Issue 8 — Penn Refuses the Compact: Rejection as Redirection

Yesterday, Penn chose academic independence over financial certainty. President Larry Jameson announced the university’s rejection of the draft federal Compact for Academic Excellence. The costs of this decision are high. Hours after Jameson’s announcement, White House spokesperson Liz Huston said that this move jeopardizes Penn’s $1 billion in annual federal funding. 

Penn is the third university to reject the proposal, after MIT last Friday and Brown earlier this week. The University of Southern California (USC) quickly followed Penn, notifying the government that it was rejecting the proposed Compact on Thursday as well. Penn’s choice, made after Jameson consulted the Penn community, reflects a conviction that key elements of the Compact conflict with the school’s values. 

Jameson also provided feedback to the government on untenable aspects of the proposal and areas where Penn is aligned on reforms. The substance of his response could catalyze collaboration between Penn and its peers on reform independent from the government.

Marc Rowan (W ‘84, WG ‘85), Chair of the Wharton Board of Advisors, was involved in the initial drafting of the Compact. He defended its substance in a New York Times op-ed, arguing that “without government involvement, [higher education] reform will be difficult.” 

However, opposition to Penn signing the Compact was overwhelming. On Wednesday, 95% of the Faculty Senate voted against joining. Philadelphia lawmakers held a press conference urging rejection. The Undergraduate Assembly, student groups, and additional faculty members lobbied for the same. Perhaps emboldened by MIT and Brown’s decisions, Penn acted four days before the October 20th feedback deadline from the Department of Education. 

Jameson’s public announcement notably emphasized Penn’s commitment to “merit-based achievement” and mentioned that his unreleased response to the government highlighted areas where Penn is already aligned to the Compact. These likely include:

However, Jameson also cited “substantive concerns” about the proposal. Although his letter to the Department of Education was not publicly published, we can imagine it includes concerns with the proposed sweeping enforcement mechanism and potential erosion of academic independence. 

The Penn administration’s approach reflects thoughtfulness rather than defiance: engagement with the Compact’s substance, not rejection for rejection’s sake.

Hours after Penn’s announcement, White House spokesperson Liz Huston made clear that rejection carries a financial price, telling The DP that “any higher education institution unwilling to assume accountability and confront these overdue and necessary reforms will find itself without future government and taxpayers support.”

Given Penn’s $1 billion in annual federal funding, such a loss of support could impact financial aid, research grants, federal contracts, and international student and employee visas. 

The warning contradicts remarks earlier this month by White House senior advisor May Mailman who told the Wall Street Journal (WSJ) that the Trump administration did not plan to “limit federal funding solely to schools that sign the compact.” The proposal itself states universities can use different systems if they “elect to forego federal benefits.” 

While conflicting, these messages from the government all point towards a tighter funding environment ahead. If any universities decide to sign the Compact, which President Donald Trump (W ‘68) extended nationwide, Penn will be fighting an uphill battle. 

As of February, the university held $2.6 billion in active National Institute of Health (NIH) funding, and it ranked third in R&D expenditure in the country in 2023, behind only Johns Hopkins and UCSF. 

The timing of funding cuts couldn’t be worse. Combined with an expected $350 million price tag from the new endowment tax over the next five years, Penn’s patient care, research enterprise, and academic innovation will suffer significantly if its federal funding is limited compared to signatories.

Turning rejection into reform

Rejection can catalyze redirection. Although the Penn administration decided not to join the Compact, the idea that American universities require reform endures. This belief underlies initiatives like Franklin’s Forum, the mission of Penn Forward, and the school’s commitment to being “imperfect but self-improving.”

Penn, Brown, MIT, USC, and the nation’s other universities have an invaluable opportunity to model reform through collaboration rather than compliance. As Harvard professor Danielle Allen wrote when commenting on the Compact, there is a window of opportunity for “strong universities [to] work together to negotiate a package of reforms for higher education.”

Penn should seize this opportunity to collaborate with its peers and create a new vision of the future of higher education. There are some proposals, like coordinated tuition pricing, that would be difficult to pursue collectively and could raise concerns of collusion. But universities can rally around core principles, beginning with those we share at Franklin’s Forum. Some of these were also reflected in the Compact, including:

So far, universities have publicly navigated their federal government challenges alone for the most part. The initial Compact invitees could have rejected the proposal together, instead of in waves. The nation’s top research institutions have the capacity and creativity to build new financial and operational models if they focus on working together.

For now, Penn’s message is measured but firm: it is willing to engage but not to yield. But this cannot, will not, and should not be the end of the conversation about reform on college campuses. Rejection of the current Compact also provides an opportunity for cooperation and innovation among the nation’s best and most influential institutions to define the future of higher education.

Thank you for reading the Franklin’s Forum newsletter! We love connecting with our readers — send us your thoughts and questions, Penn news, and ideas for future issues. If you enjoyed this edition, please spread the word by forwarding it to friends and classmates.