Penn State Cuts Over $100M From Budget to Address Financial Challenges

• Pennsylvania State University cut some $100 million from University Park colleges, administrative and student support, and Commonwealth campuses.
• The College of Engineering will see cuts of a little over $5 million.
• The business, communications, information sciences and technology, and science colleges received the only budget increases.

Pennsylvania State University is planning around $100 million in fiscal year 2026 budget cuts to eliminate an operating deficit and create a "sustainable business model" for the future.

Penn State late last month announced a roadmap outlining the university's future, investments, and budget, with $102,946,329 cut from University Park colleges, administrative and student support, and Commonwealth campuses.

"I am proud of the work we have done together in the last year-and-a-half that has served to strengthen our University as we embark on the hard work of co-creating a sustainable future for Penn State," President Neeli Bendapudi said in the announcement.

"While we are facing considerable rising costs — like every other higher education institution across the country — we also will continue to make strategic investments where they will have the most impact on our mission and identify new revenue streams to build an even stronger future for Penn State."

The College of Engineering, for example, will see cuts of a little over $5 million.

The business, communications, information sciences and technology, and science colleges received the only budget increases.

Penn State is taking 18 months to respond to financial challenges, which include changing demographics in the state, a projected $30 million increase in healthcare costs, stagnant funding from the state, tuition rates that haven't kept up with inflation, and inflation costs for goods and services.

"The need for change within our University is undeniable and must occur for Penn State to retain its status as a leading institution, to innovate, and to invest in greatness at scale in education and research," Bendapudi said.

Sara Thorndike, senior vice president for finance and business, said in the announcement that Penn State's goal is not just a balanced budget but a sustainable business model that challenges the norm of hurried reactions to financial challenges.

Despite enrollment increases at the University Park colleges, overall enrollment at the Commonwealth campuses has declined 20% since 2016.

Penn State will address the decline by expanding the nonresident, international, adult, online, and transfer student markets and by creating more affordable pathways to a degree in academic programs that align with the state's workforce needs.