This story was updated on Apr. 9 at 10:00 a.m.

The New School is expecting a nearly $30 million deficit, despite originally adopting a balanced budget for this fiscal year which ends in June 2025. The news was shared in a faculty and staff exclusive budget meeting this week.

Without an increase in students and structural changes, the university could see a five-year $100 million deficit, the university said in a statement to the New School Free Press.

Last year’s administration adopted a budget with a $57 million deficit for the 2023-2024 fiscal year. The university told the Free Press in April 2024 that they would instead break even because of cost-saving measures. In reality, the school ended the year with a $26 million deficit, according to Loretta Ferrari, the university’s chief financial officer and vice president of finance and budget.

The university’s adopted budget for this fiscal year was “very optimistic” according to Chief Operating Officer and Executive Vice President (EVP) for Business and Operations, Francisco Pineda, who only assumed the position in Jan. 2025.

An overestimation of student enrollment contributed to a significant portion of the current projected deficit. 85% of The New School’s revenue comes from student tuition. This year, enrollment was short of their target by 410 students, accounting for a $33 million shortfall in net tuition revenue.

Additionally, the university assumed the disposition of their lease for the 301 Residence Hall, which still has not occurred. This contributed $10 million directly to the deficit. In fact, all the dorms operate at a combined net loss of $13 million. Even if 301 were at 95% capacity, it would still be losing money.

In an emailed statement, the university also pointed to rising costs, growing financial aid expenses, and an ineffective use of space as contributors to this year’s deficit. 

In order to preserve long-term financial stability, a growth in students is necessary but “not enough,” according to Pineda. 

Currently, early numbers indicate that undergraduate applications, admissions, and deposits are ahead compared to spring 2024, according to Dr. Renée T. White, provost and EVP for academic affairs, who helped lead the staff and faculty budget meeting. Pineda also stated that a study of space usage of New School buildings has begun and will end in April 2026. The university first adopted an initiative to better utilize its space in 2023. 

University President Joel Towers, who was in attendance at the meeting, reiterated the need to reevaluate how the university has been using its current real estate. “We can’t keep using it this way,” he said. 

In an official statement to the Free Press, the university said, “We are actively engaged in a multi-year effort to close our budget deficit and achieve a balanced budget over the next five to six years. Our approach includes rigorous financial and scenario planning, operational efficiencies, and strategic investments aligned with our core mission of teaching, learning, and student success.” 

The university added “that Moody’s and S&P Global Ratings continue to affirm The New School’s strategic direction” with high credit ratings on their $605 million debt, which was also mentioned in the meeting this week. The high ratings “reflects confidence in the university’s ability to manage these challenges responsibly,” the statement said. 

The New School told the Free Press that “while the university does not yet have a finalized comprehensive financial stabilization plan, significant work is underway to develop one as part of our multi-year effort to balance the budget.”

A previous version of this article stated that the assumed sale of the 301 Residence hall contributed to the deficit. The story has been updated to clarify that TNS does not own 301, rather it leases it. The New School was expecting the disposition of the lease, which did not happen.