Condoleezza Rice: Pulling University Funding Threatens U.S. Tech Dominance

The former U.S. Secretary of State and Stanford Hoover Institution Director says “we don't have a Plan B” if we crush university research.

Condoleezza Rice takes a seat across from me with a message to deliver. The Trump administration’s crackdown on federal university research funding is worrying the former Secretary of State and current director of Stanford’s Hoover Institution, and she’s decided to speak up.

“We have to be very careful that we're not endangering something that is of high value to the United States, I would say, of irreplaceable value,” she tells me.

In recent months, the Trump administration has frozen billions in research funding to U.S. universities, including $2.6 billion to Harvard and $1 billion to Cornell, in response to these institutions’ politics.

Some in the tech industry have cheered these cuts as just retribution for DEI, but Rice told me they risk harming U.S. tech competitiveness at a moment the country faces a real challenge from China.

Here’s a selection from our conversation, edited lightly for length and clarity, where we discuss university funding. You can listen to the full discussion — where we also cover China, AI, export controls, and the NFL — on Apple Podcasts, Spotify, or YouTube.

Alex Kantrowitz: Secretary Rice, are we putting our ability to innovate at risk if we kneecap university research?

Condoleezza Rice: Let me be the first to say universities have, in some ways, been their own worst enemy. I don't think universities reacted particularly well after October 7. A lot of things happened on campuses that should never have happened. I also think that when it comes to freedom of speech and freedom of expression, universities weren't the paragon that we should have been for civic discourse around difference. So let me start there.

I hear you. But Harvard’s leading tuberculosis researcher has received an order from the federal government to halt her research. Is that the way to fix this?

That's exactly my point, which is that: even if universities have made these mistakes, and they have, we have to be very careful that we're not endangering something that is of high value to the United States, I would say, of irreplaceable value.

Eighy years ago, we basically made the decision, with Vannevar Bush’s important white paper, that we were going to make universities the ecosystem the infrastructure for fundamental research. And it was a really brilliant idea you would have the Defense Department and the Energy Department and the National Institutes of Health and the National Science Foundation, which would come later to fund fundamental research in universities which were cheap because labor wasn't that expensive.

You would get two kinds of innovation from that, two kinds of breakthroughs: Some were commercializable and commercializable fairly quickly, and we saw companies come out of that. And some would have to wait a while until they proved their value.

Now you could say, in the first case, maybe industry would be prepared to do that work. But think about how long it took for work on neural networks to actually become the AI revolution that we're now seeing. Because it took the link between the research that started in the 40s and the 50s on neural networks, then the GPUs to be able to do it. And now you have this revolution in AI.

Sometimes you have to wait, and commercial entities can't wait, so having the fundamental research in universities is absolutely critical. My concern is we don't have a Plan B. If it's not going to be done in universities, where is it going to be done? At one point, it was done in Bell Labs, but when Bell Labs became a cost center for AT&T after the breakup of the Baby Bells, Bell Labs went under, and most of those people fled to universities where they won multiple Nobels.

So I really hope, as we're looking at all the questions around higher education, that it will be recognized that fundamental research, scientific research, and medical research at universities are the answer. I'd ask most people, when you have some exotic disease, don't you try to get to a university-led hospital to take care of it? Because that's the front foot for American biomedical research. And you could go on and on, the founding of what became recombinant DNA, the discovery of stem cells and Google out of here…

Stanford has done okay.

Stanford's done okay. And it's not just Stanford. I could give that list for most of the research universities in the country and not just the Ivies, I'm from Birmingham, Alabama. The University of Alabama, Birmingham is an amazing Biomedical Research Center. Purdue is an amazing engineering center. So it's dotted throughout the country as well.

There's an article by Jonathan Cole, who's the former provost and dean of faculties at Columbia, where he lists the innovations we've gotten out of universities: Lasers, FM, radio, barcodes, the Google algorithm, the invention of the computer and the iPhone, cures for childhood leukemia, the Pap smear, CRISPR, the electric toothbrush, Gatorade, the Heimlich maneuver, and Viagra. That all happens in universities.

It does and there's another piece to it, of course, we train the next generation as well in PhDs that come through these universities and then go on to become faculty or go into industry. A lot of them actually go into industry from the PhD programs. And so these research universities are really a gold standard internationally. It really has set the United States apart in terms of the way that we do this in continental Europe. They teach in one place and they do research in another, at a place like Stanford or any of these universities. You can walk across campus and you've got the really brilliant young, 18-year-old, and you've got the Nobel Laureate in the same body. It's really something we have to protect.

And, as we're restricting people’s research in the United States, Europe has extended the hand and said, ‘Come do it here.’

I still think we'll win in the battle for talent. If we don't say to people, “you aren't welcome” they're going to find the place that it's best to do this because these researchers are driven by a sense of mission to do their work at the highest levels, and it's still the case that you do the work at the highest levels in the United States.

