Swarthmore College is facing an unpredictable financial context full of federal research grant cuts, persistent inflation, changing immigration and visa regulations, and a potentially temporary outcome of a much-debated college endowment tax. However, compared to other institutions, especially larger research universities, the college is faring well. As financial realities come to light, the college’s Board of Managers is expected to vote this weekend on this year’s budget, replacing the unprecedented interim three-month budget that was approved for July to September, delaying a longer-term financial commitment while Swarthmore tracked federal policy.
In July 2025, the U.S. Senate voted to exclude colleges with under 3,000 students from the increased tax on the returns from endowment investments that was part of President Donald Trump’s “One Big Beautiful Bill (OBBBA).” The exemption applied to many liberal arts colleges like Swarthmore, but also small religious schools, like Hillsdale College in Michigan, that socially conservative Republicans aimed to spare. Based on Swarthmore’s endowment per student ratio, the legislation would have required that the college pay 4% on its returns if it weren’t for the enrollment-based exemption. This would have more than doubled the 1.4% tax that Swarthmore has been paying for the last several years (which amounts to around $2 million per year). Following the bill’s signing into law, Swarthmore will not pay any tax on endowment returns starting in 2027 when the exemption goes into effect.
“We’ll have a bit more relief on returns, and that will give us a bit more flexibility on what we can spend going forward on things like financial aid,” said Rob Goldberg, Swarthmore’s vice president of finance. “It’s a good outcome. It’s not what we expected.”
The proposed endowment tax hike occupied much of the Swarthmore administration’s attention during the Spring 2025 semester. College administrators and coalition members visited D.C. frequently to speak with legislators and other colleges. Goldberg said the goal of these visits was to share with legislators Swarthmore’s values and more about how the endowment is used for financial aid and “mission critical programs.”
“We were able to tell that story pretty effectively in concert with other schools that look like us, with lawmakers in our own delegation, and lawmakers and other delegations in other states to really explain the power the endowment has on small colleges and the impact we have, not only with our students and our faculty, but in the local area,” Goldberg said. “We’re the biggest employer and we put money in the economy, and we do all those sorts of things that I don’t think a typical lawmaker really appreciated.”
Goldberg said lobbying and visits to the Capitol will continue. He said one aim of working with other small colleges is to differentiate them and their financial structures from large research universities. Swarthmore also works with the Association of Independent Colleges and Universities of Pennsylvania, a non-profit advocacy group with over 80 member schools on issues that affect higher education at the state level in Pennsylvania. Although the OBBBA, which included the endowment tax decrease for small colleges, ended up being passed by a small margin, some congressional lawmakers expressed discontent over many of the bill’s provisions, so these issues could be reopened in Congress as soon as this fall.
“We’re looking more at how to engage more effectively and not take for granted what happens in Washington,” Goldberg said. “We just can’t do that anymore.”
One of the policy areas that used to be treated as a given is federal research funding. Swarthmore, an entirely undergraduate, liberal arts institution, receives only a small number of federal grants and instead primarily funds faculty research efforts through donations, tuition, and other forms of revenue. In previous years, the minority of faculty who received federal funds went through what was a transparent process. But, starting in the spring after President Trump’s inauguration, federal grants were rescinded with little to no information or warning, seemingly at random, according to Goldberg. Additionally, many students planning to participate in research efforts during the summer at other universities were impacted by federal research funding cuts to those universities.
Swarthmore pledged to make up for the lost money — roughly $200,000 between faculty and student grants — partially through donations, and many donors have responded to these campaigns. Goldberg said fundraising to the Swarthmore Fund (an unrestricted fund that goes to the general budget) is up due to alumni concern about federal impacts on Swarthmore, which helps to offset the effects of federal grants.
“The federal government is operating so differently now, and it’s so much more unpredictable at least from the [Trump] administration,” Goldberg said. “The [Trump] administration is aggressively taking on higher ed, and they’re taking on the assumptions that we long held about higher ed, and that is a new world.”
Despite Swarthmore’s strong institutional financial standing, students and faculty may feel the impacts of Trump’s attack on higher education in other ways. Across the country, graduate schools and Ph.D programs have cut funding. With less ongoing research, there are fewer openings for research assistants and post-graduate positions. A growing unemployment rate and mass layoffs may also impact students’ job searching, or the financial status of their families, who may support them.
“When Congress is getting rid of grad loans, it’s going to affect what a student can afford,” Goldberg said. “It doesn’t directly affect us, but it certainly affects our students’ post graduate plans, and that does worry us.”
Swarthmore may also be impacted by settlements that larger universities, such as Columbia and Brown University, reached with the Trump administration to recover pulled federal funding. These settlements involve large concessions, including the handing over of student data and tightened restrictions on campus protest, and create a precedent of the federal government impacting private college operations. Goldberg said he is concerned about how these agreements may be expanded across the sector. At Brown, after student data was given up in an agreement, Trump mandated admissions data on race from all other schools.
“There are going to be things in these agreements that future institutions are going to reach [with the Trump administration] to unlock all of their research dollars that are going to affect us, even though we don’t rely that heavily on research dollars,” Goldberg said. “There are going to be Swarthmore-specific issues, and there’s going to be sectoral issues that are going to affect us, and that’s the world that we’re in.”
The interim budget also allowed Swarthmore to freeze faculty pay increases while they waited to see the impact of federal policies on international student enrollment. Goldberg said Swarthmore has a robust first-year international student class, and the majority were able to obtain visas. A few incoming students were not able to receive their visas despite individualized support from the International Student Office.
Swarthmore, while need-aware for international student admissions, does offer some of them financial aid. This insulated the college from the financial impacts of strict visa requirements, while other colleges lost revenue from a typically full-paying group that was unable to attend. Goldberg said the financial aid budget is “robust,” and growing across the board partially to match the cost of tuition increases.
“Notwithstanding all the other provisions in the bill, this one particular provision on the endowment tax we are exempt from paying the tax is huge for us in terms of protecting financial aid,” he said.
On the state and local level, Swarthmore students are insulated from the SEPTA fare hikes going into effect in response to its budget crisis. The crisis, when state Republicans refused to provide additional state funding to prevent service cuts, ended in state capital funding being used to reverse those cuts. Because Swarthmore negotiates a contract with SEPTA to provide unlimited passes to students through the Key Card Advantage program, students will not notice fare hikes while riding.
“We were interacting with our local delegation about ‘this is how Swarthmore relies on SEPTA, this is how our students rely on SEPTA,’” Goldberg said. “They were able to take that information back to the State House in Harrisburg.”
Looking into the future, Swarthmore Forward — the college’s strategic plan, which outlines new tenure track faculty positions, program enhancements, and sustainability infrastructure construction, among other things — is, in fact, continuing forward, but potentially at a slower pace. All ongoing construction, currently spreading across Parrish Lawn and beyond to drill geoexchange wells, is already paid for and contracted. Future construction costs may be variable due to unexpected national tariffs, which impact construction materials.
“One of the things we’re trying to do with our community is [say] that not everything is additive. If there are certain things we want to do that’s new, are there things we can roll back? That’s not always an easy conversation, but I think it’s a natural conversation when it comes to setting priorities,” Goldberg said. “President [Val] Smith has made it clear that she wants [the strategic plan] implementation to move at a pace. There’s going to be a budget process associated with that, and we’ll make sure that those priorities get funded.”
