A potential settlement between Harvard University and the federal government could require the Ivy League institution to invest half a billion dollars in vocational education, the secretary of commerce, Howard Lutnick, said on Thursday.

“If Harvard settles with Donald Trump, you know what he’s going to do with the $500 million? He’s going to have Harvard build vocational schools. The Harvard vocational school, because that’s what America needs,” Mr. Lutnick said during a CNBC interview.

Mr. Lutnick’s comments follow reports from August detailing negotiations over a legal agreement that would require Harvard to pay up to $500 million toward vocational and educational programs and research initiatives.

In exchange, the Trump administration would restore more than $2.2 billion in federal funding that was revoked from Harvard in April. The government withdrew the funds citing the university’s inadequate response to campus antisemitism and its continued implementation of diversity, equity, and inclusion policies.

Harvard’s president, Alan Garber, reportedly dismissed initial settlement reports in private conversations with faculty, according to sources who spoke with the Harvard Crimson. Mr. Garber indicated he was prepared to challenge the funding dispute in federal court rather than negotiate a deal.

Since those August reports, little information about potential negotiations has emerged, leading to speculation that talks had stalled. The New York Times reported last week that the administration had not issued new demands to Harvard and that the steady back-and-forth communication had slowed considerably.

Harvard has also been fighting the funding matter in court, and earlier this month scored a preliminary legal victory that could strengthen its negotiating position. U.S. District Judge Allison Burroughs rejected the government’s claims that funds were withheld due to the school’s failure to protect Jewish students, striking down the funding freeze entirely. The administration is working to appeal this decision.

Following the court ruling, several Harvard researchers reportedly received notifications from the administration confirming that their federal research funding would be restored. The number of grants set to be reinstated and the timeline for restoration remain unclear.

Since beginning his second term, Mr. Trump has consistently advocated for trade schools over elite universities, which he has criticized as antisemitic and anti-conservative. In April, Trump signed an executive order aimed at “refocusing young Americans on career preparation” following what he described as “years of shuffling Americans through an economically unproductive postsecondary system.”

Mr. Trump floated the idea of redistributing federal funds to vocational schools in a May Truth Social Post. “I am considering taking Three Billion Dollars of Grant Money away from a very antisemitic Harvard, and giving it to TRADE SCHOOLS all across our land. What a great investment that would be for the USA, and so badly needed!!!”

The White House press secretary, Karoline Leavitt, reinforced the president’s position in a Fox News interview: “Apprenticeships, electricians, plumbers—we need more of those in our country, and fewer LGBTQ graduate majors from Harvard University. That’s what this administration’s position is.”