Federal funding unpredictable, USC limits hiring amid budget cuts.

The renowned private university, the University of Southern California (USC), announced on March 24th that it has begun limiting recruitment and cutting budgets to enhance its financial resilience due to uncertainties in federal funding.

Located in Los Angeles, the university sent an email to its staff outlining measures to address anticipated financial shortages in the wake of significant cuts in subsidies and other financial aids by the Trump administration. President Trump also signed an executive order on March 20th to start the dissolution of the U.S. Department of Education and transfer student loan affairs to the Small Business Administration.

In the fiscal year 2023-2024 (from July 1, 2023, to June 30, 2024), USC received approximately $1.35 billion in federal funds, including $650 million in student financial aid and $569 million in federally funded research grants. Despite receiving over a billion dollars in federal aid, the university reported an operating deficit of $158 million. Last year, USC requested all colleges and administrative units to cut expenses, including costs of central administrators and the healthcare system, allowing raises based on performance only.

On Monday, USC President Carol Folt and other top officials stated in an email, “Like other major research institutions, USC relies heavily on federal funding to carry out our mission.” USC’s healthcare system is also funded by federal Medicare & Medicaid, as well as California’s Medi-Cal (partially federally funded), which constitute an “important part” of the system’s revenue. The university reports that these funds are now uncertain.

The university expressed, “Taking decisive action will help us address the challenges we face, while protecting and advancing critical academic and research missions for the benefit of future generations.” According to the university’s financial aid department, for the 2025-2026 academic year, the average full-time student’s tuition, fees, housing, dining, books and supplies, and transportation costs will approach $100,000.

Amid the backdrop of the Trump administration’s new policies, the university stated that it must take further measures to enhance its financial resilience to address “exceptional financial uncertainties.”

USC immediately implemented several measures on Monday, including permanent budget cuts for colleges and administrative units. The university also mentioned that contracts exceeding $50,000 require approval from the university’s Senior Vice President and Chief Financial Officer; capital expenditures will be reassessed to determine which projects can be paused or delayed; non-essential discretionary expenses such as travel, conferences, and entertainment will also be restricted.

With few exceptions, the university will freeze the hiring of non-faculty staff and limit faculty recruitment in all colleges. Another measure affecting employees is the cancellation of last year’s performance-based raises, with some exceptions related to promotions, pay equity, or legal matters.

The university also canceled the extended winter break, meaning employees will not have nearly two weeks off during Christmas and New Year. USC’s top officials announced in the notification on the 24th, “As conditions change at the federal and local levels, we will regularly assess progress and determine if further measures or adjustments are necessary.”

USC’s contingency decisions parallel those of the University of California (UC) system a few days ago. According to UC President Michael Drake, the system-wide freeze on hiring and budget cuts at the University of California will have a “particularly profound impact” on the school.