But yes, if we reject talent for too long and have it go other places we will really pay the price. I'll also say that I'm a big believer in controlling your borders. I'm a big believer in that we've made a lot of mistakes over the last few years and in losing control, particularly the southern border and I want to see that remedied.

I hope that when it comes to bringing talent to the United States, we will recognize that we don't train enough engineers. We really need H-1B visas to get people to come here. If you look at the number of founders of these high tech companies, there are an awful lot of immigrants in that group. So we do have a secret sauce, and maybe it needs a little adjusting here and there. But let's remember what's gotten us to where we are.

Why do you think this is happening? Are we too detached from major breakthroughs in the last 15-20, years where we’re now thinking it's okay to throw it away?

Universities have become detached from society and free from reality as well. And so it's not just it goes a little bit both ways. What do I mean by that? Clearly, we haven't made the case very well for what we do. Maybe it's that people take for granted some of the innovations that have come out of universities. But if you walked in and asked even a very highly educated member of the attentive public about how the research system that we just described worked, they probably wouldn't know. So maybe we shouldn't take that for granted anymore. Maybe we should make it clear why this is happening.

Secondly, I do think that universities and elites sometimes have looked down on people who “weren't their own kind.” I do think that the stories that come out about the running down of American values, American institutions, America is too racist…. people get tired of that, and they don't like the attack on their country, and they don't like the attack on their culture, and unfortunately, it's become a lot associated with elite universities. So I would say to us: let's look in the mirror a little bit too.

I'm glad you brought that up. Because if you look at the costs of what it takes to attend an American university today, it's out of control. That just changes the composition of the university, and it changes the composition of the elite. The elite becomes the same people coming from the same families. And as much as we're dividing in our country based off of any number of characteristics, we're falling apart because we don't speak to each other in terms of class. So how can we fix that?

Well, I agree with you. I used to study the Soviet Union and class conflict. I never thought I would see what is class conflict or class division in the United States. And I will say that universities that are well endowed have made an effort to use that endowment to make it possible on what's called need-blind: you apply, and if you're good enough to get in, we'll find you a way to go to school. And so some 20% or so of the student population in a place like Stanford is first gen. So these are kids whose parents, nobody else went to college. And I've always said, when I can stand in front of a class and one child is the child of an itinerant farmer, and the other is the child of a fourth generation legacy, I feel pretty good about what universities are doing, but it's not just that they are expensive. And I'll come back to why they're expensive. I was provost of Stanford. I was the budget officer. I understand why it's expensive, but I will say not every kid should go to college, because many of them don't want to go to college…

It’s not that everybody needs to go. The problem is it’s unavailable for a large part of the population

But if you want to go to college, you ought to have the ability to go. And that's why financial aid and making it possible is so important. But if you're going to take down tens of thousands of dollars in debt, and you would have done just as well with a two year degree and a skill, then maybe we ought to start to value people who work with their hands. If you've heard a lot about how we need shipbuilding, we need manufacturing back in the United States, we don't even have the skills. We don't have the welders and the electricians to do that. Why don't we value those people as much too? And that's part of that class division.

I want to make one other point about the [class] divisions. We don't know each other very well any more. And I have been wondering about ways to remedy that. When the election took place in 2016 and Donald Trump won, I actually had colleagues who said, ‘maybe I should travel and see what those people in Alabama think.’ And I thought, if you have to do an anthropological dig on your fellow citizens, we have a problem.

It was a weird cliche, and a bizarre reaction

It was a weird cliche, and a really bizarre reaction. So the military used to be a place that people went from a lot of different backgrounds. Now that really isn't true. I'm a fan and a believer in national service, even if it's voluntary national service. It doesn't have to be the military. It could be the Peace Corps, it could be any number of efforts.

I like Teach for America, because I have some kid who's from Pacific Heights, who's going to go work in the Mississippi Delta. We just need ways to get to know each other better. We've lost that as a country and no democracy can ultimately survive and prosper with those kinds of divisions. And finally, the educational system is reinforcing class differences, because I can look at your zip code and tell whether you're going to get a good education. That's a real problem. And so whether it's by giving parents choices through school choice and vouchers, or improving public schools, we'd better pay attention.

If you're going to withhold federal funding, maybe it's not research, maybe it's other forms of federal funding, maybe require the universities to not increase their tuition, not increase their fees more than inflation. Why is that so hard?

As a budget officer, I would have loved to not increase tuition, and actually tuition increases have moderated for quite a long period of time. But do you know why it is expensive to run a university like this?

I think we have had a runaway bureaucracy that is running universities. We pay so much money to people who are not teaching.

