Princeton University Warns of Tough Budget Choices Ahead

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Princeton University President Christopher Eisgruber has warned that the Ivy League institution must make "hard" budget choices in the future due to declining investment returns and increased financial pressures. Eisgruber cited long-term trends and projections, rather than a specific event, as the reason for the university needing to shift its overall financial strategy.

Why it matters

Princeton's endowment provides around 65% of its operating revenue, up from 55% in 2016. However, the university has faced declining investment returns and political threats to its endowment. This could lead to program cuts, consolidation, or elimination as Princeton seeks to maintain its teaching and research excellence.

The details

Eisgruber said Princeton's three-year average endowment returns from 2022-2024 were the second worst in more than four decades. The university currently depends "more heavily than ever" on its endowment, which is also challenged by political threats in addition to economic threats. Princeton spends roughly 5% of its endowment annually on campus operations, and the endowment now provides about 65% of its operating revenue, up from 55% in 2016. The university will continue to pursue new opportunities but must shift its overall financial strategy.

• In the 2026-2027 academic year, Princeton's endowment tax will increase from 1.4% to 8%.

What they’re saying

What’s next

Eisgruber said Princeton will continue to pursue new opportunities, but the university must shift its overall financial strategy to address the long-term challenges it faces.