Brown University secures private loan after warning of financial pressure

Brown University took out another private loan, securing a $500 million agreement after the Ivy League school warned of “deep financial challenges.”

The five-year loan with an unidentified lender carries a 4.44% interest rate which will be paid monthly, according to a securities filing on Friday.

The deal comes after the Providence, Rhode Island-based school entered into a lending agreement for $300 million in April.

A number of universities have turned to the capital markets for financing as the Trump administration targets federal funding for higher education.

“Given recent volatility in capital markets and uncertainty related to evolving federal policy related to higher education, research and other important priorities of Brown, the University is fortunate to have a number of sources of liquidity,” a spokesperson for Brown said in an emailed statement. That includes commercial paper programs, bank lines and the private and public debt markets “to help Brown manage its finances and priorities.”

Brown’s leadership outlined the school’s grim financial picture in a June message to the campus, saying “difficult decisions” are possible in the coming months. The university said it is planning for a range of scenarios, all of which “include significant cost-cutting.” 

The school is preparing to cull spending for services, scale back capital programs and change faculty and staff hiring, according to the letter authored by Brown President Christina H. Paxson, Provost Francis J. Doyle III, and Sarah Latham, executive vice president for finance and administration. Brown’s $7.2 billion endowment is the smallest of the Ivy League schools.

Brown is one of the institutions seeing a “large-scale freeze” of hundreds of millions of dollars of federal research funding, they said.

“We are doing everything possible to minimize the impact, and we are proud of the response of this community in making important changes to operations to reduce expenses over the past year,” the message said. “Unfortunately, the level of savings to date is not enough to counter the deep financial losses Brown is experiencing and must prepare for in the coming year.”