Administration officials have taken the extraordinary step of formally telling federal agencies that ongoing federal inquiries into Harvard University pose a significant financial risk to the institution, according to people familiar with the matter, heightening a standoff over the release of billions in frozen research funding. The assertion, made in internal memoranda and meetings in recent weeks, has become a lever in negotiations that remain stalled over a proposed settlement intended to restore the money.

The funds, withheld pending review, support dozens of research projects across public-health, engineering and basic science programs. University leaders say the freezes have disrupted long-running projects, delayed graduate stipends and imperiled contracts with private-sector partners. Administration officials counter that the inquiries — into compliance with federal regulations and agreements, they say — create uncertainty that could affect Harvard’s ability to manage and account for award funds.

A senior administration official, speaking on background, said regulators were concerned that “ongoing investigations and potential enforcement actions increase credit and compliance risk” for an institution that receives substantial federal support. The official added that agencies were considering whether additional controls or conditions should accompany any restoration of grants.

Harvard has pushed back. In a statement, a university spokesperson said the school “disagrees with the characterization of the situation as a financial stability issue,” and emphasized that Harvard “is cooperating with federal inquiries and working to resolve outstanding matters.” The spokesperson declined to provide details of negotiations but said the university had proposed terms intended to preserve research continuity without admitting wrongdoing.

The impasse has drawn attention from lawmakers, higher-education advocates and research administrators, who warn that prolonged uncertainty threatens not only Harvard but the broader federal research ecosystem. “When federal funds are withheld from a leading research university, the consequences ripple through labs across the country,” said a bipartisan former agency official. Graduate researchers and postdoctoral scholars reliant on grant support are among those most immediately affected.

Policy experts caution that the administration’s posture could set an influential precedent. Legal scholars and university counsel note that conditioning access to federal research money on broad assessments of institutional stability — rather than specific compliance failures — would expand agency discretion in ways that could chill academic freedom and complicate routine oversight. Proponents of tighter enforcement argue that federal agencies have a duty to safeguard taxpayer dollars and to ensure recipients meet regulatory obligations.

The standoff also has political overtones. Conservative officials have framed scrutiny of elite institutions as part of a broader agenda to hold universities accountable for administrative and speech policies. Democrats and higher-education groups have criticized the move as politicized pressure that risks undermining scientific progress and higher education’s autonomy.

As negotiations continue, both sides face choices with high stakes. For Harvard, any prolonged restriction could affect grant-funded research timelines, partnerships and donor confidence. For the federal government, a settlement perceived as too lenient could draw scrutiny from critics; a hardline stance could interrupt nationally significant research. The resolution will likely influence how federal regulators balance oversight, academic independence and the practical needs of the nation’s research enterprise.