The Massachusetts Institute of Technology is the latest elite college to borrow money from the bond market as universities contend with threats to federal funding under President Donald Trump’s administration.
MIT is joining Harvard, Stanford and Princeton in selling taxable bonds in a deal that’s set to price Tuesday, according to a roadshow for investors. Taxable bonds are often quicker to sell compared to tax-exempt bonds, which have restrictions on what the proceeds can be used for.
“MIT manages its resources to ensure it can advance the Institute’s mission in a wide range of conditions,” Glen Shor, executive vice president and treasurer for MIT, wrote in an emailed statement. “This bond issuance will provide us additional flexibility to achieve this goal.”
Colleges are taking a variety of steps to raise funds and boost their liquidity, including tapping the capital markets. Yale University is also planning to sell $850 million of bonds this month, in a deal that is set to include $350 million of taxable debt.
The flurry of debt sales come as the Trump administration has frozen federal funding for universities including Harvard, Northwestern and Cornell. Trump has hammered colleges for their handling of antisemitism after student protests roiled campuses following the Oct. 7, 2023, attack by Hamas on Israel and the Jewish state’s retaliatory response in Gaza.
The National Institutes of Health also proposed a cut to research funding for universities, which is being challenged in court.
The federal government provided $648 million in funding for MIT for sponsored activities, including research, during fiscal 2024, bond documents show. MIT also operates a laboratory sponsored by the Air Force through which $1.3 billion in revenue came from the federal government in fiscal 2024.
“As the situation at the federal level continues to evolve, the Institute will continue to evaluate developments and is contingency planning for a range of financial outcomes,” MIT said in the bond documents.
MIT is rated AAA by S&P Global Ratings, which said that demand for the university is excellent — MIT’s acceptance rate last fall was 5% and it has a $24.6 billion endowment during fiscal year 2024.
The analysts at S&P still consider the federal funding pressures a risk.
“We anticipate that operating performance could be strained due to changes in federal funding while management proceeds with efforts to reduce expenses,” they wrote.
New report shows dimmed outlook for benefits to retirees and disabled Americans, creating further pressure for federal tax hikes or more borrowing.
Open letter to SEC Chair Paul Atkins questions whether the Ivy League university withheld material information prior to its $750 million taxable bond offering.
The Las Vegas-based hybrid RIA overseeing $8.8 billion in assets has named Andy Kalbaugh president to help scale its advisor platform.
The wealth tech giant – in collaboration with Fidelity, BlackRock, State Street, and Franklin Templeton – is offering its advisor and wealth firm users more ways to diversify.
Deal volume increased post-election but now caution has taken over.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave
