and “other financial pressures.” Previously, undergraduate and graduate tuition rates were set identically, making a decoupling of the two rates unprecedented in recent years.
“During discussions about the FY2027 budget outlook and efforts to help academic departments and principal investigators adjust to pressure on their resources … the Committee endorsed a recommendation to leave the graduation tuition rate in FY2027 unchanged from the FY2026 amount,” the Priorities Committee report said.
In recognition of “changes in local costs of living,” the Priorities Committee added that graduate apartments and dorms are recommended to increase “by at most 2.5 percent” for next year.
Additionally, the release stated that the graduate student stipend rate “will increase by 2.25% next fiscal year.” Federal Reserve officials currently estimate that U.S. inflation will rise to about 2.7 percent this year, meaning that graduate student stipend increases will likely not outpace inflation, reducing the real purchasing power of graduate students.
The Priorities Committee also indicated that a “gradual reduction of graduate student enrollment” is beginning, as the University’s four-year undergraduate student expansion plan ended this past year.
“Undergraduate scholarship and graduate fellowship budgets will begin to moderate compared to recent years,” the report said. “The undergraduate scholarship budget is expected to rise by 5.4%, while graduate student support will decline slightly, by 0.6% due to planned decreases in graduate student enrollment.”
The release explained that efficiency is key to this year’s operating budget, addressing how the University is responding to lasting residue from the federal funding suspensions from last year, as well as the ongoing budget reduction measures.
The Priorities Committee report explained that “most administrative and academic units” will be asked to cut 1 to 2 percent of spending “annually for several years.” The report acknowledged that these “new savings” will “likely require units to eliminate some programs and services,” in order to prevent “a general dilution across all programs, services, and activities.”
“Units must also build flexibility and resilience more generally into their budgets beyond the 1-2 percent margins noted above to anticipate other needs or opportunities that may emerge,” the report said. “Central resources will be limited, as is the budget’s ability to shelter units from price increases, tariffs, emerging compliance issues, and other ‘surprises.’”
“The University anticipates implementing further cost savings measures as a response to federal cuts to research funding, reduced long-term assumptions for endowment performance and rising costs for employee health benefits,” the release added.
Last April, millions of dollars in federally-funded research grants were suspended by the federal government. University President Christopher Eisgruber ’83 revealed in August 2025 that about half of these suspended grants have been restored, although the University has not given an exact number of what grants remain suspended versus restored.
The effects of the federal funding suspensions were widespread, casting uncertainty on the FY2026 budget as the University punted on releasing the total operating budget last April. The University is still seeing effects of that pause in funding, according to the Priorities Committee’s report.
Currently, direct sponsored research revenues for FY2026 are projected to end the year 12.6 percent below the original estimate from last winter, which was made before the federal government took action against the University in early spring and suspended the grants which contributed significantly to this stream of research revenue.
“The budget projections for next year reflect a further 5 percent decline in federal grant funding,” the Priorities Committee report added, saying they were offset “in part” by growth in non-governmental awards.
At the end of February, the University announced that it would cut certain employee benefits. This followed an announcement of reductions in raises earlier in the year in Eisgruber’s annual “State of the University” letter. The letter added that the University would be tightening its budget due to declining long-term endowment return expectations and continued uncertainty over federal funding.
The endowment supports most aspects of University operations, including “faculty and staff salaries, financial aid, graduate stipends, research equipment, and construction projects.” While the endowment’s projected growth is not expected to increase, payouts from it are “expected to cover 65% of the University’s overall net operating budget” for FY2027.
Additionally, endowments “specified for financial aid will cover an estimated 61 percent” — $209 million — of the $342 million FY2026 scholarship total.
Regarding staff and faculty salaries, “benefit costs will account for more than 40% of the total operating budget increase for FY2027,” according to the report.
“Facing similar constraints and concerns for lower-paid employees as in the case of the staff pools,” the report recommended that assistant professors and lecturers be allocated a 2 percent salary increase pool, while associate and full professors be recommended no increase except for a special pool for promotions, retentions, or other special adjustments.
The rate of increase in the size of total faculty compensation will drop from a planned 4.75 percent in FY2026 to 1.76 percent in FY2027. Similarly, staff compensation increases will drop from 3.5 percent to 1 percent.
The newest release highlights that future budget reduction efforts could lead to changes on campus, including “the reimagination of campus services, changes to the University’s workforce, and the consolidation or elimination of some functions.”
“While the impacts will vary, most departments will see their budgets rise less than the rate of inflation for the next several years,” the release added.
“Some staffing and budget decisions may appear to be budget-related when in fact other factors may be decisive, including shifts in campus demand for programs and services and changing workforce skill requirements, especially as technology needs intensify,” the Priorities Committee report said.
For now, the budget cuts are still not over — the report announced that the “next round of cuts will be more targeted and strategic,” as the University Budget Group works closely with campus leaders and asks whether staff changes, services, organization, or eliminations or consolidations to functions and units will generate necessary savings.
“Pursue an ‘evolve by substitution’ mindset,” was the report’s recommendation to campus units.
Luke Grippo is a head News editor for the ‘Prince.’ He is from South Jersey, and typically covers high-profile interviews and University and town politics. He can be reached at luke.grippo[at]dailyprincetonian.com.
Please send any corrections to corrections[at]dailyprincetonian.com.
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