That's part of the story. And I'm a big believer that you need to cut administrative bloat. When I get a federal grant, for instance, do you know what the reporting requirements are like on a federal grant? So I would, I would trade the federal government 11 points on what's called the indirect cost recovery, in other words, the overhead that the government pays. I trade 11 points if you don't make me report to the degree that you do. And another problem is students expect a lot these days. So when I first became Provost, we had what were called Internet Cafes. So you sat down in the basement and everybody could use the [internet]. What would a kid would think today if they walked into a dorm room and there wasn't access for their computer? So the costs have gone up, expectations have gone up, but I'd be the first to say universities need to control costs.

Is it surprising to you that it's Republicans who are traditionally pro-business, are ceding what could be the roots of a decline in business because they're kneecapping the university?

A couple of things are happening. Some people are angry about the kinds of things we've been talking about, and so universities become an easy mark, because they have made so many mistakes. Again, there's something of an educational mission here, to really draw the line from that funding, that federal funding for university research, to where we are as a country in terms of innovation.

When I go to the Hill to talk to people, there are certainly any number of Senators and Congresspeople who understand that, and they are trying to hold the line. People are also looking for money in these budgets, to be really clear about it. So some of the cuts are coming because people are just looking for money, because you can't cut entitlements, so you find these smaller ways to do it.

But I've been a voice for: we really have to recenter ourselves on how important the innovations that came out of a very smart, specific system that we created 80 years ago. And I just want to repeat, we don't have a plan B, so we really do have to make sure that we're adequately funding federal research and it's not, by the way, just biomedical or engineering or what happens here in the valley, but a lot of defense capability is going to be dependent on what we do in terms of innovation as well.

You would think that if anyone would know that, it would be folks in tech. It’s notable that you're making these points on a technology podcast.

I'm doing that because I really want to speak to that community. We've done something at the Hoover Institution, along with Stanford. It's called Stanford Emerging Technology Review, and the whole purpose of it — I co-chair it with the Dean of Engineering at Stanford, Jennifer Widom — is that we need to help policymakers understand what's coming on the horizon in terms of frontier technologies. But in order to do that, we have to have the scientists who are really in the labs to help us understand these technologies. And then they need people like us who understand policy and institutions to help those institutions, understand what those technologies are doing, what the challenges are, what the upsides are, what the downsides are, and that's what we're trying to do. So that's why I'm on your podcast, in addition to the fact that a lot of people like your podcast.

I've complained for a long time in our conversation about how the federal government is pulling funding. But university endowments are massive. Harvard's endowment is $53.2 billion. Stanford, where we are, is $37.6 billion. Why are we complaining about university funding? Shouldn't these very rich institutions fund all the things they're asking the government for?

We pay out a certain amount of the endowment every year, and it covers mostly a whole range of activities. But do you know how much of that endowment is actually restricted? Of that 37 or 38 billion, a lot of that money was given by people who gave it very specific things, and you can only use that payout for very specific things. So those are big numbers, but it's not as flexible as people think.

The other thing is that endowments were structured to make sure that universities lasted for perpetuity. That's the whole idea of the endowment. And I'll give you an example of one time that Stanford had to use the endowment. We had a major earthquake in 1989 called the Loma Prieta earthquake. We had at the end of that earthquake, $157 million in unfunded damage. The four quad corners were down. The museum was down. You could drive a truck into a pothole on the streets. We actually did take down more of the endowment payout to be able to finance the rebuilding of the campus. So when you think about something like that, you think these endowments have to be there for keeping the university in perpetuity. But the main point that I would make is that they're a lot less flexible than people think.

You could get a lot of money from the interest of that $37 billion.

But we also have students, and we have dormitories, and as you were driving over to Stanford, you might have noticed that the roads are all torn up. Well, that's called planned maintenance, right? Nobody funds planned maintenance except the payout from the endowment.

The Financial Times says US universities face a $1 billion revenue hit over foreign student enrollment drop. Are we doing more damage scaring away international students because of our immigration policies?

Well, I really hope that we will be very clear that we believe in international students, and I'm a huge believer that bringing students from around the world is good for our students, it's good for [other countries], etc.. I want to see what the numbers look like in two or three years. I'm not one to take a snapshot in time, and it's not even clear to me that we are going to have a 10% reduction. There may be some places where that's the case.

But I'll tell you, I have some experience with this, because I was National Security Advisor on September 11, and for a variety of reasons, we had to really constrain student visas. Three of the hijackers were actually registered on student visas. So we very much constrained student visas. We were the ones who created that system that you read about, SEVIS, where you get a report on the student as to whether or not they're actually taking classes and so forth. We turned that around within three or four years. And so some of these effects may be temporary. Let's wait and see. But I'm one who's encouraging, particularly [the] State Department to make sure that the visas keep coming. Students are starting to get their visas, and we'll see what it looks like in the fall.