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Stanford University has confirmed its admissions policies for fall 2026 will continue considering legacy status, a decision that could influence access to one of Silicon Valley’s most important talent pipelines. Stanford is also ending its test-optional policy, requiring SAT or ACT scores for the first time since 2021.

According to the Stanford Daily, the university is so committed to keeping legacy preferences that it’s withdrawing from California’s Cal Grant program, forgoing state financial aid rather than comply with legislation signed by California Governor Gavin Newsom last fall — Assembly Bill 1780 — which bans legacy admissions. The university promises to replace that funding with its own money.

This matters far beyond Palo Alto. Stanford has been the launching pad for countless tech leaders, from the founders of Google, Nvidia, Snap, and Netflix to other renowned CEOs and VCs. With legacy admissions intact, children of Silicon Valley’s elite arguably maintain an advantage in accessing the network that has powered numerous tech booms.

The return of test requirements adds another wrinkle, potentially favoring students with resources for test prep. While supporters believe it maintains academic standards, critics argue that for an industry built on meritocracy rhetoric, Stanford’s decisions represent a step in the wrong direction — reinstating standardized barriers and perpetuating inequality.

Stanford last year announced its decision to reverse its 2021 decision to remove standardized testing as an application requirement. That the university will continue to consider legacy status was revealed this past week in newly released admissions criteria.

The policies take on added importance given universities’ financial dependence on alumni support. Alumni donations are major financial contributors to educational institutions, particularly Ivy League schools. Princeton University, for example, received nearly half its donations — 46.6% — from alums in the 2022-2023 academic year.

At Stanford specifically, most donations are either directed toward annual giving via The Stanford Fund, which spends the money immediately on current operations, financial aid, and other programs; or they are provided — more often — as gifts to Stanford’s massive endowment (managed by Stanford Management Company), which spends roughly 5% annually on university operations, accounting for roughly 22% of its operating budget.

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Universities depend even more heavily on alumni donations when facing external financial pressures, and new federal policies targeting higher education have created unforeseen and unprecedented budget issues for institutions like Stanford.

Stanford confirmed to the San Francisco Chronicle just last week that it will permanently lay off 363 employees, which is nearly 2% of its administrative and technical workforce, owing to what officials described as “ongoing economic uncertainty” and “anticipated changes in federal policy.” These include, most notably, a whopping increase in endowment taxes from 1.4% to 8% included in the Trump administration’s “Big Beautiful Bill” that was signed into law last month.

That tax increase alone will cost Stanford an estimated $750 million annually.