MIT has adapted its resource model whenever the world shifted around it. Post-Compact, we might do so again – exploring paced expansion over austerity to secure academic freedom, widen access, and strengthen our civic partnership.

We are trying to run a twenty-first-century university on twentieth-century playbooks. The three levers that once defined MIT’s eras – tuition, federal research, and investment returns – no longer align with our post-Compact reality. Over the past century, MIT’s resource model has reinvented itself at least three times, each shift driven by larger economic and political forces. World War II, the Cold War and the Space Race, and the post–Cold War realignment each rewired how we financed discovery and, with it, the rhythm of teaching and research.

Post-Compact, we are again at a juncture – choosing what MIT will become over the next twenty-five years and the next half-century. Rather than tighten into austerity, we should explore expansion –investing in independence and inclusion by extending our educational mission at meaningful scale, keeping academic freedom non-negotiable, and building a city-facing campus that grows access, not scarcity. Our own faculty – economists, social scientists, urban planners, architects, engineers – already hold the tools to turn fiscal pressure into a living laboratory for a new university–city partnership: mens et manus of real civic consequence.

Understanding what earlier shifts enabled – and what they obscured – clarifies how we arrived here and what a durable path forward can be. What follows is less a blueprint than a faculty conversation starter.

From Tuition to Federal Research
Before World War II, tuition and specialized training (naval aviation, aircraft inspection) paid most of the bills; undergraduate teaching set the rhythm. Wartime collaboration – architected by Vannevar Bush’s model for sponsored research – rewired MIT’s finances and mission. In just two years in the 1940s, research funding jumped from $105,000 to $5.2 million, and the rise continued: by FY1957, federally sponsored research reached $48 million, roughly two-thirds of a $75.2 million operating budget¹. Prestige, intellectual capital, and budget fused with the federal research state of the Cold War and Space Race; the center of gravity shifted from undergraduate instruction to graduate research.

The Endowment Era – and Its Limits
The end of the Cold War was the last great juncture: as federal growth flattened, MIT migrated from a research-driven to an investment-driven resource model. On campus (excluding Lincoln Laboratory), federal research support was $436M in FY2006, covering 75% of $588M in research spending[1]. By FY2024 it reached $580M – a nominal rise but roughly a 17% real decline after inflation. Fundraising and investment returns filled the gap: the campaigns under Presidents Vest, Hockfield, and Reif together raised over $12B, and the endowment grew from $6.5B (2000) to $27.4B in 2025[2] – about a 125% real increase ($100 in 2000 ≈ $188 in 2025). That 2.25× real growth lifted endowment (and other investable assets) per student to ~$2.75M, crossing the $2.0M threshold that now triggers the 8% endowment excise tax.

For a generation, this investment era masked a structural imbalance between operating costs and federal support. In the post-Compact landscape, that imbalance has become visible, exposed by the collision of (i) the 8% tax on investment returns, (ii) tighter F&A (indirect-cost) caps, and (iii) a federal posture increasingly willing to condition support – and campus conduct – on shifting priorities. The arithmetic is stark: roughly a $300 million annual gap – about $240 million from the excise tax (including unrealized gains now counted as taxable income) and $60 million from F&A caps at 40%[3], widening toward $135 million at 15%. The so-called Compact for Academic Excellence in Higher Education offered relief – without numbers – in exchange for alignment with new federal priorities. In her October 10 letter to the Secretary of Education, President Sally Kornbluth captured the core issue: the Compact’s principles “would restrict freedom of expression and our independence as an institution,” and its premise is “inconsistent with our core belief that scientific funding should be based on scientific merit alone”[4]. For many of us, that is the juncture: pressure on merit-based inquiry and academic freedom, and on the inclusive campus that sustains them. If scientific merit is our north star, then our financing has to safeguard the conditions that make it possible – independence, inclusion, and academic freedom.

