What Heightened Cash Monitoring Means for Harvard

On September 19, 2025, the U.S. Department of Education placed Harvard University on Heightened Cash Monitoring (HCM), a restrictive payment status that requires the school to disburse federal student aid from its own accounts and then seek reimbursement. In a formal notice the Department required an irrevocable $36 million letter of credit and cited three triggering events, including a Department of Health and Human Services finding under Title VI, recent bond issuances the university disclosed, and personnel cuts that together raised concerns about Harvard’s short-term financial responsibility.

A federal judge has already vacated earlier orders that had halted more than $2 billion in Harvard research grants, and some agencies have begun notifying researchers that funds are being reinstated. Nevertheless, the monitoring decision can increase short-term cash pressure, since universities on HCM must front aid payments while federal reimbursement is delayed. Researchers have reported paused projects and administrative leaders have warned of deeper budget changes.

Harvard’s endowment is roughly $53 billion, but much of that money is legally or contractually restricted and cannot be spent immediately to cover operating deficits; less than five percent of the endowment is unrestricted. The university has created a research continuity fund and moved to cut costs, yet officials say the combination of federal actions and new taxes could reduce flexible revenue by large amounts in coming years.

Consequently, Harvard is pursuing legal remedies while also adjusting budgets and seeking alternative funding to protect students and essential research. The situation highlights how federal oversight tools can reshape university finances even at institutions with large long-term reserves.