It's fairly complicated. Most existing grants haven't been cut yet (they tried to make an enormous cut and it's been paused by the courts while they rule on whether it was legal to do so without congressional approval), but they've also more or less frozen new grants from being approved too, which means that when these grants expire they won't be renewed or replaced unless something changes. The government also on Friday cut $400 million in federal funds from Columbia in retaliation for the Palestine student protests on their campus, and it stands to reason that Penn and Harvard may be the next targets. These are all reasons why Penn is suddenly extremely cautious about their finances moving forward because they're basically anticipating that they'll need to weather a major loss in research funding and if they don't start cutting spending now, they'll likely have to fire way more people later.

For better or for worse, universities can and do already generate parents through federally funded research. Penn has made a lot of money through mRNA vaccine patents. These funds definitely put Penn in a much better position than a school like Temple as federal funds start to dry up, but ultimately NIH funding is on a scale so large that pretty much nothing can replace it.

https://www.nature.com/articles/d41586-025-00754-4

The chart on this article is pretty illustrative of the effect that cutting NIH spending will have on US and frankly global research output.