Dear Pacificans,

I hope this finds many of you enjoying a well-deserved rest with family and friends after a highly successful academic year. Please find time to reflect on the great successes you helped drive throughout the year, and please accept my heartfelt gratitude for your tireless efforts to make our extraordinary university even better for our students, colleagues and communities.

As we prepare for the new academic year, I know many of you, like me, are reading the seemingly endless barrage of anxiety-producing news reports about problems facing American colleges and universities. Challenges that higher education has faced for more than a decade have been dramatically exacerbated by a confluence of events hitting all at once: new policies and budget cuts from a new administration in Washington, a fast-changing competitive landscape for recruiting potential students and an accelerating decline in the nation’s belief in the transformational power of a college degree (a Gallup poll showed Americans who have high confidence in higher education dropped from nearly 60 percent to 36 percent in just 10 years while those who have little to no confidence tripled, from below 10 percent to 32 percent).

The reports are coming at such a dizzying pace that it’s often hard to keep up, and even more difficult not to be concerned. Even the wealthiest institutions are at risk. Harvard University is facing a $1 billion budget shortfall, Brown University is borrowing $300 million and Stanford University is imposing a $140 million cut for the new year, which includes layoffs and hiring freezes, to name just a few schools. Additionally, many state universities have the added burden of state budget cuts.

The challenges facing R1 institutions like those mentioned above are driven in large part by deep cuts to federal research grants, the reduction of overhead for still-existing grants and a major increase to the endowment tax. Non-research-intensive universities are facing similar financial dangers, but from a more complex array of sources. As Inside Higher Education wrote last week, “The cumulative cuts across higher education in the last month were driven not by Trump but rather by dwindling enrollment, shrinking state support, rising costs and other financial pressures.”

Many of our peer institutions – private, high-quality, mid-sized comprehensive universities – are looking at another year of budget deficits, and in some cases, layoffs, hiring freezes and program eliminations. Smaller colleges in more financially precarious positions continue to shut down permanently at an alarming rate. But at Pacific – thanks to the tireless efforts of our faculty, staff and leaders in serving our students, growing new and existing programs and retaining students – we are projecting to have another strong year, with no anticipated budget cuts, freezes or layoffs while preserving the planned annual merit increases.

Total enrollment for Fall is tracking to budgeted goals, with more than 100 new confirmed students overall compared to the same time last year (new transfers and graduate students are up, first-time undergraduates are down and professional school enrollment remains unchanged). Importantly, we have kept the tuition discount rate flat for the fifth consecutive year.

Additionally, while there was significant damage to higher education in the final legislation passed by Congress and signed into law on Friday, some of the most critically important programs to Pacific were unharmed. Proposed cuts and new restrictions on Pell Grants were removed from the final legislation. Pell Grants were among our biggest concern since 37 percent of our undergraduates are Pell recipients – among the highest percentage at U.S. private universities.

Similarly, a House plan to eliminate federally subsidized loans for undergraduates was defeated. An approved increase in the tax on university endowments affects less than 100 colleges and will have no impact on us. Furthermore, White House proposals to reduce Federal Work-Study funds by 80 percent and eliminate the Supplemental Educational Opportunity Grants were rejected by Congress. All those programs remain intact.

We continue to vigorously and successfully advocate for federal grants, working closely with U.S. Rep. Josh Harder and others in Washington. In timely news, we learned Thursday that TRIO will be funded again at Pacific for five more years. The program, which is designed to provide deeper support for low-income and first-generation students, was preserved by Congress after the White House recommended elimination.

While encouraging, please also know that we remain in the midst of perhaps the most unpredictable era in American higher education. As we have seen over the past six months, there can be major new challenges that emerge, in some cases, literally overnight.

In the short term, as we look to our new academic year, I remain concerned for this Fall about our international enrollment, which adds diversity and richness to our three campuses and makes us financially stronger. Student visa approvals have always been a somewhat opaque process, but the uncertainty this year is at an all-time high. A significant decline in new international students could still change our financial picture. A Moody’s report last week said American colleges with large international populations – more than 20 percent of the overall student body – face credit risks. The average international population at U.S. colleges is 6 percent. Pacific is 11 percent. We continue to work hard to help new international students come to Pacific despite the obstacles.

Looking ahead to Fall 2026, our biggest Washington-related financial concern – in addition to international students – is significant changes to federal loan programs for graduate and professional students. The final legislation phases out the 20-year-old Grad PLUS loan program. Returning and new students for this Fall are not impacted, but new professional school students entering in Fall 2026 will no longer be eligible. Many of our professional school students in dentistry, pharmacy, health sciences and law rely on these loans to pay for their education. Meanwhile, the unsubsidized federal student loans for those professional school students will remain, but capped at $50,000 a year for a maximum of $200,000 per student. We have been in conversations with finance industry leaders on how the commercial market might fill this gap, and we will lobby our congressional delegation for the reinstatement of Grad PLUS.

I hope this correspondence helps put into context where we are financially in these tumultuous times. In short, we are in strong financial shape – in ways that so many U.S. colleges and universities are simply not – as we look ahead to the new academic year. But please remember, the landscape – particularly with international student enrollment and a highly competitive and turbulent domestic market – is volatile and can change within weeks or even days. We will continue to work around-the-clock on enrollment for Fall while strategizing on how to mitigate the Fall 2026 changes in government loans for our graduate and professional school students. I will keep you apprised, and we will have a detailed report at my State of the University presentation in early September.

Most importantly, we will continue to work together to focus on the success of our students, innovate, seek more non-tuition revenue sources (such as the Pacific Summer High School Institute, which just finished with a record 1,800 participants) and hold steadfast to the values, spirit and vision that makes Pacific so special.

In the meantime, if you have any questions, concerns or ideas, as always, please reach out to me at ccallahan@pacific.edu.

Sincerely,

Christopher Callahan
President