Michigan State University is eliminating 182 positions — 83 of them directly caused by federal funding terminations — after losing at least $104 million in research grants from NIH, NSF, USAID, and other agencies. MSU is not alone. The proposed federal budget for fiscal year 2026 calls for cutting NIH by nearly 40% and NSF by 57%. For students at research universities, these cuts can affect financial aid, research jobs, tuition decisions, and the value of a degree over time.

What Is Happening at Michigan State

Michigan State University President Kevin Guskiewicz announced a plan to reduce the university's general fund by 9% over two years — a target of $85 million. As of the latest reporting from Higher Ed Dive and Bridge Michigan, 99 positions had been cut due to internal budget pressures, with an additional 83 positions eliminated directly because of federal funding terminations — 182 total.1

The university identified at least 160 research projects "terminated or otherwise affected by actions such as stop work orders, pauses on funding decisions, and conditional terminations."2 By October 2025, 74 federally funded projects had ended with a projected multiyear impact of $104 million.

Michigan universities collectively receive approximately $1 billion per year from NIH alone. Bridge Michigan reported that at least $180 million of that was at risk of being eliminated by the funding actions underway through fall 2025.

President Guskiewicz framed the situation plainly: "Some workforce reductions are unavoidable to situate us to navigate our challenges and opportunities." He also acknowledged that "the federal funding picture remains murky, and additional impacts from the ongoing federal shutdown remain to be seen."

The Scale of the Proposed Federal Cuts

MSU's situation reflects a national policy shift. The Trump administration's proposed federal budget for fiscal year 2026 includes cuts that would fundamentally reshape how research universities are funded:3

  • NIH: approximately $18 billion cut — nearly 40% of the agency's FY2025 funding
  • NSF: $5.1 billion cut (57%), leaving total NSF funding at $3.9 billion
  • Department of Energy Office of Science: $1.1 billion cut (14%)
  • Department of Education overall: $66.7 billion proposed, a 15.3% cut from FY2025
  • Maximum Pell Grant: proposed reduction to $5,710 — a $1,685 decrease from the current maximum
  • TRIO and GEAR UP: both programs proposed for complete elimination, representing roughly $1.6 billion per year in combined funding for first-generation and low-income students

These are proposed cuts, not yet enacted law. But NIH and NSF have already issued stop-work orders, conditional terminations, and funding pauses that are affecting universities right now, regardless of final budget outcomes.

If you receive a federally funded scholarship, research stipend, or program benefit through TRIO (Upward Bound, Student Support Services, Talent Search), verify with your school's financial aid office that your award is still intact. Some TRIO-funded programs have already been affected by administrative actions.

How This Affects Students Directly

Research jobs and opportunities: At research universities, graduate and undergraduate students often work as paid research assistants on federally funded grants. When grants are terminated, those positions disappear. Students relying on research stipends for income — particularly graduate students — need to know the status of their principal investigator's funding.

Tuition pressure: When federal grants cover indirect costs (overhead) for a university, cuts reduce that revenue stream. Some universities will absorb the loss; others will pass costs on through higher tuition or student fees. MSU's operating expenses rose 17.9% between fiscal years 2020 and 2024, reaching $3.2 billion, while revenue has not kept pace.1

First-generation and low-income students: The proposed elimination of TRIO and GEAR UP would directly remove support services that many first-generation students rely on for tutoring, counseling, and college transition help. If you depend on these programs, connect with your campus office now to understand the local status.

Financial aid at your school: University budget cuts often flow to merit aid and institutional grants before they hit federal programs. If your school is significantly dependent on federal research funding, it may reduce its own scholarship pools in response. Our guide to colleges with the best financial aid can help you compare institutional aid track records.

What to Do Now

Check your school's financial health: Most universities publish annual financial reports. If you're considering a school that's heavily research-dependent — especially public universities in states with significant federal grant exposure — it's worth looking at their current budget situation.

Build a financial backup plan: If any part of your college funding relies on a federal grant-funded job or program, treat it as uncertain right now. The guide to scholarships for college covers non-federal alternatives that don't depend on congressional appropriations.

Know your FAFSA status: Federal cuts to the Department of Education budget can affect staffing and processing for student aid applications. File your FAFSA well before deadlines — do not assume the system will run smoothly under a reduced budget.

If you're a first-gen student: The guide to college planning for low-income families covers what happens when expected support structures change and what alternative pathways exist.

Graduate students on research assistantships should ask their faculty advisor directly whether the lab's NIH or NSF grants have received any stop-work orders, funding pauses, or conditional termination notices. This is not an awkward question — it's essential information for planning your program timeline and finances.

The Broader Pattern

MSU is one of the most visible examples of a national pattern. University budgets were already under pressure from rising costs before federal funding actions accelerated the problem. When a major research university cuts 182 positions in a single academic year, it signals structural strain — not an isolated event.

The decisions made in Washington about research funding don't stay in Washington. They show up in higher tuition, fewer research jobs, reduced student services, and smaller institutional aid pools. Paying attention to where that pressure lands at your specific school is part of making a sound college financial decision.

For a full picture of what college costs and how to manage them, see our guide to how much college costs.

Footnotes

  1. Higher Ed Dive. (2025, October). Michigan State layoffs, budget cuts, federal funding terminations. Higher Ed Dive. https://www.highereddive.com/news/michigan-state-layoffs-budget-cuts-federal-funding-terminations/803669/ ↩ ↩2

  2. Bridge Michigan. (2025, October). Gutted: Michigan losing $200M in fed research funding, with more in limbo. Bridge Michigan. https://bridgemi.com/talent-education/gutted-michigan-losing-200m-fed-research-funding-with-more-in-limbo/ ↩

  3. Center for American Progress; Institute for Higher Education Policy. (2025–2026). Proposed FY2026 federal budget impacts on higher education. Multiple publications. ↩