California Governor Gavin Newsom issued a sharp warning to California universities after the Trump administration unveiled a controversial proposal known as the “Compact for Academic Excellence in Higher Education.” According to Newsom, any institution in the state that signs the compact will “instantly” lose state funding, including access to the Cal Grants program, California’s $2.8 billion student financial aid initiative.

The administration’s compact, offered to nine prominent institutions including the University of Southern California (USC), outlines sweeping changes in how universities should operate. It demands the closure of departments deemed hostile to conservative ideas, a strict cap on international undergraduate students at 15%, adherence to the administration’s definition of gender, and a ban on considering race or sex in admissions and hiring. In exchange, universities would be granted what the White House describes as “substantial and meaningful federal grants.”

Story Highlights:

• Governor’s Warning: Gavin Newsom says any California universities signing Trump’s compact will lose billions in state funding.
• Compact Requirements: Demands closure of certain academic departments, a 15% cap on international students, federal gender definition, and race/sex bans in hiring and admissions.
• Financial Stakes: Institutions risk losing Cal Grants and state support if they comply.
• Trump’s Offer: Federal grants offered in exchange for compliance, along with tuition freezes and stricter grading standards.
• Impact on USC: With over 25% of its freshman class being international students, USC would be heavily affected by the proposed limits.

Newsom’s office strongly condemned the proposal, describing it as “nothing short of a hostile takeover of America’s universities.”

“It would impose strict government-mandated definitions of academic terms, erase diversity, and rip control away from campus leaders to install government-mandated conservative ideology in its place,” the governor’s office said in a statement.

The statement also highlighted concerns about financial autonomy. “It even dictates how schools must spend their own endowments. Any institution that resists could be hit with crushing fines or stripped of federal research funding.”

Newsom himself was direct in his warning:

“If any California university signs this radical agreement, they’ll lose billions in state funding – including Cal Grants – instantly. California will not bankroll schools that sell out their students, professors, researchers, and surrender academic freedom.”

The Trump administration framed the compact differently. Senior White House adviser May Mailman told the Wall Street Journal that the offer was made to institutions considered “good actors,” with leadership seen as “reformers” committed to “higher-quality education.”

Alongside the restrictions on hiring and speech, the compact also requires tuition freezes for five years and measures to crack down on grade inflation. According to the Wall Street Journal, schools would have to address the rising number of students receiving top grades, a trend the administration argues undermines educational standards.

The University of Southern California, a private research institution with an $8.2 billion endowment, acknowledged receiving the proposal. In a brief statement, USC said, “We are reviewing the Administration’s letter,” but did not directly respond to Newsom’s warning.

The Los Angeles Times reported that more than a quarter of USC’s 2025 freshman class is made up of international students, with more than half coming from China or India. The Trump proposal would not only cap international enrollment at 15% but also restrict students from any single country to just 5% of the total undergraduate population.

This measure could reshape campuses like USC, where diversity and global representation play a major role in the academic environment. Federal data shows most American universities fall below the 15% threshold, but around 120 schools—including USC, Columbia University, Emory University, and Boston University—exceed it.

For now, California universities are weighing the cost of federal funding against the state’s threat of losing billions in aid. The outcome will test the balance of academic freedom, financial stability, and political influence across some of the nation’s most prestigious campuses.

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