When “Clean” Grants Don’t Add Up
In the post-Compact landscape, even a “clean” federal grant seldom covers its full costs. Once the endowment excise and tighter F&A caps are accounted for, the real value of a research dollar can drop toward half – and lower when compliance, advising, and internal scholarships are included. The point is not to lament the arithmetic; it’s to name the model. Universities have always cross-subsidized discovery because discovery is a public mission. Faculty are not cost or profit centers; they are agents of learning and inquiry across science, engineering, the humanities, arts, and design. Cross-subsidy, then, is not a bug but a responsibility – so long as it is transparent, bounded, and periodically reviewed so budgets reinforce what we value (teaching, mentoring, durable scholarship), rather than letting margin quietly redefine the work.

So What Do We Do Now?

Before the Compact, our “hold-the-line” plan was austere but legible: slow hiring, squeeze space, grow professional education, skip a merit year, and absorb the 8% tax³. That approach presumed a stable outside world. It isn’t coming back. The endowment excise is structural; federal support is softening and more conditional; and indirect-cost recovery will not return to Cold-War ratios. Nor can we retreat to tuition as the primary lever: at roughly $64,000 sticker (with a median undergraduate net price near $10,000[5]), pushing harder on tuition would shred access and trust. Continuing to tighten inside the same footprint isn’t strategy; it is slow erosion. At this post-Compact juncture, our model has to change in a way that insulates merit from political and fiscal pressure.

The Distribution Problem
The current three-pronged approach – administrative efficiencies, more external revenue, Institute-wide cuts – stabilizes the spreadsheet without changing the footprint. By design, it channels opportunity toward units best positioned to earn (Science, Engineering, Sloan) while spreading austerity across everyone else. Left to run, that logic yields a two-tier campus. The costs aren’t only fiscal: short-horizon projects crowd out foundational and public-interest work; tenure and promotion drift toward grant counts; junior scholars ride soft money; mentoring and field-building lose time. That is how a great engineering school drifts toward contract-first habits – and away from the broader public mission that built its reputation.

A sturdier posture treats the faculty as a public good. We measure teaching, mentoring, community, and durable scholarship; margin does not define the work. Budgets could be designed to make those measures durable. A transparent mission dividend – shared across Schools, with protections for junior faculty and limits on soft-money dependence – keeps the commons that makes discovery possible. In this frame, inclusion is faculty agency in action: who we hire, mentor, and promote determines who gets to learn, to lead, and to imagine the future. Embed that agency in governance and budgets, and inclusion becomes durable and self-renewing – rather than a program that can be pared back in the next round of cuts.

The Enrollment Lever – Access, Not a Trick
As several colleagues have noted, there is one lever we actually control[6]: the denominator of the tax – endowment per student. At the September 17, 2025 faculty meeting, the provost noted that enrolling roughly 5,000 additional students would move MIT from the 8% bracket to 4%. That bracket shift is an outcome, not the point. Any relief from 8% to 4% should be earmarked first for affordability and core academic infrastructure, published annually. Over time, a larger cohort also nudges the numerator – more tuition/fee capacity and, more importantly, a broader alumni community that powers mission-aligned philanthropy and partnerships.

But the deeper case isn’t arithmetic; it’s agency, inclusion, and merit. If we truly believe funding should follow scientific merit, then growth should follow educational merit: add seats we can teach well, where learning is transformative, and do it across all Schools – humanities and arts, social sciences, architecture and planning, science, engineering, and management – so the curriculum expands with the cohort. A growth model affirms that faculty are not profit centers but agents of discovery and learning; it invests in the work we actually do – teaching, mentoring, building fields – rather than rationing it.

To keep quality non-negotiable, any growth we consider would have to be paced and guarded. We would hold the student–faculty ratio at or below today’s level (about 10:1, counting professors of all ranks, including Professors of the Practice and emeriti/ae counted only when teaching[7]) and cap average advising loads. We would stage housing, classrooms, health services, studios, and labs in step with each intake. We would publish those gates in advance. The result would be tangible across every discipline: new faculty lines, expanded studios and teaching labs, and additional TA/RA positions that strengthen mentoring and hands-on learning Institute-wide.

Inclusive growth could also rebuild public legitimacy. A larger MIT – paired with durable affordability (need-blind undergraduate admissions; indexed graduate stipends) – would signal access and national service at a moment when higher education is too often caricatured as exclusive. It could offer a better banner for a future capital campaign than austerity ever will be: Investing in MIT’s Future and Academic Freedom. And it would honor the daily work of staff and students who make excellence possible.

