On October 2, 2025, a political standoff erupted between California Governor Gavin Newsom and the Trump administration, thrusting the University of Southern California (USC) into the national spotlight. The dispute centers on a controversial White House proposal, dubbed the “Compact for Academic Excellence in Higher Education,” which offers substantial federal grants to universities that agree to a sweeping set of conservative policy directives. In a dramatic countermove, Newsom threatened to withdraw billions in state funding from any California institution that signs the compact, setting up a high-stakes showdown over the future of academic freedom, student aid, and campus governance.
The Trump administration’s compact, sent to nine public and private universities across the country—including USC—lays out a host of requirements. According to The Associated Press, these include freezing tuition, capping the number of international students at 15%, banning the use of race and gender in admissions, requiring standardized tests like the SAT or ACT for undergraduate applicants, limiting accommodations for transgender students, and fostering a campus environment more welcoming to conservative ideas. The compact also proposes strict government-mandated definitions of academic terms and even dictates how schools must spend their endowments. In return, signatory institutions would be placed on a “favorability list” for research grants and other federal funding opportunities.
“Institutions of higher education are free to develop models and values other than those below, if the institution elects to forego federal benefits,” the compact states. The White House selected universities it believed had “a president who is a reformer or a board that has really indicated they are committed to a higher-quality education,” said senior adviser May Mailman to the Wall Street Journal.
USC found itself uniquely exposed in California, as it was the only institution in the state to receive the White House letter. The university, a private institution, relies heavily on both state and federal funding to support its students and research. In the 2024-2025 academic year, USC received $28.4 million in CalGrants—state-funded scholarships that benefited 3,198 students, according to the California Student Aid Commission. The university also received $1.35 billion in federal funding in the 2024 fiscal year, which included $650 million for student financial aid and $569 million for research.
Governor Newsom’s response was swift and unequivocal. In a statement mimicking President Trump’s all-caps social media style, Newsom declared, “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.” He characterized the White House offer as a “hostile takeover” of U.S. schools, warning that 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.” Newsom added, “Any institution that resists could be hit with crushing fines or stripped of federal research funding.”
Newsom’s threat puts California universities in a precarious position, caught between the possibility of losing vital state support and the lure—or pressure—of federal funding. The vast majority of CalGrants go to public university students, but USC’s share is significant, and the school also receives additional state support through smaller programs like the Golden State Teacher Grant and Chafee grants. According to the California Department of Finance, these additional funds range in the low millions annually for USC.
USC officials, for their part, have been cautious. On October 2, 2025, they stated only that they were “reviewing the administration’s letter,” declining to indicate whether they would accept or reject the compact. The university has already been grappling with financial uncertainty, having cut budgets and frozen hiring in March 2025 due to a persistent deficit and doubts about future federal support. In July, interim president Beong-Soo Kim announced that layoffs were likely, underscoring the institution’s vulnerability to funding shocks from either side.
The Trump administration’s approach represents a significant escalation in federal involvement in campus policy. In recent months, the White House has pressured universities over issues ranging from the participation of transgender athletes in sports to the handling of pro-Palestinian protests and accusations of liberal bias. Notably, a federal judge recently allowed UCLA to reclaim many of its federal grants, but the university is still facing a more than $1 billion fine over allegations of antisemitism on campus. The Trump administration’s settlement demands at UCLA have included requirements such as not admitting international students with “anti-Western” views—a move Newsom has previously decried as “extortion.”
The White House did not mince words in its response to Newsom’s ultimatum. Spokesperson Abigail Jackson said in an emailed statement, “Gavin Newscum should worry about the disaster he’s created in his own state – from endangering girls by forcing men in their sports to hiding critical information from parents about their children’s health. By opposing the compact, Newscum is opposing efforts to cap wild tuition hikes and to protect free speech. The Trump Administration is reforming higher education across America and encouraging universities to join us in restoring academic excellence and common-sense policies.” Jackson’s use of “Newscum”—President Trump’s preferred derogatory moniker for the governor—underscored the deeply personal and partisan nature of the clash.
The debate has sparked anxiety and debate on California campuses. At UC Berkeley, students expressed concern that their school could be next on the administration’s list, even though it was not among the initial nine universities contacted. “It’s almost a slap to the face, seeing that this could be done to our school,” one student told KTVU. Another added, “We have our ideas. We know what we stand for. And I’m glad that [Newsom] is pushing against things that are not our way of life.” Political scientist Melissa Michelson of Menlo College noted, “USC is in a really tricky spot, right? Because they need support from the state. They need Cal Grants. But they also need support from the federal government.”
Faculty at USC are also uneasy. Psychology professor Darby Saxbe described the White House request as “a form of blackmail,” expressing concern that the administration would be “micro-managing” universities and calling the proposal “a tremendous overreach” that “seems to fly in the face of the same free speech principles that the administration claims to endorse.” Saxbe also noted that two of her graduate students had already lost training grants from the National Institutes of Health.
As the standoff continues, the fate of billions in student aid and research dollars hangs in the balance, with California’s flagship private university squarely in the crosshairs of a broader cultural and political battle. The outcome could have far-reaching implications not only for USC, but for the autonomy and character of higher education across the state and the nation.
For now, all eyes remain on USC’s administration as it weighs its options—caught between two powerful governments, each demanding a price for its support, and a campus community anxious about the future.