Finally, growth could deepen our civic partnership. Looking out to FY2050 and FY2075, enrollment becomes a choice about what kind of university we want to become. Pursued with Cambridge and the Commonwealth, expansion could align housing production, anti-displacement measures, transit, and climate resilience – turning a budget problem into a platform for sustainable urban development, mens et manus at civic scale. In that sense, the growth lever is larger than a tax formula: it could be a faculty choice to widen access, secure academic freedom, and renew the public mission of a great research university.

Questions for the Year Ahead
Since spring, we’ve lived under an austerity wave. Let’s finish what’s begun – harvest the savings we’ve already committed to – and then let that wave run its course. The next phase is about imagination, not retrenchment. Four lines of inquiry could frame our collective work:

1. Phased growth with guardrails.
   How might we model 1,000-3,000-5,000 enrollment scenarios that protect mentoring and thesis-advising time, keep teaching loads reasonable, and ensure housing, health services, classrooms, and labs expand in step? What does “capacity” mean in each School?
2. A city–university compact.
   What long-horizon partnership with Cambridge and the Commonwealth could align growth to housing, anti-displacement, transit, and climate resilience? Could a K–12 alliance in STEM, the humanities, and the arts advance diversity while strengthening public education?
3. Governance for a mission dividend.
   How might faculty design a transparent structure to return shared gains from professional education and industry consortia back to the commons? Any relief from 8% to 4% should put affordability and inclusion first across all Schools.
4. Teaching and learning at scale.
   What versions of the classroom, studio, and lab can preserve the hands-on spirit of an MIT education while drawing on digital and AI-enabled learning? How can scale deepen rather than dilute experience?

Answers to these questions can become the guardrails for realizing a clear value proposition: to expand access, secure academic freedom, and strengthen MIT’s civic partnership – without diluting quality – through phased, transparent growth. Our own faculty – economists, social scientists, urban planners, architects, and engineers – already hold the tools to answer them. Expansion can mobilize the full breadth of the Institute’s intellectual community, turning fiscal challenge into a shared design project – one that reimagines the university’s role in the civic and economic life of Cambridge and beyond.

Closing
Tuition built the Institute. Federally sponsored research carried it to prominence. Alumni and donors sustained its investment era.

Now, in the post-Compact moment, MIT stands at another junction – a choice about how independence and inclusion might shape the century ahead. The task may not be austerity but self-governance with equity: to bring every lever of our finances – tuition, research, investment, and enrollment – into a model that could protect academic freedom from political or fiscal coercion while widening access through deliberate growth.

We could stabilize now, expand with affordability, partner with Cambridge and the Commonwealth, and mobilize the whole faculty. This is not stimulus but possibility – phased, public, and accountable – undertaken to secure the academic freedom and inclusion on which scientific merit depends. Seen in that light, the budget is not yet a cliff; it is a design brief – one we might shape together, worthy of MIT.

[1] Canizares, C. “Sixty-six Years of Sponsored Research,” MIT Faculty Newsletter, Vol. XIX No. 3, Jan 2007.

[2] MIT Treasurer’s Report, FY2025, https://vpf.mit.edu/sites/default/files/downloads/TreasurersReport/MITTreasurersReport2025.pdf

[3] Provost A. Chandrakasan; EVP & Treasurer G. Shor, Faculty Meeting, Sept 17, 2025 (slides/remarks).

[4]  President Sally Kornbluth’s Response to the “Compact for Academic Excellence in Higher Education” – MIT Faculty Newsletter, Vol. XXXVIII No. 2, Oct. 2025.

[5] MIT Student Financial Services, “Cost of Attendance, 2024–25.” Cost of attendance | MIT Student Financial Services

[6]  Community ideas: Potential budget responses to federal actions – MIT Provost Office, October 2025.

[7] “Faculty & Instructional Staff,” MIT Facts, Oct 2024. Faculty & Instructional Staff – MIT Facts.

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